# Please help!!!!



## vogener83

Hello,

I’m in a tough situation and will appreciate any help on what decision should I take. I'm German and I've been in the US since 8 years ago.

On year ago, I decided to become a US citizen. At that time, I had a good job and my idea was to continue here the rest of my life. 

While preparing the citizenship exam, I learned something that I heard before, but never paid attention as a resident alien: every American had to report all his worldwide income. So I decided to take a look into it to become in compliance with the laws.

Then I discovered that to do so I had to pay the IRS almost $30,000, an amount that equals my actual savings. And the reason of that amount wasn't because I didn't pay taxes (I always paid them in Germany and here in the US), it was just because I didn't inform the IRS about what I had in Germany: a small bank account a bit over $10,000, where I deposited the income obtained during years working for two German companies as a contractor, and a retirement account. 

In addition to that amount, I have to add he high costs of an accountant specialized in dual citizens taxation.

Unfortunately, some months ago I lost my job and still continue in search of a new one here in the US. So, these are my options:

1- Paying the penalty and continuing here in the US trying to find a job as soon as possible, with almost nothing in my account, relying on the small jobs that I get in Germany...
2- Continuing here in the US without saying anything to the IRS, and starting to do things correctly: keeping my Germany account under 10,000 or even closing it, reporting my Germany income in the US and my retirement account
3- Going back to my country and renouncing to my US citizenship, taking the risk of a possible audit (my accountant told me that is very common to be audited after giving up the passport, especially in my case, after one year of obtaining it) 
4- Paying the penalty and starting a new life in Germany, without the fear of an IRS audit

Thanks in advance for any help on choosing what to do.


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## Bevdeforges

There's one option you're overlooking - take a look at the "domestic" Streamlined Compliance program: https://www.irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures

As long as you can state that your failure to include your German assets wasn't willful (i.e. you only just found out about it), you should be able to just file the current year and amend the last three years and then you're more or less "forgiven" (though they don't actually say that).

Having accounts in Germany should not result in dual taxation in any event, as you can take the income tax you paid in Germany as a tax credit against any tax liability for those funds or accounts in the US. (And, depending upon what kind of retirement account you have back in Germany, that may not even be reportable/taxable. If it's the State retirement system, it isn't something you're required to report.)

You also don't need specialized tax accountants. You just do your German taxes as you always have and start reporting your German income on your US forms and take the appropriate tax credit for taxes already paid.

If your accountant is talking about the penalties for not reporting foreign accounts on the FBAR/FinCEN reports each year, not to worry. That's covered with the streamlined program. 
Cheers,
Bev


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## iota2014

Maybe decide first whether you want to stay in the U.S. or return to Germany? The Streamlined criteria are somewhat different, depending whether you're resident in America or abroad, but otherwise it's pretty much the same, so you may as well live where you want to live. 

The same applies to deciding whether you want to renounce your U.S. citizenship if you decide to return to Germany. If you renounce, you'll still have to get right with the IRS up to the day before you cease to be a citizen. But there's no evidence (that I know of) that renunciants are more likely to be audited - if anything, an audit is probably _less_ likely, as long as you do all the required filing and pay all tax due.


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## vogener83

I think that's the same program my accountant is trying to apply... But even within that option, the amount is too high for me. Thanks for your respone.


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## vogener83

Where is better to apply under the Streamlined, being resident in Germany or in the US, where it is going to cost less money? Thanks for your advice.


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## Bevdeforges

It's not really a matter of where the Streamlined program will cost less. The only "cost" to the Streamlined program is that of paying the back taxes for the three back years you have to file.

In terms of intangible "costs" I suppose it might pose more of a risk of audit if you are living in the US (simply because the IRS is closer) - but if you renounce you just elevate your profile with the IRS and make an audit more likely (assuming, of course, that there is something "audit-worthy" on your returns).

