ATTN: All American Citizens! Taxes! Citizen vs. Residency based taxation, FBAR, FATCA, please read!

ATTENTION: All American Expats

Please visit http://americansabroad.org/files/6513/6370/3681/finalsubrbtmarch2013.pdf urgently. It is a pdf file, there is no virus.

American Citizens Abroad (ACA) fights for the rights of Americans abroad, and they have been working very hard to make life fair and easier for those of us overseas. If you are not familiar with a lot of the crap going on, join the club. If you have a chance, look over the ACA website at americansabroad.org/ and understand their mission and goals. I support them and I hope that you will also as they are doing a lot of things behind the scenes to help all of us.

Currently on the plate are a couple of things that need your urgent attention. The first one is the pdf file above. The letters are due on or before April 15th. This proposal from ACA is change the current tax situation for those of us living overseas. Right now as you may know you have to file income tax forms every year, including those pesky FBARs that you may not even be aware of. If you have income in Taiwan you have to file even if you owe no tax, if you are self-employed and the income is from Taiwan you still have to claim it and be taxed on it as self-employment income is taxable worldwide. The US is one of the only countries in the world that taxes its citizens outside the country. The proposal above is to change citizen-based taxation rules to residency-based taxation rules, which would eliminate many of the issues for us.

The second issue that needs serious attention is this new stupid law called FATCA! This ridiculous and unfair tax law needs to be repealed. :fume: If you do not know what FATCA is Google it, for many people this may have absolutely no impact on your life, but for many it is a serious problem. This law would allow the IRS to know every account you have in Taiwan or in other countries because all banks will be required to report all American citizens with foreign bank accounts to the IRS, and regardless if you are hiding anything or not it doesn’t matter. Many banks have already started denying American Citizens accounts overseas because they do not want the hassle of FATCA. In Taiwan I have not heard of any cases yet, but it may eventually happen. FATCA is a horrible law that will increase tax exposure to double taxation, loss of job opportunities, closure of accounts, insurance policies, etc. In addition FATCA threatens to expose your personal financial information to governments worldwide and lead to higher taxes. This is a serious problem that needs your attention. An article just a few days ago, found here: http://www.tax-news.com/news/Taiwan_US_To_Negotiate_FATCA_Agreement____60354.html will explain why your attention is needed now. I have already written a letter to the FSC in Taiwan and will be writing another letter shortly, if you want you can write letters to them also, what good it will do, well, it’s all political probably, but still you can voice your disapproval to the FSC. In addition to write your congressmen to tell them FATCA is bad. Another website that explains in more depth the problems and more articles are here: http://www.repealfatca.com/. FATCA may never take hold and many of us are pushing for a repeal of it, but it could still be put into practice on January 1, 2014 if it is not stopped soon. Only a handful of countries have complied, but more may in the near future. Nothing is known at this time.

Some things you need to be aware of in addition to this stuff above.

  • If you have not been filing income tax forms, even if you do not owe money, you need to start thinking about doing it.
  • If you have unreported income from Taiwan you might need to consider how to fix your compliance issues before FATCA takes hold. Ask an accountant.
  • If you have had more than US$10,000 in Taiwan banks, and it doesn’t matter if it is NTD, USD, CAD, EURO, etc. it needs to be reported on an FBAR every year! That is US$10,000 in aggregate not per account. So if you have five accounts in Taiwan 1. US$2000 2. NT$5000 3. NT$50,000 4. NT$250,000 and 5. EUR$2000 you have to file an FBAR because your total is over US$10,000. I believe it was tax year 2008 until now that you mainly need to be concerned about, but I could be wrong if someone has the information please post it. FBAR has been on the books since the 70’s but was never enforced until recent years. The penalties for not filing FBARs is US$10,000 per year I believe. :fume: Yes, it is ridiculous!
    If you have questions I can attempt to answer them, but a good CPA might be a good choice as many local accountants in the US have no idea about the forms required by the IRS just for living overseas.

For now, please pay attention to that pdf file and if you care, send the letter to the International Tax Reform Working Group before April 15. This is very urgent! There is a word document on the ACA website also with a link from here and how to address the email: http://americansabroad.org/issues/taxation/have-your-say-tax-reform/

Some are sitting up and listening, http://thehill.com/business-a-lobbying/293187-americans-living-abroad-plead-for-relief-from-irs#disqus_thread If you have not submitted your letters yet, please do so ASAP as they are due before April 15!

