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Be wary of your investments -- the TAXMAN is watching

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  • Originally posted by Ken44 View Post
    Sure it may come but given the myriad of problems FATCA has helped to create do you really think the law will become more draconian?
    I agree the law is stupid and counterproductive, will probably end up costing the US more money than it brings in, and has horribly unfair penalties for failing to submit forms that most people don't even know about, even when no taxes are due. But it can be spun to generate good sound bites, so yes, I do expect things to get continually more draconian. Ragging on overseas Americans is good election politics -- most voters think we are a bunch of rich weasels sipping lattes on our yachts. They don't realize we are mostly ordinary folks, living lives just like theirs, except with a foreign postal code. And nobody is going to get elected by pointing out the truth. So the beatings will continue.

    So be sure to let me know when the IRS states it will begin reporting information such as the 1099 to various foreign tax authorities as a matter of course.
    "In this regard the United States is willing to reciprocate in collecting and exchanging on an automatic basis information on accounts held in US financial institutions by residents of France, Germany, Italy, Spain and the United Kingdom."
    --Looks pretty unambiguous to me. Only question is when Japan gets added to the mix -- and as I linked up-thread, negotiations for that are apparently already under way.

    Until then I'll continue to fly under the radar and keep my US investments separate from NTA.
    As you wish.

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    • Here's a question: You're married to a J-spouse, you have different last names and you have separate bank accounts; are you supposed to report your spouse's account to U.S. authorities?

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      • Originally posted by jtij View Post
        I agree the law is stupid and counterproductive, will probably end up costing the US more money than it generates, and has horribly unfair penalties for failing to submit forms that most people don't even know about, even when no taxes are due. But it can be spun to generate good sound bites, so yes, I do expect things to get continually more draconian. Ragging on overseas Americans is good election politics -- most voters think we are a bunch of rich weasels sipping lattes on our yachts. They don't realize we are mostly ordinary folks, living lives just like theirs, except with a foreign postal code. And nobody is going to get elected by pointing out the truth. So the beatings will continue.

        That`s not necessarily true. If I recall correctly toward the end of the Clinton administration (or was it the beginning of the Bush years) there was serious talk about ending the foreign exclusion and the same argument was brought up that we (Americans living abroad) have no political backing. Yet, there was a backlash within the US business communities regarding this (ending the foreign tax exclusion) and the result was it didn`t happen. My guess is this new law will suffer a similar fate and end up being water down given the complaints from all sides it has been receiving.

        Originally posted by jtij View Post
        ..."In this regard the United States is willing to reciprocate in collecting and exchanging on an automatic basis information on accounts held in US financial institutions by residents of France, Germany, Italy, Spain and the United Kingdom."--Looks pretty unambiguous to me.
        Yes, with regards to financial institutions but not a 1099 which is my concern.
        Last edited by Ken44; 2012-06-03, 10:24 AM.

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        • Originally posted by Hijinx View Post
          Here's a question: You're married to a J-spouse, you have different last names and you have separate bank accounts; are you supposed to report your spouse's account to U.S. authorities?
          I really don`t know.

          I file my US tax return as married and filing separately. When the time comes and my wife and I return to the States I will get her a green card, change her last name to mine and file a joint tax return. After five years in the States (and should I die...) she can sell what I own and return to Japan without much worry if she wants. She will be free and clear of NTA.
          Last edited by Ken44; 2012-06-03, 10:24 AM.

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          • Originally posted by Hijinx View Post
            Here's a question: You're married to a J-spouse, you have different last names and you have separate bank accounts; are you supposed to report your spouse's account to U.S. authorities?
            This may belong in a different thread, but I think the answer depends on how you file your US taxes. If you file married-filing-jointly, which means treating your wife as a US resident for tax purposes, then yes, I believe you have to report all that stuff. If you do married-filing-separately or head-of-household, then no, you don't have to report her accounts. As far as I understand. (But I'm not an expert.)

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            • Hmmm, I think I checked the Single box. But anyway, what's to keep someone from transferring enough funds into their J-spouse's account to avoid crossing the USD 10,000 threshold which requires you to report the account to the Treasury Department?