Don't go by the threat of an audit. Not all returns with minor glitches or "peculiarities" are audited by any means. If you file a sincere, best effort return (or amendment) there's actually very little chance of being audited. IRS resources are stretched pretty thin these days and they tend to focus on the big time tax evaders. If you wind up owing a few hundred dollars for the back filings and amendments, you should be pretty much done with it. And don't forget that you get tax credits for any taxes you have already paid on the income in Germany.

If your accountant is threatening you with the penalties for not having reported your German bank accounts, change accountants. That's what the Streamlined Compliance is all about - the ability to bring your filings up to date without fear of the flat penalties.
Cheers,
Bev


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## BBCWatcher

Would you care to walk us through how you get to $30,000 owed to the IRS in the circumstances you describe? How was that $30,000 figure calculated?

There is yet another option: normal amended/late filing. Voluntarily submitting late FinCEN Form 114s should trigger no penalties. (At least, we've not seen any reports yet of late filers being assessed penalties if they're the ones coming forward before the U.S. Treasury contacts them, and if they have a valid excuse -- "I didn't know" is popular.) So how do you get up to $30K of tax owed on bank interest (already taxed by Germany) and a retirement account? That sounds...well, it'd be very surprising, let's just put it that way.

I don't understand why you would pay money to acquire a citizenship if you think it's at least reasonably possible you would renounce that same citizenship (which also costs money). That doesn't make a lot of sense to me, and I'm not sure what that particular suggestion was offered.


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## iota2014

vogener83 said:


> Where is better to apply under the Streamlined, being resident in Germany or in the US, where it is going to cost less money? Thanks for your advice.


Under the domestic Streamlined Procedures, you pay any tax due, plus a 5% penalty. If there's no tax to pay, as seems likely, then you don't pay anything. If you're currently resident in the US, this is the one you're currently eligible for.

Under the foreign Streamlined Procedures, you just pay the tax due, with no penalty. If there's no tax to pay, you don't pay anything. If you leave the U.S. and return to Germany, then once you've established German residence this is the program you'd then be eligible for.

I'd suggest you go to the link Bev posted and read through the requirements for yourself. And find a new accountant (or just do the backfiling yourself).


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## vogener83

Thanks. According to my accountant if I get an audit, I not only will have to pay money that I don't have but possible prison penalties, that's why I'm so worried...

I'm confused with this: "You just do your German taxes as you always have and start reporting your German income on your US forms and take the appropriate tax credit for taxes already paid." From now on, shouldn't I report even german income here in the US as I am a US resident?


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## vogener83

BBCWatcher said:


> Would you care to walk us through how you get to $30,000 owed to the IRS in the circumstances you describe? How was that $30,000 figure calculated?
> 
> There is yet another option: normal amended/late filing. Voluntarily submitting late FinCEN Form 114s should trigger no penalties. (At least, we've not seen any reports yet of late filers being assessed penalties if they're the ones coming forward before the U.S. Treasury contacts them, and if they have a valid excuse -- "I didn't know" is popular.) So how do you get up to $30K of tax owed on bank interest (already taxed by Germany) and a retirement account? That sounds...well, it'd be very surprising, let's just put it that way.
> 
> I don't understand why you would pay money to acquire a citizenship if you think it's at least reasonably possible you would renounce that same citizenship (which also costs money). That doesn't make a lot of sense to me, and I'm not sure what that particular suggestion was offered.


I'm very worried about now and the future, as I'm learning, my tax reporting is going to be a nightmare every year and very expensive. Thanks


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## vogener83

iota2014 said:


> Under the domestic Streamlined Procedures, you pay any tax due, plus a 5% penalty. If there's no tax to pay, as seems likely, then you don't pay anything. If you're currently resident in the US, this is the one you're currently eligible for.
> 
> Under the foreign Streamlined Procedures, you just pay the tax due, with no penalty. If there's no tax to pay, you don't pay anything. If you leave the U.S. and return to Germany, then once you've established German residence this is the program you'd then be eligible for.
> 
> I'd suggest you go to the link Bev posted and read through the requirements for yourself. And find a new accountant (or just do the backfiling yourself).


