Monthly Archives: August 2013

#Americansabroad denied child tax credit for children who are NOT US citizens – Benefit or burden?

childtaxcredit

Introducing the “FBAR Marriage”

The “FBAR Marriage” is a marriage between a U.S. person abroad and a non-U.S. person. The most important partner in the “FBAR Marriage” is the U.S. government. The most likely result of the “FBAR Marriage” is the “FBAR Divorce”.

American Exceptionalism = Exceptional Strains on the FBAR Marriage

We have seen discrimination in the following aspects of  the “FBAR Marriage”:

– requirement that the the U.S. spouse report on bank and financial accounts held with the non-U.S. spouse (FBAR, Form 8938, etc.) in the FBAR marriage;

– different and restrictive rules governing the transfer of assets from the U.S. spouse to the non-U.S. spouse (the transfer is a taxable event if the non-U.S. spouse is a “non-resident alien”;

– different and restrictive rules governing making of gifts by the U.S. spouse to the non-U.S. citizens spouse (regardless of residence);

– the considerations governing transfers of property and making gifts are a problem in the FBAR marriage, and they make divorce for U.S. citizens abroad far more difficult;

the tax penalty paid by the U.S. citizen spouse for taking the filing status of “filing separately” (instead of “married filing jointly”). Obviously the “non-resident alien” spouse cannot enter become a “U.S. person” for tax filing purposes. Note that this is going to become a bigger problem as the Obamacare tax kicks in;

On a more general level, there are the problems of :

– the family unit formed by the U.S. spouse and the non-U.S. spouse being unable to engage in responsible financial planning (no normal retirement planning products, mutual funds, etc.);

– the problems of the U.S. taxation of the principal residence of the family house;

– the possible problems of U.S. citizenship transmission if a child is born to the U.S. person and the non-U.S. spouse (interesting and complex area discussed on other posts). More on this in a moment.

And now, I draw your attention to another interesting fact:

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It’s Official: New OVDP program designed for Swiss Banks

The title of the article by Lynnley Browning is:

“Swiss  agree on penalties for banks that aided tax cheats”

A review of the article suggests that the U.S. government is attempting to impose on Swiss Banks a program that is like the “OVDI-OVDP” program.

The article begins with:

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I’ll be back: Revisiting Expatriation for tax purposes vs. Expatriation for citizenship purposes

 

A recent post from Phil Hodgen discussing relinquishing U.S. citizenship and expatriation ends with:

People care about this because they are angling for an earlier expatriation date than “now”, whatever “now” is. It won’t work. If you are a U.S. citizen, you will not have an expatriation date earlier than an objective event involving paperwork. Invoking the time traveler exception again, this is impossible to do unless you have that special ability. Determine your expatriation date for tax purposes as of right now (whenever “now” is for you), and compute the tax consequences accordingly.

As one commenter wrote:

As someone born ‘dual’, and unable to acquire the magical, ‘back-dated’ CLN, I am personally unaffected. However, I think this article just caused a lot of people more sleepless nights. The nightmare never ends.

In my respectful submission the 877A rules:

– apply to those expatriating after the 877A provisions took effect in 2008; and

– do NOT apply to those expatriating prior to the 877A provisions becoming law.

The 877A rules should NOT be read to operate retrospectively.

The 877A rules should be understood to apply when both the expatriating act and the “objective event confirming the paperwork” took place after the 877A rules took effect.

The reasons for my thinking …

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If you’re not “one of US” then don’t marry one of those #americansabroad

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Introduction:

In a recent post, “Before You Say ‘I Do’: Options for British-American Couples“, London based, U.S. immigration lawyer, Susan McFadden explores different ways the future spouse can move to the U.S. This is of interest to a large number of people. She assumes a U.K. citizen wishing to marry a U.S. citizen and move to the U.S. Although this may make “emotional sense”, it may make no sense once the euphoria wears off.