I see that if you own a property overseas, you do not need to report it,… yet.

federaltaxcrimes.blogspot.com/20 … other.html

irs.gov/Businesses/Corporati … -Form-8938 (see Q3.)

I wonder if you eventually sell a property in Taiwan, do you pay capital gain taxes to both Taiwan and US?

Based on the above, I can very well imagine some particularly enthralled emmigrants to Taiwan giving up their US citizenship in the future…

Except, there is a tax to pay first: irs.gov/Individuals/Internat … iation-Tax

"Expatriation on or after June 16, 2008
If you expatriated after June 16, 2008, the new IRC 877A expatriation rules apply to you if any of the following statements apply.

  1. Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($145,000 for 2009 and 2010, $147,000 for 2011, and $151,000 for 2012).
  2. Your net worth is $2 million or more on the date of your expatriation or termination of residency.
  3. You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency."

If you have sufficient asset, there is an exclusion amount. The rest are taxed per mark-to-market value.

“Under IRC 877A(a)(3), the amount that would otherwise be includible in gross income by reason of the deemed sale rule is reduced (but not to below zero) by $600,000, which amount is to be adjusted for inflation for calendar years after 2008 (the “exclusion amount”). For calendar year 2010, the exclusion amount as adjusted for inflation is $627,000. For calendar year 2011, the exclusion amount is $636,000. For calendar year 2012, the exclusion amount is $651,000.”

The tax could be hefty.

[quote=“fh2000”]I see that if you own a property overseas, you do not need to report it,… yet.

federaltaxcrimes.blogspot.com/20 … other.html

irs.gov/Businesses/Corporati … -Form-8938 (see Q3.)

I wonder if you eventually sell a property in Taiwan, do you pay capital gain taxes to both Taiwan and US?[/quote]

Actually this depends. Read this: renounceuscitizenship.wordpress. … ns-abroad/

There is a potential that you will have to pay tax on that depending on the fluctuating exchange rates. For the tax issue for Taiwan and the US, that part I am not sure. That is something you will have to look into when the time comes as these tax laws are constantly changing and constantly getting worse. Other countries are not learning how to incorporate their own FATCAs known as GATCA. Which would be a Global FATCA. A horrible and ridiculous concept that will cause a nightmare beyond any imagination.

In addition, I encourage all of you to go and support Rand Paul’s Bill to repeal FATCA. https://www.popvox.com/bills/us/113/s887

In addition, there is a fee to renounce US citizenship, as I recall it is something like US$450. However, of course all taxes have to be paid prior to letting you leave. Of course for those Taiwanese emigrants that never filed taxes and probably don’t know they owe taxes, I am not sure what would happen.

[quote=“JeffG”]

The second issue that needs serious attention is this new stupid law called FATCA! This ridiculous and unfair tax law needs to be repealed. :fume: If you do not know what FATCA is Google it, for many people this may have absolutely no impact on your life, but for many it is a serious problem. This law would allow the IRS to know every account you have in Taiwan or in other countries because all banks will be required to report all American citizens with foreign bank accounts to the IRS, and regardless if you are hiding anything or not it doesn’t matter. Many banks have already started denying American Citizens accounts overseas because they do not want the hassle of FATCA. In Taiwan I have not heard of any cases yet, but it may eventually happen. FATCA is a horrible law that will increase tax exposure to double taxation, loss of job opportunities, closure of accounts, insurance policies, etc. In addition FATCA threatens to expose your personal financial information to governments worldwide and lead to higher taxes. ][/quote]

Banks here are required to report info on its American residents to the IRS. It was on the news.