So where is that 5% penalty applied? Say I have not reported in US $X from my Germany income, do I have to pay in the US a penalty equivalent to a 5% of those $X? Or the 5% is applied in a different way? Thanks


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## iota2014

vogener83 said:


> So where is that 5% penalty applied? Say I have not reported in US $X from my Germany income, do I have to pay in the US a penalty equivalent to a 5% of those $X?


No, not at all. The FBAR (Fincen114) is only a _reporting_ obligation. You can get horrible penalties for not filing FBARs, but you're spared those if you go through the Streamlined Procedures. At the same time that you file the back FBARs, you also amend or file any incorrect or missing 1040s. For instance, if you received any interest on the German account, you need to amend the 1040 you filed for that year and report that interest. You can also, as Bev said, claim credit for the German tax you've already presumably paid on that interest. So you probably end up not owing any additional tax to the US, and not paying any 5% penalty.

But how the pension is treated depends on exactly what kind of pension it is.


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## Bevdeforges

vogener83 said:


> Thanks. According to my accountant if I get an audit, I not only will have to pay money that I don't have but possible prison penalties, that's why I'm so worried...


Unless you're in the upper tax brackets, that is an amazingly big "if." Only a very small proportion of tax returns are audited - and generally only those that promise huge returns in unpaid taxes. If your accountant is implying or threatening that your amended returns are likely to be audited, you'd best check to see just what he filed in prior years.



> I'm confused with this: "You just do your German taxes as you always have and start reporting your German income on your US forms and take the appropriate tax credit for taxes already paid." From now on, shouldn't I report even german income here in the US as I am a US resident?


You file your German taxes as you have always done and pay whatever tax is due on your German income from whatever German sources you have.

You include your German income with your US income on your US returns. Then, you use a form 1116 to inform the IRS of what German taxes you paid on your German income and you receive a credit against your US taxes for what you paid to the German government. 
Cheers,
Bev


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## jbr439

The domestic Streamlined penalty of 5% is applied on assets, not taxes owed. So even if you owe no taxes, you'll still pay a 5% penalty based on assets.

From: https://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-in-the-United-States

The Title 26 miscellaneous offshore penalty is equal to 5 percent of the highest aggregate balance/value of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period. For this purpose, the highest aggregate balance/value is determined by aggregating the year-end account balances and year-end asset values of all the foreign financial assets subject to the miscellaneous offshore penalty for each of the years in the covered tax return period and the covered FBAR period and selecting the highest aggregate balance/value from among those years.

A foreign financial asset is subject to the 5-percent miscellaneous offshore penalty in a given year in the covered FBAR period if the asset should have been, but was not, reported on an FBAR (FinCEN Form 114) for that year. A foreign financial asset is subject to the 5-percent miscellaneous offshore penalty in a given year in the covered tax return period if the asset should have been, but was not, reported on a Form 8938 for that year. A foreign financial asset is also subject to the 5-percent miscellaneous offshore penalty in a given year in the covered tax return period if the asset was properly reported for that year, but gross income in respect of the asset was not reported in that year.​


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## iota2014

Apologies for getting it wrong, OP. Thanks, jbr439, for correcting my error.

That's pretty horrible for an innocent mistake.


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## Nononymous

iota2014 said:


> That's pretty horrible for an innocent mistake.


Hence the popularity of both quiet disclosure and non-compliance.


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## iota2014

Nononymous said:


> Hence the popularity of both quiet disclosure and non-compliance.


Indeed.


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## BBCWatcher

Ordinary late filing of amended returns (1040X) and missing reports (FinCEN Form 114, IRS Form 3520) is still an option. The Streamlined Program is an optional choice. Do not choose the Streamlined Program if the normal, ordinary alternative is better.

