This is such a horrible law. It places such a huge burden on us. Banks have no desire to do business with Americans.

Hahahahahaha

We just got an annoying FaCtA letter from our bank. The paperwork burden placed on banks is so onerous that we recieve piles of documents to sign every couple months

Im kind of curious, in this day and age of internet banking. (Mine is in San Antonio Texas, 1200 miles from where I live) why any American needs an overseas bank account.

The reporting requirements are ridiculous, and it is always the middle class that is hardest hit by this shit, but if it is impossiblely difficult, why not just do your banking in the US?

I probably could understand a foregn bank account if that bank gave you a loan to buy property in the country you live in, but having lived for seven years now, in two different foreign countries, i myself have never had or needed a foreign bank account.
(Nor would I want one since being a resident of Japan, and owning property here would subject all my income, even that received in the US to Japanese taxes which are not all that low)

That hundred thousand dollar exclusion Americans working overseas under certain conditions get to claim against their US tax liability is worth a little bit of hassle to prove you are not hiding significant amounts of income in a foreign bank to evade those same taxes.

And it if it easier and less costly to give up your citizenship (and social security and medicare) to avoid those foreign bank account hassles, I guess the goverment considers that a win win.

Nicole are you being serious? You don't understand the concept of an American living outside the US permanently? You do realise that some people were born and/or raised in the US and then live the remainder of their lives in another country? I am frankly aghast at your comment.

Sorry, not Nicole, but the comment underneath.

Nicole are you being serious? You don't understand the concept of an American living outside the US permanently? You do realise that some people were born and/or raised in the US and then live the remainder of their lives in another country? I am frankly aghast at your comment.

Jenny at October 18, 2016 1:18 AM

I understand you perfectly. I am serious. If you live outside the US permemantly , than you should either A. become a citizen of the country you are living in, and bank there, or B. keep your accounts in the US, if you remain a citizen of the US.

I have found it extremely easy to either use a credit card to make payments for utilities, and rent, or do a regualr direct depost from a US. Account.
If I can't do either of those, I can withdraw cash with a debit card in local currency and pay the bills that way.
Banking is international now.

I haven't seen the inside of a actual bank in ten years.

Do you find this difficult to understand?

There are a lot of really sketchy places in the world where I wouldnt want to give up the security of being able to flee to the nearest American embassy if the shit hits the fan.

I have friends who have had to do just that. So I don't take my American citizenship lightly. Half the world or more would probably kill for an American passport. That's how valuable it is.

I lived 7 years in Germany until 2011. My normal US bank would not have sufficed. Fortunately, I could also use the US bank set up on the military post to pay my rent and utilities which did not accept credit card information for payment. The US bank on post had some sort of set up for it to work in the German system. Doubt keeping only US accounts would work for all expats everywhere.

Have you ever heard of dual citizenship? I DO have citizenship of the country I live in, but am still subject to US taxation and bank account reporting, and am discriminated against when banking and investing. I want to bank where I live without being treated as a second class citizen. The only option is renunciation which has become extortionately expensive.

To be honest you sound a little ill informed or perhaps myopic as you think of all expats as 'working temporarily' overseas. I recommend doing some reading on this topic to try to understand what is happening.

Have you ever heard of dual citizenship? I DO have citizenship of the country I live in, but am still subject to US taxation and bank account reporting, and am discriminated against when banking and investing. I want to bank where I live without being treated as a second class citizen. The only option is renunciation which has become extortionately expensive.

Yes, I have, but I am more familiar with banking and taxation.

You havent made any real arguments here. Get an accountant and an immigration attorney to do the math for you, and figure out if renunciation a one time cost is worth the loss of the incredible value of US citizenship.

Methinks a lot of whiners here want to have their cake and eat it too, which is the real problem. Actually what they want is to make money off the exchange rate, moving money into dollars and then back into local currency when it is advantageous to do so. A foreign bank account makes that a lot easier.

Please give me an example of a bill you have that has to be paid by an incountry bank that cannot be paid, by a credit card, a bank transfer from a US bank, with cash or with a locally purchased money order.
There are no bills that I have in Japan that cant be paid that way. There are no bills that I had in Germany which could not be paid that way.

