# Fatca & Triple Citizenship



## BroBro

Hello Everyone, I'm a first time poster long time lurker.

I have citizenship to 3 countries one being USA the other two lets call them Country A and a country B. I unfortunately was born in the USA and have been reading up on FATCA and am a bit worried about it. 

My father passed several years ago and I was forced to opened up an account in country A for his inheritance. The account has 6 figures in it and makes a few hundred dollars a year in interest. 

I have 3 passports one of which does not indicate which country I was born in, only the city. This city exists in my other country of citizenship.

I got a letter from my bank which is stating that I have to file the FATCA or explain why I gave them a USA address when I registered the account or they maybe forced to close it. (doesn't say if they'll still report if I close the account). And potentially W-8BEN (which I do not wish to fill out)

Here are the options that I've come up with, some which game the system...

1 I look into filling my FATCA now and hope that the fees to pay are minimal.
2 Show the bank my passport from Country A & with the city of birth and giving them an ID from Country B (which doesn't show a birth place). 
3 Pull the money from Country A's bank account hoping they don't declare anything since they don't have concrete proof I'm a US Citizen and find another bank account which I can register with Country A and/or B's information to put the money in. 

Disadvantages:
Option 1: I would make my taxes much more complex for the rest of my life and could owe alot of money to them
Option 2: They may make me fill out a w-8ben form in which I'd essentially have to lie on.
Option 3: I'd be hoping that my old bank doesn't rat me out and I'd have to find another bank to accept the money.

Reason for wanting not to pay FATCA...
The inheritance money I received was for property which my father purchased long before he ever came to the USA. While in the USA he never benefited from said property (never collecting anything from it or using money from the USA to pay for it) Thus I believe the US government isn't entitled to money/property which it had nothing to do with.

What do you guys think?


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## BroBro

Quick question,

If I were to file a FATCA would they charge me based on my entire inheritance (that I got 7-8 years ago) or just on the interest I make from it?


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## Nononymous

I think you're completely confused on some very fundamental issues: you are not "charged" money under FATCA, nor do you file FATCA yourself.

You need to do more research, but in the meantime, here is the fast summary. Note that from a US perspective it doesn't matter what your other citizenships are, they only care about the fact that you're a US citizen.

FATCA - A reporting mechanism whereby banks outside the US report balance and account information to the US government for accounts held by "US persons" (a group that includes US citizens). You do nothing, this is taken care of by the bank. If they suspect you of being a US person they may require you to fill out a W-8 or W-9 or otherwise make a declaration. Presumably if the US discovers sufficiently large accounts that were not reported voluntarily (see below) they may eventually investigate to see whether any money is owing to them. 

FinCEN (formerly FBAR) - A mechanism whereby US citizens report balance and account information for all financial accounts held outside the US if their total balance exceeds $10k. You report this online, yourself. While technically you can be fined for not reporting accounts, awareness of and compliance with this law is quite low, and many people are apparently "coming clean" without penalty.

Taxes - As a US citizen, you are required to file a tax return every year on your worldwide income (unless you have a very small income and don't meet the minimum threshold) though you can use either the foreign earned income exclusion or foreign tax credit to avoid double taxation. Most US citizens living abroad (94 percent) do not owe taxes to the US. The penalty for not filing is a percentage of the tax owed, which also means that 94 percent of US taxpayers overseas would not be penalized if they didn't file. Awareness of and compliance with this requirement is also quite low among some groups of US expats or dual citizens.

It's difficult to give more specific advice because your original messages was extremely confusing. Do you live in Country A or Country B? Your profile says Australia, but you mention giving a US address to the bank. Are you already US tax compliant? It's impossible to tell what's going on, and what if any the implications might be in terms of US inheritance tax.

If you want to keep this money off the US radar, the simplest approach would be to open an bank account with no "US indicia" such as place of birth or address, then move the money there. This would essentially make it FATCA-proof. I'd be nervous about signing a W-8 and making a false declaration that you're not a US citizen, but there's nothing wrong with a few verbal lies or hiding the truth by opening an account using the passport that does not show your country of birth.


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## Bevdeforges

As Nononymous says, you're confounding a number of different things/laws/phenomena. (Not unreasonably so, as there has been lots of confusing information flying around lately on the Internet about this stuff.)

To add just a bit to what Nononymous has already said, it can all depend on where it is you actually live. If you live in the US, just fill out the forms and get on with life.

