Living abroad (away from the U.S.) is taking a nasty turn. What was once living our dream in Italy is turning into “1984” for us and for the banking institutions that serve us. In its infinite wisdom, the U.S. government (specifically the Departments of Treasury and Justice, and lawmakers in both houses of Congress) has become the watchdog of anyone living abroad who has a bank account.
We all know that millionaires and billionaires and corporations have been hiding money overseas for years. Fine, it’s time to go after the major tax cheats. I’m all for that. But with the law called FACTA (Foreign Accounts Tax Compliance Act) going into effect, the U.S. government is insisting on two things: One, that all U.S. citizens living abroad must report all details of foreign bank accounts and get taxed on them even though we pay taxes on them here; and two, that the banking institutions must comply with some very serious U.S. regulations. Or else. Where the “or else” is heavy, heavy fines and criminal charges, not just to the bank, but to the employees!! Talk about blackmail.
Can you imagine what would happen if Germany or France or Norway or South Africa tried to do this to the American banking industry? They would laugh in their faces.
Let me repeat. I am all for wiping out corruption and getting gazillionaires to pay their taxes. But this law is not affecting only them. In fact, it probably won’t hurt them much at all; they’ll still find ways to hide their money. No, this law is affecting the 99% (sound familiar?) of us who live abroad and have to have a bank account in the town where we live.
This compliance regime is so serious that a number of banks have decided they won’t do it. Sounds brave, right? Nope. What it means is they’re simply telling their American citizen clients that they can no longer bank or invest with their institution, and they’re canceling accounts. How the hell can you live without having a bank account? Even an online one. They’re also subject to this, so please don’t comment with “Why don’t you just get an online account?”
I have nothing to hide and I dutifully report our foreign back accounts. What irks me is that this form used to be called FBAR (Foreign Bank Account Report). Now they’ve changed the name to FinCEN (Financial Crimes Enforcement Network). Isn’t that sweet? We’re now potential financial criminals in the eyes of the U.S. government just for having a checking account in a local bank. Welcome to the 21st century of bullying, surveillance, paranoia and fear.
It must make you want to renounce your US citizenship!
YUCK! You explain this so well, my dear, beautiful Nina, and it’s beautifully written. In stark contrast to the beauty of your writing this post is about such an ugly & disturbing topic that must be addressed. Good for you for speaking up! Ah, what a mess!
It is just getting more and more complicated!
I’d cancel the US bank account. Things are ridiculous these days… always the little person is the one that pays – big business continues to get away with it and effectively runs the country (don’t get me started…!)
Pretty goofy, if you ask me. I remember when we were expats in Switzerland and the U.K. We paid taxes both locally and in the U.S. because a portion of our income was paid by the US Nestle company. And we had to disclose our holdings in foreign bank accounts as well. This new regime seems far more draconian than what we had to endure.
One key difference in how I was paid is that Nestle policy was that my tax consequences were supposed to be “tax neutral” so that my overall taxes (foreign and US) were not supposed to be more than what I would have paid if I was just located in the U.S.
I imagine you and Ron still have significant income from US sources so that you have to file US returns. So the solution is “simple.” Just find other sources of income outside the U.S. so you don’t have to pay U.S taxes and go through this mess. Good luck.
If we could cancel our U.S. sources, but then we’d be dead broke! We’d have to pay taxes anyway; the US is the only country that taxes its citizens on world-wide income.
Question: are you also an Italian citizen? Thanks for the info.!
No, but I’m a legal resident.
I had no idea. Thank you for educating me.
Double taxing and threats? Sounds like fascism to me.