It's like having the choice between two mobile phone plans: $25 per month for unlimited calls or 3 cents per minute pay-as-you-go. If you make 5 minutes of calls per month, take the second deal and save $24.85 per month. If you make 1,000 minutes of calls per month, take the first deal and save $5 per month.


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## vogener83

Thanks everybody for all the advice. I'm going to try to be in compliance with regulations. Let's see.


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## iota2014

Good luck!


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## vogener83

Sorry for bothering you again with this. I'm trying to make a chart with my alternatives, but I'm a bit confused. Please, can you help me clarifying these alternatives? I think I understand 1 and 2, but confused about 3 and 4 (I have copied in 3/4 the same points as in 1. Please, can you help me correcting what applies? Thanks again.


1- Domestic Streamlined Program
. Only for US residents
. File current year and amend the last three. You apply in the US the taxes that you paid in Germany as a credit. You might have or might not have to pay back taxes depending on final calculation. There are not penalties
. Report FBAR: last 6 years of bank account and pay 5% penalty applied only to 1 year’s balance (the highest)


2- Foreign Streamlined Program
. Only for foreign residents (if I were living in Germany)
. File current year and amend the last three. You apply in the US the taxes that you paid in Germany as a credit. You might have or might not have to pay back taxes depending on final calculation. There are not penalties
. Report FBAR: last 6 years of bank account WITHOUT PENALTY


3- Ordinary late filing of amended returns and missing reports
. Only for US residents
. File current year and amend the last three. You apply in the US the taxes that you paid in Germany as a credit. You might have or might not have to pay back taxes depending on final calculation. There are not penalties
. Report FBAR: last 6 years of bank account and pay 5% penalty applied only to 1 year’s balance (the highest)


4- Offshore Voluntary Disclosure Program (OVDP)
. Only for US residents
. File current year and amend the last three. You apply in the US the taxes that you paid in Germany as a credit. You might have or might not have to pay back taxes depending on final calculation. There are not penalties
. Report FBAR: last 6 years of bank account and pay 5% penalty applied only to 1 year’s balance (the highest)


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## Nononymous

Number 3: This is the quiet disclosure approach, which works both for US residents and non-residents. Very likely you won't pay any sort of FBAR penalty. Just file them late, say you didn't know about the requirement, and by all accounts they will probably leave you alone, especially if you are no longer a US resident.

Number 4: Avoid this at all costs. It's basically an amnesty program for criminals, with mandatory penalties. The streamlined programs were created when it became obvious that this was overkill, and that it ultimately discouraged compliance.


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## BBCWatcher

So to summarize, realistically you would be choosing between either Option 1 or Option 2 (depending on where you are resident), and Option 3. It sounds like Option 3 is going to be the best choice ("pay as you go" over "flat fee" in my mobile phone service analogy, and since apparently you're a U.S. resident without Option 2), but to figure that out just run a rough calculation. As Nononymous suggests you'd calculate FinCEN Form 114 late filing penalties at zero (we're assuming the U.S. Treasury hasn't contacted you already), and you'd calculate U.S. income tax owed on the unreported income after considering your Foreign Tax Credit, plus penalties and interest on any unpaid tax.

FYI, I much prefer the term "ordinary late/amended filing." There's nothing "quiet" (or "loud") about that, and I think trying to characterize ordinary late/amended filing as "quiet" is misleading. It sounds like it's sneaky, underhanded, or whatever. It's nothing of the sort -- it's perfectly normal, ordinary, and common. It's the standard process the IRS and Treasury have and provide. Otherwise Form 1040X wouldn't exist.

Regarding Option 4, it can be the best option if you're very seriously in trouble, facing criminal penalties (prison time). Never say never. But that's not you from all indications, and that's not most people.


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## jbr439

BBCWatcher said:


> So to summarize, realistically you would be choosing between either Option 1 or Option 2 (depending on where you are resident), and Option 3. It sounds like Option 3 is going to be the best choice, but to figure that out just run a rough calculation.
> ...