There is a case to be made for simply filling out the W9, which admits that you're a US "person" (don't have to be a citizen - simply being a resident counts, too). That gives them your US SS number, and pretty much makes it necessary that you declare any interest those overseas accounts are being paid on your US tax returns. (You said it's only a few hundred a year, so really shouldn't make much difference on your returns.)

There's nothing due per se on the inheritance you got from your father. You should include this account on your FBAR each year, but the FBAR doesn't calculate nor result in any taxation. It's just declaring that you have an account outside the US. There are lots of folks with bank balances well into six figures who don't wind up filing US taxes at all (due to insufficient income overall), but at the most it's only the interest income you'd owe anything on.

And, as long as that inheritance is strictly cash that is sitting in the bank, there's nothing FATCA related that you have to file. If it's stocks and bonds that could change, but as far as the IRS is concerned, you have an overseas bank account with $X thousand as the high balance each year. Nothing taxable about that other than the interest paid you. (And if the bank is withholding local tax on it, you can either claim that back as a tax credit, should your reporting it on your US forms generate any taxes, or just report it net of whatever tax you pay locally on the interest.)
Cheers,
Bev


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## BroBro

I'm living in a US territory currently, I've never reported my foreign bank account because I believed that the foreign bank account option was for US Citizens who were dumping money into off shore bank accounts, not people with a nationality from another country with accounts that have no connection with the USA and who simply want to keep their lives in other countries separate.

I'm going to talk to my tax guy about this and see what they think. I'm also probably going to open up an account without hinting of any US connection and see how far that gets me. Maybe keep a few hundred dollars in it to test the waters.

I really would like to keep the money off the US Radar because who knows what the future holds, who knows what kind of crazy laws they enact later down the line. I know there's always a risk that the account could be found out but in most countries the USA doesn't have the power to take the money from that account only bill you for it.


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## Bevdeforges

Be careful if you're living in a US territory and have the usual sorts of accounts either there or in "mainland" US. True, the IRS can't seize money in a foreign bank account (at the moment), but they can and will seize your US accounts and/or assets if they have reason to believe you owe them a bundle.
Cheers,
Bev


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## Nononymous

BroBro said:


> I really would like to keep the money off the US Radar because who knows what the future holds, who knows what kind of crazy laws they enact later down the line. I know there's always a risk that the account could be found out but in most countries the USA doesn't have the power to take the money from that account only bill you for it.


If I were a US citizen living in a US territory, my inclination might be to follow the rules. While the IRS may not have the power to touch your foreign account, it does have the power to go after your US income and assets if it thinks that you owe it money. We're talking about a few hundred in interest here, not vast fortunes. I would look into the domestic streamlined program, see if you can get caught up on FBAR declarations without penalty.

In contrast, I'm a Canadian-US dual living in Canada with no US income or assets, so I'm perfectly comfortable privately flipping Uncle Sam the bird by remaining completely non-compliant. But I'm not sure I'd do that in your shoes.


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## Nononymous

BroBro said:


> I'm living in a US territory currently, I've never reported my foreign bank account because I believed that the foreign bank account option was for US Citizens who were dumping money into off shore bank accounts, not people with a nationality from another country with accounts that have no connection with the USA and who simply want to keep their lives in other countries separate.


Sadly, you were wrong. The US government doesn't see it this way. The US government does not care about any other citizenships you might happen to hold.


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## jbr439

Nononymous said:


> ...
> Taxes - As a US citizen, you are required to file a tax return every year on your worldwide income (unless you have a very small income and don't meet the minimum threshold) though you can use either the foreign earned income exclusion or foreign tax credit to avoid double taxation.
> ...


Not so much for the NIIT (Net Investment Income Tax). You can't use FTCs to mitigate it. Most folks are unlikely to get hit by it, but it's there, and is indicative of a mindset that's really not too concerned about double taxation issues. Thin edge of the wedge?

Also, I imagine if you have to cough up yearly tax on unrealized gains for your 'foreign' mutual funds and ETFs (PFICs), then you may get hit by double taxation as your resident country will tax you when the gain is actually realized, meaning no FTC available to use (except for 1 year carryback, I think). Presumably this one would be a temporary problem as most rational people would reorganize their financial situation after the first unfortunate encounter with it.