[quote=“archylgp”][quote=“JeffG”]

The second issue that needs serious attention is this new stupid law called FATCA! This ridiculous and unfair tax law needs to be repealed. :fume: If you do not know what FATCA is Google it, for many people this may have absolutely no impact on your life, but for many it is a serious problem. This law would allow the IRS to know every account you have in Taiwan or in other countries because all banks will be required to report all American citizens with foreign bank accounts to the IRS, and regardless if you are hiding anything or not it doesn’t matter. Many banks have already started denying American Citizens accounts overseas because they do not want the hassle of FATCA. In Taiwan I have not heard of any cases yet, but it may eventually happen. FATCA is a horrible law that will increase tax exposure to double taxation, loss of job opportunities, closure of accounts, insurance policies, etc. In addition FATCA threatens to expose your personal financial information to governments worldwide and lead to higher taxes. ][/quote]

Banks here are required to report info on its American residents to the IRS. It was on the news.[/quote]

That information is incorrect as far as I know. the information you recieved was probably from the newspaper earlier this year, but nothing nothing has been put in place yet that I know of. The US gov’t and Taiwan have only entered into negotiations for FATCA compliance at this time. It has not been decided yet, and I suggest people to write to your congressmen in the US and also the Taiwan Financial Supervisory Committee and urge them not to bow to US pressure. tax-news.com/news/Taiwan_US_ … 60354.html This is the latest news from April 2013. In addition support Senator Rand Paul’s bill to repeal FATCA altogether, link is above.

I made a call today to the FSC, and although I cannot discuss in detail the conversation, I can say is that Taiwan most likely will sign on for FATCA compliance at some point. I do not think they are sure yet when that will happen, however. Those of you who are not tax compliant might have some things to worry about as none of us are immune from this horrible law. If you have not been filing your US tax returns even without income to report but maintain a bank account, FATCA will find you. And penalities for not filing your FBARs every year is ridiculous.

What I hope all of you will do at the moment is write to your senators and representatives and tell them they should repeal FATCA, you can get ammunition for your letter from oversight.house.gov/committee-members/

I was shocked to learn that renewing a passport is a reportable event to the IRS too!!! http://www.artiopartners.com/us-expat-past-due-returns/us-passport-american-expat-taxes/ It makes me wonder what else is coming…

I have known about that for quite some time, and it is of no surprise.

You don’t really want to know the answer to, what else is coming, Ignorance is bliss. And in light of what is happening in the US government right now with the IRS scandal I suspect some of these issues above are going to come out, and that might be a very positive thing for those of us abroad. I am starting to think that FATCA may never be enforceable, but, then again… A positive outcome of this scandal might be here: marketwatch.com/story/why-ir … 2013-05-21

For those of you who are interested, as I do not think I have posted it yet, you may be interested to learn that all the letters that were sent to the Ways and Means last month have had a very positive effect. However, none of this is law yet, but you can read the document if you want, it’s 500+ pages. Page 521 will be of particular interest to those of us abroad, you can download the document here: jct.gov/publications.html?f … wn&id=4517.

I am so happy I renounced in 2008 I waited three months to get it approved. My friend who recently renounced has been waiting six month and still not approved. Yes the USA keeps you in limbo under they approve you.

I have a much more “come and prove it” attitude toward the IRS. I’ve been paid almost exclusively in cash since 2005. I never filed a tax return – ever. I’ve not bothered to claim exemption, either. Since I don’t make but a piddle anyway, I’ve never faced an auditor, or even a stray inquiry.

I also don’t own any credit cards or have any reportably high bank interest. The investments that I do make are in tax-exempt, and I don’t have any student loans to repay.

There’s a sort of perverse beauty in living just under the radar.

[quote=“JeffG”]If you have had more than US$10,000 in Taiwan banks, and it doesn’t matter if it is NTD, USD, CAD, EURO, etc. it needs to be reported on an FBAR every year! That is US$10,000 in aggregate not per account. So if you have five accounts in Taiwan 1. US$2000 2. NT$5000 3. NT$50,000 4. NT$250,000 and 5. EUR$2000 you have to file an FBAR because your total is over US$10,000. I believe it was tax year 2008 until now that you mainly need to be concerned about, but I could be wrong if someone has the information please post it. FBAR has been on the books since the 70’s but was never enforced until recent years. The penalties for not filing FBARs is US$10,000 per year I believe. :fume: Yes, it is ridiculous!
If you have questions I can attempt to answer them, but a good CPA might be a good choice as many local accountants in the US have no idea about the forms required by the IRS just for living overseas.[/quote]

I just filed my FBAR for 2012. The deadline is June 30. This is the first year I filed this. Can anyone confirm what JeffG stated above about having to file these back to 2008? Thank you!