Marriage between those who are not “one of US” and U.S. citizens needs to be considered from the perspective of what it means to be married to a U.S. citizen.  Much has been written on the effects of direct U.S. taxation, FBAR and other IRS requirements. These are a gross violation of the sanctity of the family during the marriage. In some cases, it may be the “straw that breaks the marital back“. But, what about divorce? How do the tax laws  apply to a marriage where one partner is NOT a U.S. citizen?

Those who have thought about citizenship-based taxation and the way it affects U.S. citizens abroad understand it to be  a form of life control. It is certainly a “fiscal prison”. But, it is much more. Under the guise of citizenship-based taxation the U.S. claims the right to interfere with, define and control the family. In fact the most important party in the family of any U.S. citizen abroad is the U.S. government.

U.S. tax laws operate to:

– make it more difficult for U.S. citizens to marry non-citizens; and

– make U.S. citizens  very unattractive as marriage partners.

I suggest that these laws in their intention and application constitute a massive human rights violation against U.S. citizens in general and U.S. citizens abroad in particular. Furthermore, they are one more example of the truth about citizenship-based taxation.

Citizenship-based taxation is NOT about taxation.  It is about life control!

(Interestingly, in his book “The Audacity of Hope” Senator Obama discussed the importance of marriage in society.)

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Citizenship, identity, mourning loss of identity and moving on …

The above tweet references an article published on August 25, 2013 at the New York Times. The article is popular and as of now has generated almost 600 comments. It’s a very interesting article because it dispels the myth that all Green Card holders want U.S. citizenship. The article highlights the fact that there are many Green Card holders who choose NOT to become U.S. citizens either because:

– they are indifferent to U.S. citizenship and don’t have a compelling reason to get it;

– they specifically do NOT want U.S. citizenship.

The article focused largely on the connection between citizenship and identity. Interestingly there is no mention of the FBAR fundraiser or other injustices to which immigrants have been subjected. It is full of interesting and instructive comments.

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The Cruz Chronicles 2: Possibly the first Canadian president

We know that Mr. Cruz plans to renounce his Canadian citizenship. The assumption is that this will be easy for him to achieve. This is because:

1. Unlike the United States, Canada views citizenship as voluntary membership in a political community.   The United States views citizenship as  as a form of “servitude” to the state;

2. The assumption is that Cruz was also born a U.S. citizen. In other words, Mr. Cruz would have another citizenship to go to if and when he renounces his Canadian citizenship. Mr. Cruz better hope that Canada will simply accept his claim of being a U.S. citizen (without forcing Mr. Cruz  to prove his U.S. citizenship).

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The Cruz Chronicles 1: His Canadian citizenship is not in doubt. Is Ted Cruz a US citizen?

 

Recent, shocking revelations regarding Texas Senator Ted Cruz! Ted Cruz is a Canadian citizen. Does this mean that he is not American or not completely American?  The above tweet references an article that reports the release of a story  that …

Ted_cruz_certificate

… showed Cruz was born in 1970 in Calgary, Canada. His mother, Eleanor, was born in Delaware and was a U.S. citizen and his father, Rafael, was born in Cuba. Cruz had said in interviews prior to his Senate election that he is a U.S. citizen because his mother was born in the USA.

“Because I was a U.S. citizen at birth, because I left Calgary when I was 4 and have lived my entire life since then in the U.S., and because I have never taken affirmative steps to claim Canadian citizenship, I assumed that was the end of the matter,” Cruz said in a statement released Monday.

“Now The Dallas Morning News says that I may technically have dual citizenship,” Cruz continued. “Assuming that is true, then sure, I will renounce any Canadian citizenship. Nothing against Canada, but I’m an American by birth and as a U.S. senator, I believe I should be only an American.”

Cruz will have to explain in writing why he doesn’t want to be Canadian, fill out a four-page form and get clearance from Canada’s spy agency, according to Reuters. The process could take up to eight months.

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