I’m taking a break from my StrengthsFinder series to vent about my COMPLETE AND UTTER DISDAIN for the IRS and the US Government’s arrogant and excessive requirements upon it’s citizens who live overseas.
I just spent hours of my precious time filling out stupid compliance forms for our “foreign” trust.
You would think that after crossing the border to go live in another more liberty-minded part of the world, that you could turn your back for good on Uncle Sam’s jurisdiction over your life. But no! Unless you renounce your citizenship, you are still very much accountable to the domineering forces that rule “the land of the free.”
What a joke!
Here are three things that are a royal pain about being a US citizen living overseas:
1. The US Government is greedy and expects a cut of every citizen’s income no matter where they live.
Apparently, the USA assumes itself to be your god. Most governments do in light of typical income tax requirements. But in virtually the entire world, if you are a non-resident citizen earning income in another country, you have no tax obligation at home.
Not if you’re an American. The USA is one of only two nations on the planet that taxes its non-resident citizens on their worldwide income. The other is a DICTATORSHIP that you’ve probably never heard of: Eritrea. Here they are in pink:
There is a point at which the benefit of being a US citizen no longer outweighs the cost. Once your income is high enough, it makes more sense to renounce your citizenship. There are an increasing number of people who are doing it. Last year, the number was 4,279. The year before was a record 3,415.
Unfortunately, the USA is a little like the mafia. Once you’re in, they make it really hard to get out. There’s even an exit tax for high income or high net worth individuals. You can read more about that here, which is also where I got the stats above of the number of people leaving for good.
2. The IRS demands to know every penny you hold in every account all over the world.
For every overseas account that I hold that at any time during the year has a balance over $10,000, I must report the details of that account to the IRS, including the account number and the account balances. Are you serious!?
It’s called the Report of Foreign Bank and Financial Accounts, or FBAR, but it should be called FUBAR, because it is definitely an F’d-Up requirement.
So every year at tax time, I log onto the FUBAR website and begrudgingly unfold the intimate details of my financial situation to Nanny America, to prove that I am not hiding or laundering money.
Isn’t this in violation of my fourth amendment right against unreasonable searches and seizures? I guess we’re all guilty until proven innocent.
What’s the penalty if you don’t file? You could pay $10,000 per year if it’s accidental, but if you fail to file on purpose, the penalty is either $100,000 or 50% of the balance in an unreported foreign account, whichever is greater. And that’s per year, going back as far as six tax years!
3. The IRS has excessive reporting requirements related to its citizens’ international business dealings.
As I alluded to above, I just completed an annual reporting requirement for a discretionary trust that my wife and I hold in Australia. I would expect to be required to adhere to annual reporting requirements here in Australia. That would be no big deal; but in the USA?!
It’s not even the hours out my life that it takes to fill out and file the documents that’s the worst part. What I hate most is being forced to reveal detailed financial statements of my business dealings to the US government when I don’t even live there.
Oh, and they want a FUBAR report for our trust as well, including account details and balances.
What I feel like writing in every blank on the form is “NONE OF YOUR DAMN BUSINESS!”
Of course, that would feel good, but it would also cost me $10,000, or 5% of the net worth of the trust, whichever is greater. That’s the penalty for failing to report in a timely manner.
Okay, I feel just a little better now. Stay tuned for Part 4 of the StrengthsFinder series coming up soon.
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