So there's at least one instance, maybe 2, where you *can* be hit by double taxation.


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## BBCWatcher

BroBro said:


> I'm living in a US territory currently, I've never reported my foreign bank account because I believed that the foreign bank account option was for US Citizens who were dumping money into off shore bank accounts, not people with a nationality from another country with accounts that have no connection with the USA and who simply want to keep their lives in other countries separate.


It's hard for me to understand how a _reasonable_ person could believe what you just wrote.

You are a citizen of Country A. If you were living in Country A, do you think your U.S. citizenship would somehow shield you from the legal requirements Country A imposes on you by virtue of your citizenship, your residence, or both? A reasonable person would not believe that.

You're certainly proposing to _act_ like (yet another) U.S. citizen trying to hide assets in an offshore bank account. Is that such a smart idea? I'd vote no. You're probably going to get nailed on this sooner or later since the bank is already "curious" and very likely to send in their report, so my recommendation would be to get compliant while it's likely to be free to get compliant. In this case that means W-9s to your financial institutions and 6 years of FinCEN Form 114s, immediately. Even if you owe interest and penalties on the interest income you describe it'll be trivial (and that's assuming Foreign Tax Credits aren't enough), but FATCA-triggered asset confiscation will not be fun.

The game is up, and the clock is ticking, in your case. That would be the most reasonable interpretation of the facts you've presented. You've got a shot at making this a non-event, even a free one, by getting compliant immediately as described, or you can lose a lot of money fairly soon. I think those are your only two choices now. Your call.


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## BroBro

BBCWatcher said:


> It's hard for me to understand how a _reasonable_ person could believe what you just wrote.
> 
> You are a citizen of Country A. If you were living in Country A, do you think your U.S. citizenship would somehow shield you from the legal requirements Country A imposes on you by virtue of your citizenship, your residence, or both? A reasonable person would not believe that.
> 
> You're certainly proposing to _act_ like (yet another) U.S. citizen trying to hide assets in an offshore bank account. Is that such a smart idea? I'd vote no. You're probably going to get nailed on this sooner or later since the bank is already "curious" and very likely to send in their report, so my recommendation would be to get compliant while it's likely to be free to get compliant. In this case that means W-9s to your financial institutions and 6 years of FinCEN Form 114s, immediately. Even if you owe interest and penalties on the interest income you describe it'll be trivial (and that's assuming Foreign Tax Credits aren't enough), but FATCA-triggered asset confiscation will not be fun.
> 
> The game is up, and the clock is ticking, in your case. That would be the most reasonable interpretation of the facts you've presented. You've got a shot at making this a non-event, even a free one, by getting compliant immediately as described, or you can lose a lot of money fairly soon. I think those are your only two choices now. Your call.


That's the exact opposite of what I'm trying to say. Your saying that If I was a US Citizen living in Country A that I'd try to use my US Citizenship to circumvent their tax system this is not what I'm saying at all. I'm saying that If you made money in the US and are diverting it to offshore accounts and claiming it as a deduction that's wrong. But being taxed by the US for making money in another country is 100 percent wrong. It's essentially taxing other countries citizens and pulling money out of said country with no benefit to that country or it's citizen. I believe in taxes I believe that you should pay taxes so that you have protection, infrastructure etc your paying for a benefit! 

For example, you make money in the US all that money is taxed and you use it to make a living there, but you also make some money in Country A as well and pay taxes there as long as you don't transfer your money into the US you shouldn't be taxed on it because your not benefiting from it as a US resident, only when you transfer that money into the US do you benefit from it. 

My account in Country A is from my inheritance, I have been informed that there is no taxes on my inheritance money. I also checked the account today and found out that I'm only making 2 dollars a month on it so taxes are due on $24 dollars a year. Also in country A the FATCA treaty with the US prohibits the US from looking back in time so they are only allowed to see what's in 2015 etc.


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## BBCWatcher

BroBro said:


> That's the exact opposite of what I'm trying to say.


No, it's exactly the same, only with the countries flipped.



> But being taxed by the US for making money in another country is 100 percent wrong.


