American taxes – how to update them without going bankrupt

posted 3 years ago in Legal
Post # 3
Member
10219 posts
Sugar Beekeeper
  • Wedding: December 2012

Ya welcome to the world under a poor economy.

Once upon a time if you were a US Citizen (or a Canadian) living abroad there was a “gentleman’s agreement” that you paid taxes to the country you lived in, and filed in the other, and none to relatively little was paid to your home country.

In recent years, both the US and Canada has decided that THEY BOTH want more of the pie… so the guy in the middle, the guy making the money, actually is the one who is suffering.  (Just had a GF go thru this with her Husband’s US Company’s Survivor Pension and her living here in Canada… both the US & Canada, took their slice… and then some !!)

I cannot really advise you… I think only an Accountant or Tax Lawyer should do that (Yellow Pages)… but I can tell you it will hurt.  It will hurt if you pay or don’t pay.

If you choose not to pay the USA, in so much as you live on this side of the Border… as you’ve noted you can FORGET ABOUT ever travelling to the US again… and I wouldn’t even risk for example flying anywhere near the USA either (including the Caribbean)… cause if you are on a plane that has to diverted and land in the US, you’ll be arrested sitting on the tarmack.

I agree the whole mess sucks, but it is what it is.  He chose to keep his dual citizenship / ties with America.  America is now in hard times economically so they are calling in all their markers.  It is within their rights to do so.

Sorry… (( HUGS ))

 

Post # 5
Member
42538 posts
Honey Beekeeper
  • Wedding: November 1999

@laceydoilies:  You need to be speaking with a lawyer or accountant in Ontario who specializes in American taxes. Asking for help from strangers over the Internet could lead you to nothing but trouble. You can meet with most lawyers for one free session just to get an idea where you stand.

 

Post # 7
Member
6032 posts
Bee Keeper
  • Wedding: October 2014

Most ex-pats (which is technically what he is) can deduct a fair bit of their foreign income, to the point where they do not have any tax due, but they still must file a tax return. Get an accountant, either in the US or Canada, that specializes in ex-pat taxes and file the back years of returns. You do not need a lawyer at this point; you need an accountant.

Also if he’s trying to denounce his itizenship just to avoid paying taxes, that wil never be approved. Once he’s got his back taxes in order, he can try again to denounce his citizenship on the basis of being unwilling to participate in a draft for the US (not that they will ever have a draft again, but if you’re not willing to defend the nation, you’ll get the citizenship stripped).

Post # 8
Member
10495 posts
Sugar Beekeeper
  • Wedding: January 2011

@laceydoilies:  Chances are you guys won’t owe much!  Taxes in Canada tend to be higher and you aren’t completely doubled taxed.

Unlike RRSPs, TFSAs are not recognized by the US government , so his TFSAs would be one area he could take a hit, especially if he did well with those investments.

I agree with PPs – get an accountant who is familar with US taxes!  They are much more complicated than Canadian ones and hopefully the acountant would save you two money.

Post # 10
Member
277 posts
Helper bee
  • Wedding: September 2010

This has become one of my big pet peeves as a US citizen living overseas.  There’s an exclusion so you’re not double taxed.  I don’t know what it was this year, but it’s probably around $97k or something like that.  What this means is every dollar made under the exclusion is tax free since you’re paying tax in the country you’re living in.

So if your DH never made, or had savings, that went over the exclusion the chances of having anything to pay is slim.  However, you guys do need to get an accountant that specializes in US taxes for expats to help you out and make sure that back filing and whatnot is done properly.

On tha note, I just want to express how freakin much I hate that citizens living in a foreign country has to do a full filing every year.  Aside from killing trees (there’s no e-filing if you’re married), this year I had to pay almost 7 euro just to mail the freakin forms to the US. o-O  Aside from the inconvienance and cost to me, I KNOW the IRS is wasting money going over my forms.

On top of that, I also know that the US is losing money going after latent citizens like your DH.  I’m guessing for every 50k they bring in they’re probably spending a few hundred thousand to investigate and start the process.  It’s entirely different than going after people who are knowingly avoiding taxation and putting their money into tax havens.

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