I seem to recall you on several occasions voicing a preference for Foreign Streamlined (option 2) as opposed to "quiet disclosure", as the former is the "official" way to get into compliance. What changed?


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## BBCWatcher

jbr439 said:


> I seem to recall you on several occasions voicing a preference for Foreign Streamlined (option 2)....


Option 2 is not available to U.S. residents. However, if available, Option 2 (as far as I can tell) rarely results in a financial outcome that's less attractive than ordinary late/amended filing. Consequently I generally recommend Option 2 as a default for those who qualify. Here's the rare exception: if ordinary late/amended filing would result in a refund (due to Foreign Tax Credits, typically), then the offshore version of the Streamlined Program is less attractive. Tax refund applications via the Streamlined Program apparently get closer scrutiny. If you're genuinely owed money from the IRS, then I'd opt for ordinary late/amended filing -- provided the paperwork burden and cost is bearable. (The Streamlined Program still has that advantage.)

Option 1, the domestic version of the Streamlined Program, is different. Option 1 is a "flat rate" financial outcome based on assets. Option 1 may or may not be better than Option 3. I don't prejudge that particular financial outcome in the same way.


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## vogener83

BBCWatcher said:


> Option 2 is not available to U.S. residents. However, if available, Option 2 (as far as I can tell) rarely results in a financial outcome that's less attractive than ordinary late/amended filing. Consequently I generally recommend Option 2 as a default for those who qualify. Here's the rare exception: if ordinary late/amended filing would result in a refund (due to Foreign Tax Credits, typically), then the offshore version of the Streamlined Program is less attractive. Tax refund applications via the Streamlined Program apparently get closer scrutiny. If you're genuinely owed money from the IRS, then I'd opt for ordinary late/amended filing -- provided the paperwork burden and cost is bearable. (The Streamlined Program still has that advantage.)
> 
> Option 1, the domestic version of the Streamlined Program, is different. Option 1 is a "flat rate" financial outcome based on assets. Option 1 may or may not be better than Option 3. I don't prejudge that particular financial outcome in the same way.



If I decide to go back to Germany:

- How much time do I have to be a German resident to go with option 2- Foreign Streamlined Program
- If I decide to give up US citizenship after sending everything under the program, should I wait some time or I can do it immediately? (I would like to stop as soon as possible this excessive costs and hussle)
- Say one year I had "10" as unreported German income and paid "3" (30%) in German taxes. If in the US I have to apply same tax (30%) to those "10", I shouldn't owe money to IRS thanks to the credit. Is the calculation that simple or I'm missing something?

Thanks again to everybody


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## Bevdeforges

Before you make any plans, take a look at the website for the US Consulate in Germany. That is where you would have to renounce your US citizenship. And it costs $2350 to do so. The Consulate website should have more details regarding the exact procedure.
Cheers,
Bev


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## BBCWatcher

As I recall the offshore Streamlined Program requires at least one year of foreign residence within the past three. But if the IRS or Treasury try to contact you first, you (probably) don't get the choice of any Streamlined Program.

Your explanation of the Foreign Tax Credit is basically correct, conceptually anyway.

In addition to the $2350 fee to document renunciation or relinquishment of U.S. citizenship (or long-term permanent residence) there is an Expatriation Tax that might be owed if your total global net worth is $2 million or more.


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## iota2014

vogener83 said:


> If I decide to go back to Germany:
> 
> - If I decide to give up US citizenship after sending everything under the program, should I wait some time or I can do it immediately? (I would like to stop as soon as possible this excessive costs and hussle.


If you decide to renounce:

1. You have to swear an oath of renunciation (or affirm) at a U.S. Embassy; as Bev said, it costs $2350. You must have a second citizenship at the time you renounce (so that the renunciation doesn't render you stateless). If you lost your German citizenship when you took U.S. citizenship, you need to get it back before renouncing U.S. citizenship.

