# FBAR and dual citizenship US



## Casumb (11 mo ago)

Hello there, my first post here after reading so many informative posts…

I was born in foreign country but became a US citizen by naturalization in 2005. I lived and worked in the US for 9 years. Then, I moved back to my country in 2013 and never returned since (sold my house in the US 2 years ago and closed all my bank accounts—basically, I have nothing left in the US. No 401k or anything). Because I wanted to keep my social security benefits, I have continued paying US taxes and yes the taxes of the country I am living in.

Now, the question is: I opened all my non-US bank accounts in 2012 using my national ID card and was not asked about my US citizenship. I didn’t know about the FBAR reporting either. But just a couple years back, I learned that I had to do the FBAR reporting. (Well, so far the banks have not asked me to declare my US citizenship, because I used my ID card to open those accounts, I think.) I have been reluctant to report because some of my accounts exceed $10,000 (nothing near 7 or 8 figures, though).

I guess if I choose to report, then the banks may find out that I am a US citizen and freeze my accounts or close my accounts because I did not let them know that I was a US person!? I would put them in trouble.

If I choose to stay silent, will the IRS find that out? Would it trigger them? How can a person who has been paying taxes (1000-2000 dollars/year) not have a bank account?

I am also thinking about giving up my US citizenship because of the taxes (being a self-employed paying a high tax rate), reporting, and all the hiccups I have faced while trying to trade or make some investments (in addition to the fact that I don’t see myself living the US). I just want to do things “right,“ so my application won’t be turned down, or if I don’t renouce, I can just have a peace of mind. Otherwise, I would lose the 2350 fee for nothing.

But what is the “right” thing to do in this case?


Thank you.


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## Harry Moles (11 mo ago)

Doing things "right" is generally an expensive mistake.

To answer a few of your questions, and make some general observations:

1. Reporting your accounts on FBAR will not lead to the same banks discovering that should be subject to FATCA reporting. That will only happen if you tell the banks that you are a US citizen. Without knowing what the banks are like where you live, I can't say whether that would be a problem or not. In Canada banks don't really care, but in some European countries banks will restrict the services offered to US-person customers.

2. If you are silent and your banks don't subject you to FATCA reporting, then the IRS will not find out about the accounts. FBAR reports (filed by you, not by the bank) actually go to a different arm of the US government, not to to the IRS. Where you may have a problem coming into full compliance is if you are earning interest or dividends from these accounts. If so, have you declared the income or completed Schedule B on your 1040? 

3. Don't overestimate the ability of the IRS to figure things out or come after you. They generally don't care about non-residents. They lack information about you and the resources to follow up, and they can't easily collect.

4. You could easily have stopped filing upon departure without putting your future Social Security benefits at risk. In most cases when people file US tax returns they owe nothing anyway due to foreign tax credits or the foreign earned income exclusion, but it sounds like you've actually managed to pay a US tax bill every year. This is unfortunate (unless you're doing this on purpose to somehow continue building Social Security credits, in which case it might be advantageous if the numbers work out).

5. You can renounce at any time. This is your right, the application cannot be turned down unless the consulate thinks you are not mentally competent. You are not required to be in tax compliance - citizenship matters are between you and the State Department, they don't care about your tax status.


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## Casumb (11 mo ago)

Harry Moles said:


> Doing things "right" is generally an expensive mistake.


I agree. That’s why I have been very reluctant…



> 1. Reporting your accounts on FBAR will not lead to the same banks discovering that should be subject to FATCA reporting. That will only happen if you tell the banks that you are a US citizen. Without knowing what the banks are like where you live, I can't say whether that would be a problem or not. In Canada banks don't really care, but in some European countries banks will restrict the services offered to US-person customers.


Silly as it may sound, but I have been worried about this since I found out about FBAR reporting. I am afraid to open new accounts, apply for a credit card, trade, apply for insurance packages here etc. because everywhere they ask you if you are a US person. I am even afraid to cash my stimulus paychecks, thinking I would expose my citizenship to the bank and the IRS (as they would be able to identify my bank account). I know it sounds crazy and stupid. The whole thing just makes me feel like I have been deprived of my freedom—living in my ‘home’ country and not being to do things as others do because of the blue passport.



