However, their mates work for international companies which means they could be transferred outside the US borders, which represents the threat of severe economic damage to any American expat.
Do I warn them? Most are middle class. We are not talking about the rich.
1. If you have property in another country and sell it you will have to pay capital gains in the US and meet whatever tax obligations in the country where the property was located.
2. Anything you earn anywhere, any way is now US taxable
3. If you have any foreign accounts, you must report them on the FBAR or face huge penalties. Depending on the circumstances, the fines could exceed the balance many times over.
4. If you have a current bank account overseas and they find out you are American, the account could be closed. Check out FATCA
5.If you plan to retire to your original country or another country, your retirement income could be double taxed.
6. You will have great difficulty opening a bank account in another country. Many things like mortgages, car loans, life insurance and investments could be impossible to get.
7. Plan to spend a minimum of four figures for US tax return to make sure you are in compliance with all the changes that happen and carry huge fines if ignored.
Problems do vary from country to country. And problems can be retro-active. The new tax reform to encourage businesses to bring money back to the US also has affected small American overseas business owners because their tax obligation goes back to 1986. Many were using retained earnings for retirement only to find a large portion is now due to Uncle Sam.
So, if people want to go for their American nationality and they will live in the US forever, forever and forever, go for it. But if there is a chance you might end up living outside the US borders just be aware that it is financially dangerous.
But my dilemma remains. Do I but in and warn them or not?
Posts
2 comments:
This is crucial information! Thank you so much.
I would simply mention they need to read this blogpost, for example, and check up on FBAR and FATCA obligations and how that might affect them and their children, if the children were not born in the U.S.
Greencard holders are in a similar situation to citizens, but it's simpler to give up the greencard, if needed. Long-term visa holders are subject to the President's whim as to whether they can remain in the U.S., or not.
They need to be informed, but not put off or encouraged.
Post a Comment