October 17, 2018

expats

Edward Snowden Is Going to Need Some Expert Expat Tax Advice

Any enterprising tax gurus out there should recognize this as an opportunity: Will #Snowden pay U.S. #taxes on Russian income? As U.S. citizen, he's supposed to file. http://t.co/xGnS42gO9D #expats — Janet Novack (@janetnovack) August 7, 2013 There are always loose ends in these situations. Here's hoping one of you can capitalize on this one.

IRS: Facebook Co-founder Is Gonna Take Off Now

So to speak. Bloomberg reports that Eduardo Saverin has renounced his U.S. citizenship ahead of Facebook's IPO. This has a number of obvious advantages – the lack of Kardashians, Nickelback, and NBA playoffs to name a few. But also, there are the tax advantages to consider, which it appears Saverin may have done: Facebook plans to […]

Is the IRS Going to War with Canada?

Wars with Canada turn out badly. While the Canadians are a seemingly peaceful people, content with their Tim Horton’s and their hockey, they seem to come out on top in a fight. Ethan Allen and Benedict Arnold learned that lesson early on, and things went no better in 1812.

Now IRS Commissioner Shulman is baiting Canada for another war:

Premier David Alward, one of New Brunswick’s best known dual citizens, says he has been caught in the same broad net U.S. officials have cast to catch international tax evaders.


This prominent Canadian has been dragged into a U.S. tax nightmare the same way as thousands of other well-meaning expats:

Alward was born in Beverly, Mass., and spent his early years in the United States before his family settled in New Brunswick.

“I’ve had to scramble like thousands of other people,” Alward said, adding that he is complying with the U.S. demand for tax returns going back years and detailed disclosures.

The IRS is going after offshore tax violators in a big way. It’s natural that there are more in Canada than anywhere else because of geography and economics. But the IRS approach has been to enforce traffic safety by shooting jaywalkers.

While the US taxes its citizens on worldwide income, many, maybe most, expatriates have little or no U.S. tax liability. The foreign earned income exclusion and the foreign tax credit take care of that. But the long-obscure “FBAR” requirement to report foreign financial accounts over $10,000 threatens to impoverish many of these people anyway. The penalties for failing to file the FBAR Form, Form TD 09.22-1, are the greater of $10,000 or half the value of the account. The IRS is freely asserting these penalties even when little or no tax is due, and is even applying them to Canadian retirement accounts of U.S. expats like Alward.

The IRS has had two “amnesties” to draw expats into its loving arms, and the program has been a disaster for many ordinary folks who have signed up to try to clean up their records. Taxpayers living in Canada since childhood are presumed to be tax cheats, and penalized accordingly.

The IRS could learn a lot from states in handling these issues. The IRS “amnesties” have been progressively more restrictive, with higher penalties, making it more and more dangerous for folks with trivial paperwork violations to come out of the cold. Many states, in contrast, have standing deals where out-of-state taxpayers can clean up their tax histories by filing a few years of back tax returns, no questions asked. If the IRS would take this approach, and waive FBAR penalties for accounts under, say, $200,000 — and for all retirement accounts –maybe we won’t have to worry about the White House getting sacked again.

Number of U.S. Expatriates Still Growing

Had it up to here [bridge of your nose or so] with taxes in the United States? Giving more thought to GTFO and never coming back? You’re not alone.

More people expatriated from the U.S. in the first quarter of 2011 than in the first quarter of 2010. This after the increase in Q1 of ’10 was more than double than Q1 of ’09. Perhaps this is due to some sort of a “I need to get the hell out of this country” resolution but you could also assume that these folks don’t align themselves with the Patriotic Millionaires.

[ITB via TaxProf]