You don't get to decide what's "100 percent wrong" here.(*) "Right" or "wrong," if you are a resident of practically any country, your worldwide income is taxable. (Whether particular income is actually taxed is a separate question.) As it happens, U.S. citizens are taxed on their worldwide income no matter where they live (and have financial reporting obligations), but that point is moot here. You are a U.S. resident also. You've got an offshore account, the account is reportable, and the income from all your accounts (interest, dividends, capital gains, etc.) is U.S. taxable, with a Foreign Tax Credit allowed. Period, end of story. And your financial institution already suspects you're a U.S. person and will (in all likelihood) report your account either directly to the U.S. Treasury Department or to the U.S. Treasury Department via that country's government _no matter what you do or don't do_.

So what's the plan now? Are you going to file some paperwork now and pay either zero or a tiny bit of tax, or are you going to pay a significant portion of your assets due to noncompliance? That's my assessment of your two choices. I don't think there's a third, at least not in these circumstances. Your call.

Again, I don't see any other way to interpret the facts as you've described them. In this case, in these circumstances, for better or worse, FATCA is working exactly as designed.

(*) With two possible caveats: (a) You can peacefully and democratically participate in U.S. politics. You can contribute to and volunteer for your preferred candidates who favor your preferred policies, for example. (b) You can terminate your U.S. citizenship and thus terminate all the rights, privileges, and obligations associated with that citizenship from that date forward. That includes your right to reside in the United States, of course.


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## Bevdeforges

While I (and most other US citizens resident overseas) share your point of view over what the US "should" and "shouldn't" be able to tax, the fact of the matter is that the laws are written to give them every right to have you declare your worldwide income every year - and to tax that income as established in the law. If it makes you feel any better, we have to declare our worldwide income here in France, too, though the system for adjusting for foreign income already subject to tax elsewhere is a bit more logical IMO).

But really, if you're only talking about $24 a year, just "render unto Caesar" and make your life a whole lot simpler. That amount of interest isn't going to generate any additional tax (or not enough to make a difference) on your US forms. Yes, the W9 is a PITA, but it's a one-time thing for the bank's records. The FBAR is merely the disclosure of the existence of the account - and for the 10 minutes or so a year it takes to fill the form out and file it, it keeps a whole heap of problems off your back.

Depending on what country your stash is in, I'd even suggest just filing for the current year and going forward. The FATCA reporting provisions for the banks only just started in 2014 or so (some later) and unless you appear to be hiding or laundering a significant balance of funds, it's highly unlikely they'll come tearing through the bank's records, looking for prior year sums and movements.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> While I (and most other US citizens resident overseas) share your point of view over what the US "should" and "shouldn't" be able to tax....


The lobby groups don't agree. As far as I know they have no objection to worldwide taxation and financial reporting obligations imposed by the U.S. on U.S. residents, at least not any broad objections.

BroBro is a U.S. resident. One doesn't even get to argue whether citizenship-based obligations are "right" or "wrong." He could be an undocumented, illegal resident of the U.S. without U.S. citizenship and he'd still have the same tax and financial reporting obligations. If he moves to Uganda (just picking a random example) then citizenship would matter.

He's got undeclared money stashed overseas. That's quite simple. Practically every country would slam him, harder. Thank goodness (as you and other have pointed out) that getting fully compliant now means, at most, a few dollars in back taxes, interest, and penalties. Most other countries wouldn't even offer that option.

But the U.S. is not going to be patient for long in this case, in my view. It'll just depend on when the FATCA report lands, and that won't be too long from now.


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## BroBro

I assume that because the money is pre-existing that I don't have to pay taxes on it since its inheritance, I just have to pay taxes on the interest it's generated? I believe that the country my money is in has a tax deal with the US in which it taxes what's left over from the tax in Country A. Country A charges 25% on the interest generated, the US only charges 15% if I'm not mistaken. If everything I just said is correct then in theory I don't owe any taxes.


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## BBCWatcher

BroBro said:


> I assume that because the money is pre-existing that I don't have to pay taxes on it since its inheritance, I just have to pay taxes on the interest it's generated?


That's generally correct. Rare exceptions would include certain inheritances from former U.S. citizens, inheritances as a result of illegal gains (a cocaine dealer's fortune, say), and inheritances that violate asset controls (such as international sanctions).



> Country A charges 25% on the interest generated, the US only charges 15% if I'm not mistaken.


The U.S. generally charges ordinary progressive income tax rates on interest, less a Foreign Tax Credit. U.S. marginal rates currently range from 0% to 43.4%.



> If everything I just said is correct then in theory I don't owe any taxes.