> 2. If you are silent and your banks don't subject you to FATCA reporting, then the IRS will not find out about the accounts. FBAR reports (filed by you, not by the bank) actually go to a different arm of the US government, not to to the IRS. Where you may have a problem coming into full compliance is if you are earning interest or dividends from these accounts. If so, have you declared the income or completed Schedule B on your 1040?


Again the stupid mistake I have made… I somehow reported my interests and gave the names of the two banks where I had accounts. But last year after I found out about FBAR reporting, I was like, no, I didn’t get any W-9 form from the banks, so perhaps it’s safer not to report to avoid discrepancies. But again, it might trigger the IRS, I am afraid.



> 3. Don't overestimate the ability of the IRS to figure things out or come after you. They generally don't care about non-residents. They lack information about you and the resources to follow up, and they can't easily collect.


If I had not reported it since I moved here, I would not have worried. I didn’t know at first that I had to file taxes and do the FBAR reporting. Just thought that it’d be a good idea to keep my SS benefits. But now after the discovery about this whole complicated thing, I have been worried about it every tax year. Like living in fear, in addition to having to pay taxes in both places for years. I am perfectly okay having to pay the country of my resident, though; it just makes sense: you live here, so you have the duty and responsibility.



> 4. You could easily have stopped filing upon departure without putting your future Social Security benefits at risk. In most cases when people file US tax returns they owe nothing anyway due to foreign tax credits or the foreign earned income exclusion, but it sounds like you've actually managed to pay a US tax bill every year. This is unfortunate (unless you're doing this on purpose to somehow continue building Social Security credits, in which case it might be advantageous if the numbers work out).


I‘ve got enough credits and am entitled to the benefits now. But again, just found out that 25.5% of my benefits will be deducted because, once I renounce, I will become a non-resident and my benefits are therefore subject to 25.5% tax withholding!

I understand, and the tax program I have used seems to suggest, that the the foreign earned exc. doesn’t apply to self-employment, which is my case.



> 5. You can renounce at any time. This is your right, the application cannot be turned down unless the consulate thinks you are not mentally competent. You are not required to be in tax compliance - citizenship matters are between you and the State Department, they don't care about your tax status.


Thank you. Now the renunciation fee and the 25.5% thing got me thinking. But going forward, I imagine if I have to live with this fear every year and not being to do some financial-related stuff, it might be a good thing to renounce. Sigh…


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## Harry Moles (11 mo ago)

You can do anything you want in your home country as long as you don't tell any financial institutions that you acquired US citizenship. Use your national ID showing non-US birthplace. What could be easier? 

Have you not cashed your stimulus checks? You might want to do that soon, if it's not already too late.

Paying self-employment tax to a country you don't plan on living in is just throwing money away. Stop filing, or call it earned income and claim the FEIE to zero out your tax bill. The IRS won't know what's going on, and your Social Security benefits won't be at risk.

If you don't want US tax withheld from your future Social Security payments, don't renounce US citizenship. But you should also consult the tax treaty between the US and your country of residence so that you fully understand how those benefits would be taxed - if not by one country, then by the other, is generally the rule.


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## Casumb (11 mo ago)

Harry Moles said:


> You can do anything you want in your home country as long as you don't tell any financial institutions that you acquired US citizenship. Use your national ID showing non-US birthplace. What could be easier?


That's what I have been thinking... Every time when I want to apply for something, open an investment account, or buy some insurance package, I just cringe when asked if I am a US person. So, I always end up with not doing them--and I feel like "why am I being held back?" I wish I had more freedom and investment opportunities.

However, I also think that in the future when it's time to collect my SS benefits, I will have to open a new bank account (SS account just to receive direct deposits), and then I will have to declare my citizenship anyway. Will not that be an issue--"so you've been hiding all these years?"? I think there's a possibility that they may come after me, both the banks and the IRS. Like I said, it's just some dark clouds hanging over me every tax season, and I guess perhaps like some US expats overseas I have been stressed out. So, renunciation *may* be the best option to go (despite the horrible fee), at least that's what I feel for now.