It is not the US governments job to make sure your life overseas is a bed of roses with the best of both worlds.

And while I think a lot of the banking laws are stupid, like the drug laws, that doesn't mean that I feel particurly sorry for those who voluntarily put themselves in a position where they become a problem when those problems can be so easily avoided.

Having created the problem, the government is hardly going to resolve it.

Having created the problem, the government is hardly going to resolve it.

Isab writes: Im kind of curious, in this day and age of internet banking. (Mine is in San Antonio Texas, 1200 miles from where I live) why any American needs an overseas bank account.

I don't know how you managed to live and work in a foreign country with only a US bank account. I can only imagine you were there as a pure expat, i.e., that you were not really integrated into the local country. Just some examples:

- If you want a mortgage, for example, there is exactly zero chance that your US bank will help you buy property in your local country. You need a local bank.

- If you're working for a company in that country (as opposed to a US company), they will probably not pay your salary to an account in a foreign country.

- If you have a retirement account tied to your employment (again, assuming a local company), this will definitely involve local accounts.

- Finally, if you have any sort of signature authority for a company, the entire company becomes subject to FATCA reporting. On the employee side, this can limit your career options. On the private side, it prevents you playing entrepreneur and starting your own little company.

In any and all of these cases: Unless the local bank has thousands of Americans for customers, they *will* refuse to deal with the FATCA crap. It is a huge hassle for them.

Next to last: If you actually read the documents that FATCA requires you (the end customer) to sign, they are pretty horrifying. The bank not only shares your data with the US government, they have the right to share it with undesignated third parties, without any further notice to you. This is meant to cover any intermediate banks, but it isn't actually restricted in any way - they could post your data on the Internet, for all that you can do about it. In the case of any damages due to a data breach, you (the end customer) carry full responsibility, i.e., you have no recourse against the government, the banks, or anyone else.

Finally: sure, hand in your citizenship. So many of us did that they quintupled the fees to slow down the flood. It now costs more than $2000, which is just insane! There are a lot of people out in the world who cannot possibly afford to pay more than $2k just to get rid of a crappy citizenship.

More on how this affects people here - from Matt Welch about his wife's small income from freelance articles:

http://www.advicegoddess.com/archives/2012/04/17/the_irs_turns_b.html

And then:

Uniquely in the world, the United States government is demanding that all foreign financial institutions disclose the details of all U.S.-based accounts and withhold 30 percent in potential taxes from accounts held by other institutions that don't disclose. Let's see, what do you suppose might happen when Washington makes life a living hell for every foreign bank that dares do business with Americans?

Shocker: "Banks no longer want American clients." So if you are one of the estimated 6.6 million Americans living abroad, you can forget about opening or even maintaining that bank account. Sorry! Those 150 minutes of federal spending won't pay for themselves!

Boris Johnson, the former Lord Mayor of London, ran into the same problem. Born in New York, his parents moved the family to London when he was five years old. Forty years later he sold a house he had bought in London. The IRS came calling; asking for the tax on the capital gains. He settled and then renounced his U.S. citizenship.

www.theatlantic.com/international/archive/2015/02/boris-Johnson-renounces-us-citizenship-tax-bill-mayor-london/385554/

Isab the law requires banks to give info to the US government on non US citizens if they are married to US citizens

Stay at home spouses earning nothing must give over all their spouses financial info, which as was pointed out can be shared with god only knows who.

My question though, under what right can the US government force foreign companies to comply with a US law?

How is it the government can force ten's of thousands of banks to comply, but they can't make Apple and Samsung stop using child slave labor to make smart phones?

Isab, I've got to go with the other commenters here. The reason why: the U.S. is doing something here that no other country does, and it creates a huge dis-motivation for doing business with American citizens. And it's an extension of the other unique U.S. tax policy, which is taxing all of the worldwide income of U.S. citizens, another dumb idea that puts Americans at a competitive disadvantage when doing business abroad. Further, Hillary is looming with capital controls. She's promised in her campaign ads to impose a punitive exit tax on anyone who renounces their citizenship -- if you renounce, the U.S. government will seize nearly all of your assets. We may as well put up a Berlin Wall around the country.