2. You need to finish up with the IRS by filing your final tax forms, paying any tax that may be due. You then have to file Form 8854, on which you provide information on your tax liability for each of the past five years, and your net worth. You must be able to confirm, on Form 8854, that you've filed all the tax forms due, and paid the tax due, for five years preceding the renunciation.

So a possible scenario (if you definitely decide you want to renounce) might be:

a) Move back to Germany.

b) File and/or amend tax forms through the "quiet disclosure" method, making sure you're completely up to date for the past five years (2011-2015).

c) Make an appontment at the Embassy to renounce. They'll ask you to complete some forms and bring e.g. latest U.S. and German passports, birth certificate, etc. (They keep the U.S. passport). Eventually, you should receive a Certificate of Renunciation. Takes a long time - I renounced last October and am still waiting for the CLN. (Doesn't cause me any problems.)

d) In 2017, file your final tax forms for the year of your renunciation (2016), and file Form 8854.

Getting through steps (b) and (c) took me about six weeks, though it depends how quickly you can get an appointment at the Embassy. Some Embassies have longer waiting times than others, apparently.

See https://travel.state.gov/content/tr...aws-policies/renunciation-of-citizenship.html

and

https://fam.state.gov/searchapps/vi...s=RENOUNC&url=/FAM/07FAM/07FAM1260.html#M1261


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## vogener83

Thanks everybody!


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## BBCWatcher

I forgot to add you also, generally, get less favorable tax treatment on U.S. source income if you are (or become) a nonresident alien.


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## JustLurking

BBCWatcher said:


> I forgot to add you also, generally, get less favorable tax treatment on U.S. source income if you are (or become) a nonresident alien.


For non-resident aliens living in Germany, US tax rates are _far_ from unfavourable.

US tax rates on US source income under the US/Germany tax treaty are: interest 0%; dividends 15%, but 5% for some; pensions and annuities 0%; social security payments 0%. There is also a general 0% US capital gains tax rate for all non-resident aliens, treaty or otherwise.

Germany also has a decent estate tax treaty with the US, should one have the poor judgement to die while holding US situs assets.


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## BBCWatcher

Hence the word "generally." (But the rates aren't the only factor.)


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## JustLurking

BBCWatcher said:


> But the rates aren't the only factor.


What other factors do you have in mind here?


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## BBCWatcher

Here are a couple examples:

1. Italy has a similar arrangement in its tax treaty, where taxability of U.S. Social Security benefits flips to zero (U.S. rate) depending on citizenship status when resident in Italy. The problem: Italy's tax rates on that income are generally higher.

2. Dividends are taxed at 15% flat rate on the U.S. side (and with withholding), as you point out. Sounds wonderful, right? Not so much, not always. A lot of people qualify for the 10% or 0% tax brackets on that income, and without withholding. If that's you, you won't be happy with 15% flat (plus whatever Germany adds, if anything).

In short, you have to look well beyond the headline treaty rates to figure out the actual financial outcome even if you assume zero income impact (not a given).


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## JustLurking

BBCWatcher said:


> 1. Italy has a similar arrangement in its tax treaty, where taxability of U.S. Social Security benefits flips to zero (U.S. rate) depending on citizenship status when resident in Italy. The problem: Italy's tax rates on that income are generally higher.


Straw man. Italy has no relevance to the discussion of Germany.



BBCWatcher said:


> 2. Dividends are taxed at 15% flat rate on the U.S. side (and with withholding), as you point out. Sounds wonderful, right? Not so much, not always. A lot of people qualify for the 10% or 0% tax brackets on that income, and without withholding. If that's you, you won't be happy with 15% flat (plus whatever Germany adds, if anything).


German tax on dividends is 25%, foreign tax credits allowed, and exceeds both the 15% US NRA withholding rate and also the cherry-picked lower US rates you describe. This means there is no US tax related downside for a German resident who renounces US citizenship, even where they retain US situated investments.