[quote=“marasan”][quote=“JeffG”]If you have had more than US$10,000 in Taiwan banks, and it doesn’t matter if it is NTD, USD, CAD, EURO, etc. it needs to be reported on an FBAR every year! That is US$10,000 in aggregate not per account. So if you have five accounts in Taiwan 1. US$2000 2. NT$5000 3. NT$50,000 4. NT$250,000 and 5. EUR$2000 you have to file an FBAR because your total is over US$10,000. I believe it was tax year 2008 until now that you mainly need to be concerned about, but I could be wrong if someone has the information please post it. FBAR has been on the books since the 70’s but was never enforced until recent years. The penalties for not filing FBARs is US$10,000 per year I believe. :fume: Yes, it is ridiculous!
If you have questions I can attempt to answer them, but a good CPA might be a good choice as many local accountants in the US have no idea about the forms required by the IRS just for living overseas.[/quote]

I just filed my FBAR for 2012. The deadline is June 30. This is the first year I filed this. Can anyone confirm what JeffG stated above about having to file these back to 2008? Thank you![/quote]

Actually Marasan, I am not sure that you would need to file back previous FBARS or not, that is something you need to seriously consider and weigh your risks of doing it and not doing it, it is not so clear cut. If you talk to any major acountant in Taiwan they will tell you 100% by the book, yes you should, but by doing it you open yourself up to a possible audit. However, by not doing it, you also open yourself up to a possible audit by filing your first FBAR. Yes, it is a catch 22 situation, no matter what you do, you’re screwed. There is no clear cut way for Americans abroad to become tax compliant if they are not. There is another website that lists seven ways to become compliant and all of them have risks. And if you were to file back FBARs you may actually need to go back even further than 2008 if you were to have to file these. To be honest, there was no way for expats to really know about this law was really in effect or not as the IRS has changed it’s policy on it about 12 times during the last 20-30 years. But only until recently did they decide to enforce it, but not tell anyone. If I can find the link, I would post it, but I have over 100 different links about the junk going on about FATCA and all…

If you just filed for 2012 and sent it by mail, it will be late. They have to recieve the FBAR by June 30, not postmarked by June 30. Another thing most people don’t know as it was just annouced about 1-2 weeks ago is that starting in July all FBARs now HAVE to be filed electronically or you have to call the IRS to explain why you cannot file electronically. Another serious oversight in the IRS’ planning, i.e. what if I live in a country that I don’t have internet access? But no one ever said the IRS can do the right thing…

[quote=“JeffG”]Actually Marasan, I am not sure that you would need to file back previous FBARS or not, that is something you need to seriously consider and weigh your risks of doing it and not doing it, it is not so clear cut. If you talk to any major acountant in Taiwan they will tell you 100% by the book, yes you should, but by doing it you open yourself up to a possible audit. However, by not doing it, you also open yourself up to a possible audit by filing your first FBAR. Yes, it is a catch 22 situation, no matter what you do, you’re screwed. There is no clear cut way for Americans abroad to become tax compliant if they are not. There is another website that lists seven ways to become compliant and all of them have risks. And if you were to file back FBARs you may actually need to go back even further than 2008 if you were to have to file these. To be honest, there was no way for expats to really know about this law was really in effect or not as the IRS has changed it’s policy on it about 12 times during the last 20-30 years. But only until recently did they decide to enforce it, but not tell anyone. If I can find the link, I would post it, but I have over 100 different links about the junk going on about FATCA and all…

If you just filed for 2012 and sent it by mail, it will be late. They have to recieve the FBAR by June 30, not postmarked by June 30. Another thing most people don’t know as it was just annouced about 1-2 weeks ago is that starting in July all FBARs now HAVE to be filed electronically or you have to call the IRS to explain why you cannot file electronically. Another serious oversight in the IRS’ planning, i.e. what if I live in a country that I don’t have internet access? But no one ever said the IRS can do the right thing…[/quote]

Thanks for that. I did file electronically (so I made the deadline) and I notice it’s very easy to change the year, meaning that you can file back as far back as you want. I might just go back a number of years to when I arrived in Taiwan. I was a student before then so that should be good enough. The accountant that I use tells me that we need to go back to 2004 but he wants to double check on this since it’s just something he heard. What an incredible pain in the *** this all is!