> Have you not cashed your stimulus checks? You might want to do that soon, if it's not already too late.


Not yet.



> Paying self-employment tax to a country you don't plan on living in is just throwing money away. Stop filing, or call it earned income and claim the FEIE to zero out your tax bill. The IRS won't know what's going on, and your Social Security benefits won't be at risk.


That's what I thought when I first moved back here yearsssssss ago. Should I continue filing or not? (To be honest, I didn't know back then that all US citizens who moved overseas had to file. I thought if you wanted to continue contributing to your SS benefits, do it; if not, forget it.) I also wondered, how were they going to know how much people who live abroad make, unless the payments involved US banks? We could just put in any number if we were to file. But then I learned about FBAR reporting.



> If you don't want US tax withheld from your future Social Security payments, don't renounce US citizenship. But you should also consult the tax treaty between the US and your country of residence so that you fully understand how those benefits would be taxed - if not by one country, then by the other, is generally the rule.


Thank you, Harry. I will definitely check that out. I think it wouldn't be as horrible as 25.5%


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## Harry Moles (11 mo ago)

You need to move past the paranoia. I can't really help you with that.

But you might want to do something with those stimulus checks very soon, otherwise you will lose the money (if you haven't already).


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## Bevdeforges (Nov 16, 2007)

Casumb said:


> However, I also think that in the future when it's time to collect my SS benefits, I will have to open a new bank account (SS account just to receive direct deposits), and then I will have to declare my citizenship anyway. Will not that be an issue--"so you've been hiding all these years?"?


Let me assure you - this is absolutely NOT the case. In many countries, it is possible to have your SS payments direct deposited into your local bank account. It's the consulate that handles that. And US SS is payable to many non-US citizens. The one caveat is that if you are a NRA (non-resident alien) then they withhold 30% (the NR tax rate) on 85% of your benefit.

But quick, go cash in the stimulus checks. Those were sent to LOTS of non-citizens over here - often based on SS records rather than tax records. But there has been no problem for those who cashed them in right away.


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## Casumb (11 mo ago)

Harry Moles said:


> You need to move past the paranoia. I can't really help you with that.
> 
> But you might want to do something with those stimulus checks very soon, otherwise you will lose the money (if you haven't already).


Thank you so much, Harry.


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## Casumb (11 mo ago)

Bevdeforges said:


> Let me assure you - this is absolutely NOT the case. In many countries, it is possible to have your SS payments direct deposited into your local bank account. It's the consulate that handles that. And US SS is payable to many non-US citizens. The one caveat is that if you are a NRA (non-resident alien) then they withhold 30% (the NR tax rate) on 85% of your benefit.
> 
> But quick, go cash in the stimulus checks. Those were sent to LOTS of non-citizens over here - often based on SS records rather than tax records. But there has been no problem for those who cashed them in right away.


Thank you so much, Beveforges.

In fact, I did claim the stimulus check rebate for my 2020 return. I guess I was audited because I got a mail from the IRS late last year saying that I miscalculated my 2020 return based on the rebate check, and they would send me me a refund check, which I haven't received and will have to contact them.

Now, I am having the 1,400 with me. I might just claim the rebate when I do my 2021 return.

By the way, what about my situation on FBAR? What are your thoughts (if you don't mind and are happy to share)? I would like to hear from as many people as possible.


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## Bevdeforges (Nov 16, 2007)

If they replied to you about your 2020 return, chances are it was a simple mathematical error that was caught when they put your return into the computer. If the $1400 check won't make a difference in your taxes due, just forget about it. They only really worry about "mistakes" on returns where it changes the amount due (either to the IRS or to you).


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## Casumb (11 mo ago)

Bevdeforges said:


> If they replied to you about your 2020 return, chances are it was a simple mathematical error that was caught when they put your return into the computer. If the $1400 check won't make a difference in your taxes due, just forget about it. They only really worry about "mistakes" on returns where it changes the amount due (either to the IRS or to you).


Thank you, Bev


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