Monthly Archives: October 2012

Excessive regulation makes it harder for Homelanders to purchase real estate

This blog is focused primarily on the liabilities of U.S. citizenship. U.S. citizenship is a liability because of the enormous number of unfair regulations imposed on U.S. citizens abroad. The U.S. government has burdened U.S. citizens abroad with such a regulatory stranglehold that few can afford to maintain U.S. citizenship. Renunciations of U.S. citizenship are soaring and widely seen as necessary as a form of protection from the U.S. government – a government that seems to be “hell bent” on destroying its citizens abroad. The U.S. government seems incapable of making the connection between its trade deficit and having U.S. citizens “on the ground” in other countries selling U.S. products. But who cares about U.S. citizens abroad? As a good American, I certainly don’t. How could anybody have the temerity to leave the homeland? After all, the best place for Americans is in America. (Only kidding)

That said, it is also clear that the government is imposing excessive burdens on Homelanders. The U.S. economy is in the dumps. This was largely caused by bad mortgages. By “bad mortgages” I mean mortgages that were the offered by banks who had reason to believe that the borrowers could not pay the money back. But, why would the banks care? After all many of the mortgages were guaranteed by the U.S. government.

Here is an interesting video that explains how mortgages led to the 2008 Global financial crisis. Continue reading


#Americans abroad who became citizens of another country prior to 1986 read this ..



Or for those who are not twitter literate:


Thank you for your well reasoned and articulate comment on this issue.

Much appreciated. You are absolutely right that very lawyers understand this issue. The reason is simple: the cases that you refer to and the context in which they arose were a long time ago. To really understand this area of law, one must almost grow up with it. But the main message that people need to take from your comment is:

“To clarify: If indeed your US nationality was forfeit upon naturalisation in Canada and if it was restored (retroactively but
conditionally) by Supreme Court decision then that restoration was subject (under international law acceded in by the USG) to your consent. You probably gave that assent by applying for a new passport. You should have had legal counsel. Unfortunately there aren’t many lawyers competent in this arcane area to which I have devoted much of my life.”

Why US citizens in Canada should NOT invest in TFSAs or any other “Foreign Trust” (RRSPs excepted)

Not if you are U.S. citizen

Introduction – U.S. citizenship has opportunities, liabilities and disabilities

Living as a U.S. citizen outside the “Homeland” is at best difficult and at worst impossible.

Those who wish to remain U.S. citizens and live outside the United States must live by the motto:

“The difficult we do today. The impossible takes a bit longer”.

Many will see the difficulties as being too great, too time consuming and too expensive and will renounce their U.S. citizenship. At the very least, you should fully understands the opportunities, liabilities and disabilities of U.S. citizenship.

The difficulty of financial planning and investing – A Major Disability

As a U.S. citizen you are taxed in the same way and according to the same rules as U.S. citizens who live in the U.S. It is important to understand that the U.S. tax system is almost the exact opposite of Canada’s tax system. The reason is that:

Retirement planning in Canada is based on the principle of tax deferral. That is what an RRSP or TFSA is – a tax deferred investment plan. You will NOT (at least in the short term) pay tax on income earned inside one of these investment vehicles.

The U.S. tax system is designed to attack “tax deferral” (examples PFICS and Subpart F income) and will severely (and if you want to see how bad this is see this post about PFICs) punish you if you invest in these things.

By the way, if you are not already aware of this U.S. citizens should not invest in Canadian based mutual funds. (The are considered by the IRS to be PFICs.)

While I am on a roll, I will also remind you of the problems of:

fluctuating exchange rates creating phantom gains or losses; and

your principal residence is NOT a tax free capital gain.

Now, back to the main point of this post.

The Four Principles Of US Taxation Abroad

The U.S. tax system (at least in relation to U.S. citizens abroad) operates on the following four basic principles:

1. If something is “foreign” it should be punished.

2. The “principle of penalty” – There is no way that somebody can clean up innocent mistakes without paying penalties or the threat of penalties.

3. “No good deed goes unpunished” – Those who have filed (and are in the system) will have greater problems than those who have never filed. (Look at the new Streamlined compliance procedures for evidence of this – those who have filed cannot use the procedure to amend returns)

4. U.S. citizens abroad are tax cheats.

Those four principles sum it up.

Continue reading