You are welcome. I am glad to hear you filed electronically!!! The problem with filing back FBARs is that you risk being penalized for being late. What the penality is I don’t know exactely, but $10,000 rings a bell. I don’t have the information on hand, but it may have been written above also by another user last month. The IRS has systemacially targeted overseas Americans for years through penality abuse. They actually will make more money on penalities than on the taxes Americans abroad actually owe. Why there is even a penalty for late or not filing FBARs is a question many of us have been asking recently. I would be very careful on taking the advice of an accountant, because most accountants really do not understand how to file expat taxes. If you are using a CPA in Taiwan or a well known CPA who has experience, much experience in doing expat tax returns, they are going to tell you to go by the books, which may put yourself at a bigger risk than just starting fresh this year and filing going forward. I am not advising anything, I am simply letting you know that you should choose very wisely whether to file back FBARs or not. Yes, it is an incredible pain in the *** and it is just going to get worse when FATCA takes effect next year.

Remember, you only have to file an FBAR if your aggregate amount went over US$10,000 on any given year. Again that includes any currency and spread out over how many ever accounts you hold.

Here’s a quote from a Forbes article:

http://www.forbes.com/sites/robertwood/2011/07/21/e-filing-and-other-fbar-quirks/

It seems like they’re saying that there’s a penalty for not filing but not for doing so late. I’m not saying they’re right. Just letting you know what I read- another link to add to your pile of links!

By the way, here is the firm in Taipei that I use: http://cpataiwan.com/

I used them to catch up with past years when I neglected to file and I continue to use them now. Mr. Ma and Philip Yeh at the company know what they’re doing and they charge much less than companies based in Hong Kong and other areas. Philip is the CPA at the company who filed my FBAR electronically.

taxesforexpats.com/services/ … taxes.html

Some interesting info here:

[quote]On September 1, 2012, a new streamlined procedure was announced by the IRS for delinquent taxpayers living abroad. The opportunity is not only limited to tax filing; relief is also offered for late compliance with FBAR (Reports of Foreign Bank and Financial Accounts). Additionally, this program may be used for filing amended returns to claim retroactive relief on qualified foreign pension plans eligible for tax deferral.

In order to qualify, you must have:

Resided in a country outside the US since January 1, 2009;

Not have had significant monetary activity in the United States;

Filed all required tax returns or other reporting information in your host country; and

A balance of less than $1,500 owed to the IRS for each of the previous 3 tax years.

Participation in the program will entail:

Taxpayers will be required to file all back taxes and relevant documentation for the previous 3 years and FBAR reports for 6 years.

All submitted tax documentation and FBAR forms will be reviewed by an IRS representative and assessed whether to be low, moderate, or high risk for compliance. Individuals who are deemed to be low risk will be on an automatic fast-track for approval, no penalties will be assessed, and no further action will be required of the taxpayer.

If there is a justifiable reason why you were unable to file on time or you are requesting a deferral on a retirement account you may be asked to provide a written explanation.

In addition to the qualifications listed above, the IRS is taking other facts into consideration. Even if you meet the aforementioned qualifications, you may still be considered “high risk” and will, therefore, be ineligible for the program. Please see the article Streamlined Program Qualifications for more details.

What does it mean to be Low Risk?

Since ‘Low Risk’ participants will be free of additional penalties, it’s hard not to wonder what constitutes as ‘low risk.’ The IRS views returns with a minimal amount ($1,500) of taxes or no taxes due at all to be low risk. The less tax liability, income, assets, and complexity of the return the lower the risk it poses to the IRS. Conversely, the higher the tax liability and more complex of a return generally lead to a higher assessment of risk. More details will be available in time, and a somewhat deeper explanation can be found on the IRS website.[/quote]

Seems to me this would likely cover a lot of people. But it’s amazing to me how hard this info is to find. The more research I do, the more there is to it. And I just now found this program above. We’re being subjected to stuff that we aren’t being told about in advance.