How does a U.S. law compel foreign governments to comply? Why doesn't France, for instance, just say, "Fuck you!" to the U.S. government and not report what Americans are making?

To boil things down a bit (and lose quite a bit of detail) the US already has treaties involving banking rules with a number of nations. So essentially the US government passed a law and then told all those nations either comply with this new law or we are revoking our treaty. Said treaty probably covers a number of different things like trade, immigration, and other diplomatic issues.

As for why some nations don't say F-U, some have. Notably China, Russia, and I think Switzerland.

Ben, i believe they put the screws to Switzerland too.

What most of you dont seem to realize is that internally within the US, states play this game too.

They will use the income you make working temporarily in a state, or money your lower earning spouse makes to try and get their tax hooks into all income you both make in every state.

My point was never that these are good laws, or that they dont discourage foreign banks from doing business with Americans.

My point was that the people whining about this, ordinary middle class people who are living overseas, can cheaply and easily avoid this, by not having their name on a foreign bank account, and doing their banking from a bank located in the US which is also required by law to report everything to the IRS.

". And it's an extension of the other unique U.S. tax policy, which is taxing all of the worldwide income of U.S. citizens, another dumb idea that puts Americans at a competitive disadvantage when doing business abroad."

But they dont tax* all *income earned abroad. There is a nice 100k plus exclusion for Americans living and working overseas.

It doesnt apply to US government employees, but contractors, and Americans working for foreign companies can take advantage of it.

You also get a credit for foreign taxes paid.

I know, math is hard....:-)

To all you ignoramus idiots out there who clearly do not understand how a real American could ever choose to voluntarily not return to the good ole land of the free (sic), let me explain:

I was born and raised in Wis. but moved to New Zealand over 40 years ago because that's where my husband was from and it was easier for me to move than for him to move the the USA.

Fast forward four decades and I am a dual citizen who works and pays all my relevant taxes in the country where I reside. I do not (and have not for decades) have any sort of USA bank account/financial connections/credit cards, etc. For all the years I was a stay at home mother, I had zero income; since returning to the work force I have never even approached earning half of what I would need to earn before the IRS would be able to collect a dime.

This year, scared shitless about the possible impact of FATCA, I hired a specialist tax accountant (believe me, the forms are not for the faint hearted and your average tax preparer can't do this work) and spent over $3000 to bring myself into compliance (which involved preparing the last five years of returns) to find that I owed the American people (wait for it, drum roll): exactly $0.00.

My choices from now on are to: 1) quickly renounce my citizenship (another $3000 BTW)as you can only renounce if you are tax compliant or 2) keep paying $1000/year to the accountant (it'll be cheaper now I'm up to date).

As my husband is already retired and has no plans to ever visit the US again, he has chosen to ignore the whole thing and take his chances. I however am still working and have family remaining hence my 'cooperation'. But once I'm retired I too will be giving the IRS a giant middle finger.

As to why countries comply with this, it's easy: the US threatens trade sanctions/banking restrictions, etc. until the respective foreign governments cave. Let's face it expatriates don't carry enough votes to counter this.

And for those of you who say, "come home then", well that would be nice, but as I'm not a billionaire I can't afford it. I was 20 when I left (so no Social Security/Medicare for me) and at my age (work it out all those math mavens out there) I have pre-existing medical conditions that none of you red, white and blue enthusiasts are going to pay for.

For those of you who still say that the USA is the greatest country in the world and that the American way is always the best, I have a couple of words for you: ostrich, sand.

Keep up the good work Amy, your column is a must read for me!

I'm an American living in Switzerland and while Switzerland would like to tell the US to stick it in their ear, they haven't.

I don't actually have a Swiss account because I don't work in Switzerland. All my clients are in the US, and I have a US account only. But my husband works here and he has a Swiss account. The bank wouldn't even let me be a co account holder because I don't have a Swiss job.