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              • Originally posted by Ken44 View Post
                That`s not necessarily true. If I recall correctly toward the end of the Clinton administration (or was it the beginning of the Bush years) there was serious talk about ending the foreign exclusion and the same argument was brought up that we (Americans living abroad) have no political backing. Yet, there this was a backlash within the US business communities regarding this (ending the foreign tax exclusion) and the result was it didn`t happen.
                I remember that, and the mistake the legislators made was to talk about the idea before voting on it, which gave some warning and time to react. After that, folks like Grassley and Levin started slipping potentially controversial measures like that into bills at midnight the day before the bill goes up for a vote, so that the rest of Congress does not even know it is in there when they vote on it. That is how the foreign earned income stacking rule, and FATCA, were both passed. And Grassley has expressly stated that he doesn't consider overseas Americans to serve any useful purpose, and that he wants to kill the foreign earned income exclusion outright. My guess is he will wait to find some opportunity to slip in a measure killing the exclusion on the sly some time.

                My guess is this new law will suffer a similar fate and end up being water down given the complaints from all sides it has been receiving.
                You have more faith in human nature, or at least politics, than I do.

                Yes, with regards to financial institutions but not a 1099 which is my concern.
                Not sure I understand the distinction being made here.

                Comment


                • Originally posted by Hijinx View Post
                  Hmmm, I think I checked the Single box.
                  You mean Married-Filing-Separately? (Can't file Single if one is married.)

                  But anyway, what's to keep someone from transferring enough funds into their J-spouse's account to avoid crossing the USD 10,000 threshold which requires you to report the account to the Treasury Department?
                  Watch out for Japanese gift taxes, which kick in at 1,100,000 yen/year, I think.

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                  • Originally posted by jtij View Post
                    You mean Married-Filing-Separately? (Can't file Single if one is married.)

                    Does it matter? If one is not in need of a deduction, does the IRS care?


                    Watch out for Japanese gift taxes, which kick in at 1,100,000 yen/year, I think.
                    Yeah, but it's communal property--no gift taxes apply. I'm just curious that at some point in the future, the J-tax authorities might report that I'm married and the info on my wife's account as well as mine.

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                    • Originally posted by jtij View Post
                      ...

                      Not sure I understand the distinction being made here.
                      If this law continues to get stronger foreign tax authorities such as NTA will have access to my banking accounts but not necessarily information (such as a 1099) which my property management companies file with the IRS.


                      Originally posted by jtij View Post
                      ...
                      You have more faith in human nature, or at least politics, than I do.
                      It has little to do with human nature and everything to do with money. Many business and banking communities around the world are up in arms and there`s not a whole lot if evidence FATCA will produce enough to warrant the problems. Lobbyists will continue to pressure Congress and the law will eventually be watered down.
                      Last edited by Ken44; 2012-06-03, 11:21 AM.

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                      • Originally posted by Ken44 View Post
                        I really don`t know.

                        I file my US tax return as married and filing separately. When the time comes and my wife and I return to the States I will get her a green card, change her last name to mine and file a joint tax return. After five years in the States (and should I die...) she can sell what I own and return to Japan without much worry if she wants. She will be free and clear of NTA.
                        I hope you are familiar with USA taxes on gifts and leaving assets to non-citizens.

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                        • Originally posted by Plats View Post
                          I hope you are familiar with USA taxes on gifts and leaving assets to non-citizens.
                          I`m not.

                          What are the potential problems my wife (with green card) and recipient of the assets within my trust may run into?

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                          • I found this:
                            http://www.advisortoday.com/archives...m?articleID=93

                            I own only real estate and if sold the amount would be fairly substantial.

                            I`ll talk with the lawyer who created my trust when I return to the US this summer about the best way to handle this.

                            Comment


                            • Originally posted by Ken44 View Post
                              I found this:
                              http://www.advisortoday.com/archives...m?articleID=93
                              I own only real estate and if sold the amount would be fairly substantial.
                              I`ll talk with the lawyer who created my trust when I return to the US this summer about the best way to handle this.
                              I've been studying this too because I have the exact same plan as you. Taking US citizenship would solve the problem, but returning back to Japan would create another. If you come up with something better, please post here.

                              Comment


                              • Originally posted by Plats View Post
                                I've been studying this too because I have the exact same plan as you. Taking US citizenship would solve the problem, but returning back to Japan would create another. If you come up with something better, please post here.
                                Yeah, this is going to be tricky.

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