Tag Archives: discrimination against U.S. citizens abroad

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


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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