# Moving to Germany and need experiences or serious advice about flying under the radar



## kellybrassano (Jul 26, 2021)

Born and raised in Germany and have become a naturalized citizen after living in the US for a long time. Now I moved back to Germany and found out that part of the "american freedom" is to partake in the US tax ordeal every year. So I've spent some time reading about it online and am back and forth whether or not to do it, it kind of freaks me out so I hope you guys can share some experiences or give solid advice on the pro's and con's.

Here is my situation:

1. We moved back to Germany in summer 2019, I opened a bank account with my natural german ID (no ties to the US), born in Germany, never was asked about the US. I also never made any transfers whatsoever from a US bank account to my German account. My german account has about 40,000+ Euros in it which I brought from my savings in the US in cash. So there shouldn't be any issues with ever being confronted about FATCA - am I correct or am I missing something?!
I don't plan on filing the FATCA crap because once you do it you're forced to send information about it every year, and god forbid you forget it one year, you're slapped with a massive fine - no thank you, why open up a can of worms.
Question: What are the chances the I.R-S finds this account? If they do will I face the 10k fine? Does anyone have experiences or knowledge of someone that has gotten charged this 10k penalty especially if they "find it" and you never disclosed anything or is this just threads and all cases get eventually an abatement?! What can happen worst case in this scenario?

2. I work for myself in Germany doing online work for non-US companies, in the US I always did my taxes and paid the self-employment tax. My wife does not work, she is also american and my (our) annual income last year hit about 16,000 Euros. Now since we didn't even hit the threshold of $24,800 for that year (married couple) I should be in the clear for not even filing - then I read an article that one must file regardless if you're self-employed and make at least $300 or so. Now I realize Germany-US has a $104k+ foreign income exclusion so one way or another I never owe anything to the US anyways.
Question: Do I need to file? Should I file? What can happen worst case scenario if I don't file?

3. We do live in a house that my family owns and my parents want to transfer the deed into my name, basically passing the house on to me. All my family are german, non-americans. Am I supposed to file anything with the IRS if my parents pass the house in Germany on to me or not?!
I am very uncertain to own anything at the moment, simply because I am scared having anything in my name in the event the US would ever come after me for anything in the future - say I accumulate some sort of tax debt in the future that I can't pay or they slap me with insane penalities like 10k fbar etc, could they take my house in Germany or put a lien on it or force me to sell it?! I am just scared because this house to me is meaningful as my anchestry built it a long time ago and it's been in the family, so I don't want to own something so precious that could be taken from me or jeopardized because of dumb US tax laws that I might have ignored in the past... What are worst case scenarios?!

4. I do own cryptocurrency, none on a US exchange. In the future I plan on paying some of that out to myself in Germany.
Question: If I sell crypto I held for over 1 year, those gains fall under long term capital gains and those are tax free up to $80k per year for a married couple as far as I know. So as an expat let's assume I make 100k USD as income (work and short term capital gains) and 80k on long term capital gains, would I face taxes in the US or not? The foreign earned income exclusion should cover my 100k income and the 80k longterm gains should be covered too or does the 80k longterm gains fall also within the 104k income exclusion?!
I am asking this example so that in the future, even if I don't file and at some point I do have to file, that I don't create tax debt and also fall within exclusion amounts. In Germany longterm gains are not taxed, in the US unfortunately they are.


Let me be clear, I am not looking to evade anything nor to break the law in any way but I just feel a huge amount of stress thinking of doing this whole tax crap and account disclosures simply because of my US passport and also feel like this is a massive intrusion in my privacy.
My biggest issue with filing is that once I do, I am in the FBAR machinery, the 1040 tax machinery, can't get away anymore - the second biggest issue is that I read that 1 in 20 expat returns are audited. Now I've never been audited, always did my taxes, always paid all up and I simply don't want to deal with the stress of random BS audits, especially since of what I read this happens at 3AM sometimes because of the time differences. It's just a huge burden.

On the one side I'd feel better to be compliant, especially since I don't owe anything but I don't want to deal with the burden of stressful audits or constantly be on the radar of the I.R-S for their tax returns or FBARs or whatever. Also I read from one guy if you are in a non-english speaking country an audit is even more stressful as you have to translate docs etc and for what... just so you can prove that you make a few bucks in a different country where you're taxed anways...

On the other side I figure I don't do anything for a few years (no tax returns, no FBARs) and eventually streamline anyways but once I do I realize am in the system, so dragging it out might be okay as long as I am smart about it and don't create any future debts by not filing IF I know I could owe something.

