Marriage and American citizenship: The #FBAR Marriage and more

“The best way to get ahead financially is to be part of a married couple in which both partners have a college degree and a career.”

This was an interesting excerpt an article that first appeared in an article in Bloomberg View. The effect of marriage on financial stability is enormous. Marriages can either be financially advantageous or can lead to financial disaster.

That said, the reporting requirements of FATCA and FBAR have a huge impact on a non-U.S. citizen who is either married to or is considering marriage to an expat U.S. citizen. In a marriage many bank accounts and assets are owned and managed jointly. Imagine the following situation:

A U.S. spouse has signing authority over a bank account with a non-U.S. spouse. Imagine that this bank account  holds assets of  the non-U.S. spouse. The requirements of FATCA and FBAR require that the U.S. spouse reports the assets of the non-U.S. spouse to the IRS. Of course, the way around this is to never allow the U.S. spouse to have any signing authority, ownership or access to the account.

If you were not a U.S. citizen, would you want to be married to someone who was obligated to report your assets to the IRS? The days of expat U.S. citizens being able to find non-U.S. marriage partners are over!

Consider the following:

“Myself and one other woman on the forum both discussed how divorce had gone through our minds as an option. She is an older woman with a very long term marriage and so am I. However, if we divorced the IRS could not bothering our foreign spouses and children. So who do I divorce? My husband or my country? If I divorce my country will I still be able to visit my father, brother and sister there? These are the kinds of positions they are putting us in. Law abiding, people who never broke the law in their life and who are middle to lower income for the most part and who owed no taxes.”

http://www.economicnoise.com/2011/10/17/government-compassion-on-display/

And this:

“Clarissa has been in Canada since 1975, and became a Canadian citizen in 1980. She is deeply frustrated that her husband, a single-nationality Canadian, now has to declare his assets to the IRS because of his wife’s American nationality. 

“He is very unhappy about this — now his income is fair game for the IRS,” she said. “Canadian business partners of dual Canadian-US citizens are also affected by the invasive disclosures required by the IRS. For people opening new bank accounts, they now ask if you’re a U.S. citizen or not.”

http://www.vancouverobserver.com/politics/news/2011/08/30/deadline-disclosure?page=0,0

Here`s more:

“Yes, you have to report to the United States even if the money in the account was made by a foreign spouse. If you have checking rights they violate the privacy rights of foreign citizens. No thanks, I just heard about this and I’m renouncing. It’s that “signature authority” I fully object to. It makes me as an American a liability to my Canadian family. Heinous!“

http://www.youtube.com/watch?v=cl44CdUsVn8

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One thought on “Marriage and American citizenship: The #FBAR Marriage and more

  1. renounceuscitizenship Post author

    Take a look at this post on Phil Hodgen’s blog (Phil, thanks so much for this great resource!):

    http://hodgen.com/damsel-in-distress-a-vdp-success-story/

    The moral of the story is that U.S. citizens should not have signing authority on family bank accounts and investment vehicles – sad but true.

    AnotherAnon
    September 10, 2011 | 7:18 am

    I love that phrase. I have only been dealing with this issue for two weeks since I first learned about the OVDI, but as of yesterday’s deadline I would say I used up ten years’ worth of LCUs. The small cold that I had when I first learned about this draconian cash grab has turned into a major chest infection, and I am tortured by the thought of losing a portion of our hard-earned retirement income just because my Canadian husband had the misfortune of turning them into spousals in 2006. Ironically that was the first time we have put both our names on a single family asset in 18 years of marriage. Sadly, he transferred almost everything over to my name on the advice of a Canadian investment expert, and the hit will be substantial. I can just about handle paying penalties on my own money, but for this wonderful man to lose a chunk of his Canadian savings to a foreign government is an abomination. After two weeks of torture trying to decide whether to enter the OVDI or attempt quiet disclosure (three Canadian tax and accounting professionals looking at my case, declared me an obvious ‘minnow’, and recommended the latter route), I finally caved in yesterday and filed the OVDI papers. I realized that I simply wouldn’t be able to sleep at night for however many years it took the IRS to decide my fate and that of my family. It is heartening to hear that Damsel in Distress had a good outcome, but I share the concerns of others in this thread who wonder if the mercy that was shown to her was more of an outlier than a positive new direction for the IRS. Nothing I read or heard from the IRS about OVDI 2011 has made me think that case-by-case discretion will be an option, or that IRS agents are even allowed to seek reasonable accommodations for regular middle class folks who are facing the loss of their life savings for failure to file an administrative form.

    Reply

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