The point every poster has made, clearly. Indeed, due to Foreign Tax Credits you might get some modest U.S. tax _reduction_ depending on your U.S. tax bracket. (What was that you were saying about how horrible the U.S. is?  They're so horrible you could be eligible for a refund. ) But where you could be/likely will be in big financial trouble if you don't act now is if you fail to report the account. To clean up that problem you would file FinCEN Form 114 for 2014 back to 2009 inclusive ASAP. (I disagree with Bev here. There's no upside in not getting FBAR cleaned up fully, and that means 6 years, though you can skip any of the six years if/when you did not meet the filing threshold.) You would also file IRS Form 8968 if your overseas financial accounts are big enough (via amended 1040Xs, together with the undeclared interest income and Foreign Tax Credit) and IRS Form 3520 to report the inheritance.

You have a fairly serious reporting problem, in other words. You're doing a great job right now _pretending_ to look like a crook. I'd stop pretending to be something you're not!


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## BBCWatcher

A couple more points:

1. One reason I disagree with Bev on the FBARs is we really don't know what will be in your particular FATCA file. We only might know the minimum composition but not the maximum. If your file contains even the account opening date, and that date is older than your FBARs but less than 6 years in the past, you're caught. ("You filed in 2014. Why haven't we seen this account that you opened in 2012 in the 2012 and 2013 reports -- reports you never filed?" Good question!) There is no upside to underreporting here. Bad idea, in my view.

2. You also have the option to participate in the IRS's domestic version of the Streamlined Program if you act before you hear from the IRS or Treasury. However, I think ordinary, voluntary late filing will be more attractive and might even mean a tax refund if your U.S. marginal tax rate is below the foreign tax rate on that interest income.


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## BBCWatcher

One more thing. We've been assuming that the inheritance you received either had no U.S. connection (meaning, no U.S. assets and was not the estate of a U.S. person or ex-U.S. person), or that U.S. estate taxes were properly settled to the extent owed, or that the estate had a total value below the exemption limit (currently $5.43 million, less in previous years). I think that's a safe assumption given the amount of interest you allude to, but I mention it for the record.


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## Bevdeforges

The main reason I disagree with some of BBC's comments is that, at the moment, it is highly unlikely that either Treasury or the IRS is going to go back in time on FBAR/FinCEN compliance in those cases where the balance in the overseas accounts is relative modest - and certainly an account generating only $24 or so a year in interest can be considered "modest." BBC seems to think otherwise, but hey, you plays the game and you takes your chances. (At least that's how I was trained to do taxes.)

On the other issue - you have the right idea, perhaps for the wrong reasons, but it all works out in the end. Again generally speaking, if you received an inheritance (and particularly an inheritance in cash rather than investments), assuming that the estate was properly handled and transferred, the funds you received should not normally be subject to US taxation. It's nice if you have something like a probate certificate or some official document showing the resolution of the estate, but unless we're talking zillions of $$ here, that's not absolutely necessary. If you took possession of a portfolio of your Dad's stocks and bonds, that opens up a whole different can of worms.

The big thing for you to consider is your "exposure" - what BBC refers to as whether or not you "look like" you're a crook or hiding something. If the country you have your stash in has a treaty with the US, then they will report your account to the Feds under the FATCA regulations that apply to the banks. Just make sure you've already reported/disclosed the existence of the account before the Feds get the revelation from your overseas bank. If you somehow haven't "properly" reported it, they may be in touch for further information (but only if they stand a chance of recovering some amount of taxes from you in the process). But if in doubt, disclose and then wait for further instructions.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> The main reason I disagree with some of BBC's comments is that, at the moment, it is highly unlikely that either Treasury or the IRS is going to go back in time on FBAR/FinCEN compliance in those cases where the balance in the overseas accounts is relative modest - and certainly an account generating only $24 or so a year in interest can be considered "modest." BBC seems to think otherwise....


No, I do not. Well, at least if you're willing to strike the word "highly." 

But I do not see the point in underreporting when there are non-zero odds here of getting caught red handed (and penalized). Why act like a crook when you're not a crook? It mystifies me why someone would voluntarily do that unless (at least) there's some upside. Is saving ~60 minutes by filing one year instead of six worth the risk? I'd vote no.

I'd file the 6 years, bury the issue, and sleep well for all of the next 5 years (the time for the statute of limitations to run out on underreporting FBARs). Why the heck not?


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