Last scenario, if I don't do anything and I get a letter one day about FBAR or taxes, am I ****ed?! I read that once they contact you you can't claim an abatement for fbar penalty anymore nor any other waivers on tax returns etc... is that true?!

And overall, say a US citizen owes 5k or 500k to the US on tax debts or penalties - could they ever go after you in a foreign country? empty your accounts, put liens on cars or houses? basically can they really **** you or can they only truly **** you within the US? I am an average Joe, maybe one day I have 500k to my name, maybe not, that's really it, I am not big money but still I have fears about all this and I would seriously appreciate your honest feedbacks, would love to read your experiences, listen to your solid advice and hopefully your insights help me feel better about this whole US double taxation BS for US expats.

Maybe you guys could instill peace for me by your own experiences that I am fine to ignore US expat taxation laws and don't really get into hot water in the future until I am ready to streamline everything... or not. Thank you!


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## Nononymous (Jul 12, 2011)

kellybrassano said:


> Question: Do I need to file? Should I file? What can happen worst case scenario if I don't file?


The worst that can happen is that you won't get $3200 in stimulus benefits from your 2020 return. Otherwise you're pretty safe to just continue ignoring this. If you're a dual citizen - even better, born outside the US - with no US assets then the IRS really can't touch you in another country.


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## Nononymous (Jul 12, 2011)

A few more answers. Overall, just relax: the IRS doesn't have the resources to go hunting ordinary lower-income foreign residents, and has near-zero powers to inflict punishment outside the US. If you don't have US assets, you have no reason to worry.

1. Regarding bank accounts. If you opened your account with German ID (with non-US birthplace) and did not confess to having US citizenship, you won't be subject to FATCA reporting, period. However, if you have a joint account with your wife and she only has a US passport (or US birthplace) then that account would be subject to FATCA. In this situation it's fairly typical to keep the joint account to a minimum for household expenses and ensure that the US spouse's name is not on any significant assets. Just to clear up any confusion, FBAR is the form you are required to submit every year (if your total non-US accounts exceed $10k) while FATCA is the automatic reporting done by the bank for accounts identified as belonging to US persons. (There is also a FATCA form you submit, but at much higher balance thresholds). As for FBAR fines, extremely rare, people are generally not punished if they catch up voluntarily. The IRS would only be able to detect an account through FATCA (so be careful of joint accounts with a US-person spouse) but to date there's no evidence that they have the capability to match records. Overall, not a concern.

2. If you meet the very low threshold for self-employed, then yes, you are required to file. "Should I file?" is a different question entirely. The risks of non-compliance are essentially zero if you have no meaningful ties with the US. But if you have US assets or family connections or plans to return, you might want to be more careful. Also you may still be able to claim the stimulus benefit this year, which would be $6400 for the two of you.

3. There's no US tax on your owning a house, but if you later sold it at a large gain, the US would want you to pay capital gains on that amount (beyond a $250k per person allowance). If Germany taxed that gain then you could offset the US tax burden, but in many countries there is no capital gains owing on the sale of a primary residence, which means no offset. Don't worry about penalties because they are completely unenforceable.

4. No idea, but the general principle here is that if you do things as a German on a non-US exchange, the IRS isn't going to know about it and you don't need to worry about taxes unless you decide to be compliant.

Other:

"I am not looking to evade anything nor to break the law in any way" - There's nothing wrong with refusing to file, which *is* breaking US law, if you have no further ties to the US and no plans to ever return.

"I read that 1 in 20 expat returns are audited" - This is utter nonsense. I assume you read that on some expat tax firm site, where terrifying potential customers is part of the business model.

"could they ever go after you in a foreign country? empty your accounts, put liens on cars or houses?" - No, unless you are some sort of multi-multi-million dollar international tax criminal. The IRS is not going to attempt to extradite you or pursue a long complicated case in the German courts for a few hundred thousand.

Again, just relax. Ninety percent of US citizens abroad file nothing. The IRS makes no active attempt to look for them - it doesn't have the resources and knows that there's very little ROI since most owe nothing anyway. If you are going to maintain US ties - if your wife has only US citizenship that might be an issue - and potentially may return then there's a good argument to become compliant through streamlined, and be careful about future investments that may fall foul of US reporting requirements. If you have no further dealings with the US, keep on living your life as a German in Germany and forget about all this.


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## Bevdeforges (Nov 16, 2007)

To add just a bit to what Nononymous has said here - have you checked on the status of your German citizenship? Germany (and Austria) have traditionally been countries that will pull your nationality if you take on a second nationality as an adult. (And if they find out about it, of course.) As far as I know, the only people who can have a dual nationality if one of those is German are those who were entitled to both German and the second nationality at birth. 