We have to provide a copy of our US tax returns to our bank every year to prove we're paying taxes.

Not only are we subject to the reporting requirements of FATCA, we still have to pay US taxes. Only one other country in the world taxes it's citizens when they work and live in another country--Eritrea.

It's ridiculous. Every year I pay out about $20k to a country I didn't even step foot in.

I wish the Swiss banks had the balls to tell the US to stuff it. As others have said: there is no legal basis for the US to demand FATCA compliance.

As I understand it, the trick is this: The US dollar is still (temporarily, we hope), the de facto currency for international exchange. The US gets to decide which banks have access to the dollar exchange in the US (sorry, don't remember the correct term just now). If a bank refuses to comply with FATCA, the US will not allow them to trade in dollars, essentially cutting them off from most international trading. That's death for any bank beyond maybe a local credit union.

There's no legal basis for cutting a bank off, but "might makes right". Basically, it's blackmail.

This is a big reason that other currencies are being used more and more for international trading. The US has pissed everyone off, and long-term pretty much guaranteed that the dollar will lose its supremacy.

An earlier comment caught my eye: "why any American needs an overseas bank account?"
When I told National Bank my perm address was in the UK, they refused to issue a new debit card on the account - makes the US account pretty useless anywhere in the world - even the good ol' US of A. And the noose is tightening in the UK as some institutions no longer do business with US citizens. Sadly, only Trump 'promises' to get rid of FATCA and the real elephant in the room: Citizenship Based Taxation (CBT). USA stands shoulder to shoulder with only Eritrea on CBT.

"But they dont tax* all *income earned abroad. There is a nice 100k plus exclusion for Americans living and working overseas."

I have been in government contracting for 30 years. I have been briefed hundreds of times on travel and TDY of all sorts. And I have never, ever heard anyone mention this exemption. Who is it available to? I have a colleague who is about to take an extended assignment in Australia, and he's already been warned that his income will be taxed by both countries. There are some deductions, bit they won't overcome the increased tax burden.

And yes, the states have jumped in. We now have a company rule that there are no TDY's longer than 28 days, unless it's leading to a permanent relocation. Every branch of government is grubbing for the very last dollar it can squeeze out of the citizenry.

Also: you still seem to be missing that the FACTA regs effectively prevent you from doing business in the currency of the country where you are, when you are abroad. You get paid in native currency, but then you have to convert it to U.S. dollars to put it into your U.S. bank account. And then when you go to the grocery store, you have to convert it back to the native currency. Paying commissions and fees both ways is more money than the average middle-class person will ever make off of the currency arbitrage (which, in any event, is going to be working against you in one direction or the other).

But here's my biggest objection. Do you know what FACTA really is? It's a backdoor currency control. Its real purpose is to prevent people from earning or moving assets out of the country. Currency controls are a financial Berlin Wall. They are a hallmark of banana republics and Stalinist dictatorships. It's what countries do when they are so horrible that they have to imprison their population in order to prevent mass emigration.

Dave, the deduction is available to anyone who can prove that they are resident of a foreign country. For details, see (iirc) Irs form 2555.

The catch: if you are a foreign resident, you are paying income tax in your country of residence. The US taxation is double taxation, it just kicks in at 100k. Depending on where you live, that may not actually be all that much.

"The catch: if you are a foreign resident, you are paying income tax in your country of residence"

It isnt a deduction it is an exemption, which is much better than a deduction. You need to work overseas for a full year to claim it.

And you dont necessarily pay foreign taxes. . Many foreign countries dont allow you to establsih actual residency in the country unless you are married to a citizen of that country.

And if you do pay foreign taxes there is a foreign tax credit you can claim against your US taxes. Not a deduction, a credit, which is the better of the two options.

"Paying commissions and fees both ways is more money than the average middle-class person will ever make off of the currency arbitrage "

Get yourself a no foreign transaction fee credit card. A lot of them out there. If you are working for a multi national corporation ask for salary to be direct deposit into a US bank account.

Why do you assume yourself to be so helpless Cousin Dave?