Unfortunately, the Americans make it difficult (and expensive) to renounce the US nationality, so I'm not sure here what your options are. 

But as Nononymous says, the key thing is to evaluate what your (financial) ties are to the US and what your future plans may be. The IRS is super strapped for budget and personnel, so the chances of them "reaching out" to find you are somewhere between slim and none. There has been talk about increasing their budget to fix this situation - but that plan is NOT popular at the moment and in any event is directed at improving the auditing of the upper income folks (think the 1%) who used to be audited routinely, but now are down to only about 40% these days.


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## kellybrassano (Jul 26, 2021)

Thank you so much for your insight Nononymous. We did receive the stimulus last year to an open bank account we have in the US, so I don't think we can claim anything else. Basically of what you're saying is that I am okay flying under the radar. You mentioned "if you have intention to move back to the US or ties, etc", I don't know what the future holds and where we may end up but even though I ignore the whole taxation ordeal and that fbar I should be okay if I go through the streamline procedure prior to moving back to the states if this is what we do. Or do you foresee issues with that?!
And in regards to 1 in 20 expat returns are audited, I've read it in various locations and then I found this article which made me cringe:

__
https://www.reddit.com/r/offmychest/comments/3y3dl9
Not sure how much truth there is to this but it just makes me wonder why america does this to its own people


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## kellybrassano (Jul 26, 2021)

Thank you Bevdeforges, yes both my citizenships are intact, thank you for pointing that out though. I have no intention to renounce my US nationality unless I am truly forced to as again I don't know whether we find ourselves stateside again but in that case I hope and rely on the streamline procedure to reset any issues. It's this uncertainty whether or not we may go back at some point that has me confused too in regards to filing or not.


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## Nononymous (Jul 12, 2011)

kellybrassano said:


> Thank you so much for your insight Nononymous. We did receive the stimulus last year to an open bank account we have in the US, so I don't think we can claim anything else. Basically of what you're saying is that I am okay flying under the radar. You mentioned "if you have intention to move back to the US or ties, etc", I don't know what the future holds and where we may end up but even though I ignore the whole taxation ordeal and that fbar I should be okay if I go through the streamline procedure prior to moving back to the states if this is what we do. Or do you foresee issues with that?!
> And in regards to 1 in 20 expat returns are audited, I've read it in various locations and then I found this article which made me cringe:
> 
> __
> ...


The audit rate for expats is *not* 5 percent. The reddit post though is pretty typical of your more anxious law-abiding US expat. You have another passport so you can basically ignore it.

You could ignore this for a long time then if you decide to move, use the streamlined program. However, there's no guarantee that streamlined will be around forever. (Expat tax firms will say "act now on this limited-time offer from the IRS" but over the past ten years the pseudo-amnesty deals seem to be getting better, not going away.) What's more likely to cause problems is if you make a bunch of investments that would be painful or expensive to report (i.e. PFIC) before you decided to become compliant. So even if you aren't going to be filing, if you think there's any chance of it happening in future, plan accordingly.

PS on edit: There's a difference between the IRS asking for a receipt or a piece of paper to prove a claim, and a full-on go-through-all-your-files audit. Sometimes "audit rate" statistics the former, which is generally not onerous.


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## Nononymous (Jul 12, 2011)

Bevdeforges said:


> To add just a bit to what Nononymous has said here - have you checked on the status of your German citizenship? Germany (and Austria) have traditionally been countries that will pull your nationality if you take on a second nationality as an adult.


It's generally not difficult for a German abroad to keep their citizenship when they naturalize elsewhere. They request - one of my favourite words - a Beibehaltungsgenehmigung. When it's the other way around, a foreigner becoming German, it's much more difficult to keep the original citizenship. (Though amusingly enough, if you have a sufficiently low household income you can keep your US citizenship due to the very high renunciation fee being deemed a financial hardship.)


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## kellybrassano (Jul 26, 2021)

As of right now I'd only have 2020 to declare and you cannot streamline unless you're at least 3 or 4 years behind. In my case if I decide in a year that it's too much hassle to worry about flying under the radar what do I do? Can I just do the 2020 and 2021 returns and voluntarily add the fbars to it at that point and bring them late or would that raise flags and or penalties. Basically is only streamline going to guarantee a penalty free disclosure vs filing a couple years late? Aside from the fear of constant audit hassle which you've eased on me and the disclosure of privacy I am leaning towards filing on not having to worry, then again you write that 90% of foreigners don't bother, I really just weigh the pro's and con's and if it's worth it to fly under and just disclose.


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## Nononymous (Jul 12, 2011)

I think my earlier post referred to doing streamlined at some point in the future, when you already hadn't filed for more than three years. I believe that there's a procedure for filing delinquent FBARs that waives penalties, similar to streamlined. Otherwise there's no penalty for filing your tax returns late if you don't owe any money. So really there's no risk to getting caught up now. However, if you think you'll get bored of it in a couple of years then it's probably better not to start in the first place - why let them know that you've left the country? Not that there's much they can do to you outside the US. And at some point you'll need to look at the potential opportunity cost of avoiding investments with unfavourable US tax treatment.


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## Moulard (Feb 3, 2017)

In 2018 3.4% of Individual International returns were examined (IRS speak for an audit).. which on face value makes it appear as if international returns are examined more frequently than any other individual return group.

BUT....

International returns in that particular tax table includes Forms 1040–PR (self-employment income tax return for Puerto Rico residents) and 1040–SS (self-employment income tax return for U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands residents). Territorial tax residents are subject to US Social Security taxes, and income tax on non-territorial taxed income... Not what most people would think of as a international taxpayers...

5781 of those examinations were field examinations. As stated elsewhere the IRS has no international presence perforce the examination of an expat return would have to be by correspondence.

That leaves 157 correspondence audits..

So the true number of international examinations is likely to sit south of 157.

OK.. an International taxpayer with representation in the US could be subject to a field examination... so lets be generous and say all correspondence examinations were expats and there were a handful of field examinations are round the figure up to 200...

Reported international returns (including U.S. Territories other than Puerto Rico, U.S. Armed Service members overseas, and international).. 1,730,023

I will leave it as homework to figure out the true percentage of expat tax returns audited....

First you will need to go to the tax authorities of the U.S. Virgin Islands, Guam, American Samoa, and Northern Mariana Islands to figure out how many self employed returns in each Territory.
Second you will need to get some indication of US service members positioned overseas and take a guess at home many of their returns were jointly made with the other party.. and thus can be excluded... so you will probably need to find the number of unmarried servicemen and women to figure out the portion filing separately...
Subtract those from the 1,730,023 and divide by 200 (or less.. likely significantly less).


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## Nononymous (Jul 12, 2011)

Thank you for carefully explaining what I blithely assert without providing evidence.


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## Moulard (Feb 3, 2017)

Suspect one won't be able to do the same moving forward with more recent data.

In essence the IRS have thrown the towel in the ring, admitted they cannot complete routine audits within a year.

From a statistical yearbook perspective, the audit data is meaningless if you cannot compare audits to the returns that "produced" them and I believe they intended to remove examination statistics.

I haven't looked at the new SOI tables for 2019 in detail yet.. but that said, digging through tax data is about as exciting as watching the Olympics.


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## Nononymous (Jul 12, 2011)

Are we not overdue for another one of those quadrennial reports that show how few returns are filed by non-residents? From whence one gets the ballpark 10 percent compliance figure.


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## *Sunshine* (Mar 13, 2016)

Although you've received many replies from foreigners who are not even living in Germany and seem to be completely ignorant of how things work here, I'd like offer an alternative answer from someone who actually lives in Germany. 

BaFin has been extremely lax in performing its regulatory duty, however, the Wirecard scandal has highlighted the flaws in the system. Expect increased regulation of the financial sector and don't be surprised if your bank ends up closing your accounts and/or reporting them to the IRS.



kellybrassano said:


> Let me be clear, I am not looking to evade anything nor to break the law in any way but I just feel a huge amount of stress thinking of doing this whole tax crap and account disclosures simply because of my US passport and also feel like this is a massive intrusion in my privacy.


You chose to become American. You can either follow the onerous reporting requirements that the US imposes on its citizens or you can give up the citizenship. Alternatively you can worry about getting caught, until you actually get caught.


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## Nononymous (Jul 12, 2011)

If the OP was born in Germany and has German ID, then US citizenship they acquired later in life is going to be completely undetectable by financial institutions unless they do our say something foolish in front of a bank employee. While I don't currently live in Germany, I do have a German bank account from which my US citizenship has been successfully concealed. It's not that difficult to do.

Is the German government going to draw up a list of everyone who applied for a Beibehaltungsgenehmigung from a US address and circulate those names to the country's financial institutions? I think not.

Finally, detection of US citizenship by a bank may indeed lead to restrictions on services available and/or FATCA reporting. But it pretty much ends there. For anyone without US assets there is no risk to continued non-compliance. The IRS does not have the ability to enforce penalties in Germany - even against an American without German citizenship.


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