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## BBCWatcher

JustLurking said:


> Straw man.


No. Germany is not the world. If you want to rebut what I wrote, it'd have to be (or at least darn near it).



> This means there is no US tax related downside for a German resident who renounces US citizenship, even where they retain US situated investments.


What is withholding then, chopped liver?  There is a time value to money, after all. Even in Germany.


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## vogener83

*streamlined question*

Hello, I have some more questions.

- Does anyone know cases where the IRS audits an Streamlined process (domestic or foreign.) I mean, you send 3 years of tax due with 6 FBARS, but they decide to go back more years

- Also, is it common to being audited after renouncing? Any experiences?

Thanks!


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## Bevdeforges

Here are three "interesting" articles about the chances of being audited:
Worried about being audited by the IRS? Here are your chances - MarketWatch
Forbes Welcome
IRS: Your Chances of Getting Audited Lowest in a Decade - DailyFinance

If you want to see for yourself, you can always download the Data Book they refer to in the Forbes article.
Cheers,
Bev


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## Pacifica

vogener83 said:


> - Also, is it common to being audited after renouncing? Any experiences?


Haven’t heard of any, and no one’s mentioned it on Brock, where people have been reporting their expatriation experiences and tax experiences over the past four years. So, it doesn’t appear to me to be common. Just my guess but I suspect they use the same triggering criteria for audit on renunciants as they do on anyone else.


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## vogener83

Hi, my accountant told me that even if you renounce, you can be called for an audit in any moment during your “whole life” because with IRS obligations never expire.

So, according to this, if I go with the streamlined process and then I renounce, that doesn’t mean they forget about you at all. I thought renunciation is a “goodbye forever”, but it is not…!!

Is there any time frame after renouncing when you can feel free from this crazy tax laws?
Is it true that they can call you any time or year of your life asking to go back on time and pay taxes for more than those 3 years? This sounds so crazy…

Thanks


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## BBCWatcher

I tend to think your accountant is exaggerating.

As background, I suggest reading this article explaining the statutes of limitations that apply to the IRS.

OK, once you've read that background article, focus on this section: "False, Fraudulent, or Missing Returns." You are participating in the IRS's Streamlined Program precisely because you have missing returns and/or false returns -- you didn't file at all when you were supposed to, or you did file but you forgot to include a foreign bank account or something else similar.

However, the Streamlined Program is an amnesty program. It's a special offer from the IRS. If the IRS doesn't object to your participation in that program, the IRS is promising that all past sins are forgiven. In other words, the IRS is waiving its unlimited statute of limitations for everything that happened before the 3 years you must file when you participate in the Streamlined Program. There is one gigantic caveat, though: if the IRS discovers that you still did something "stupid" and didn't report income, or an account, or whatever -- if your Streamlined Program filings weren't entirely truthful and complete -- then the IRS reserves the right to rescind its amnesty deal. Which is of course quite fair.

Your filings in the Streamlined Program are subject to a finite statute of limitations because you did file, and those limits are described in that background article. That limit ranges from 3 to 6 years depending on the circumstances. But not your lifetime.

FinCEN Form 114 always has a 6 year statute of limitations, even if you didn't file.

So, to summarize, and assuming you're filing what you need file within the Streamlined Program plus anything thereafter that's required (including a truthful and complete 8854), you've started a 6 year clock (maximum). Past that, you're clear.

All that make sense?

Note that if you have or will have U.S. source income -- a U.S. IRA "left behind," to pick one example -- then you could have future interactions with the IRS. You might have to file IRS Form 1040NR, at least to claim a refund of withholding if you're eligible. Renunciation is not a guarantee of zero future interactions with the IRS. In that sense your accountant is correct.

Also note there are a few lucky individuals who have to file more than one 8854, so that can stretch things out a bit if you're one of the lucky few.


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## BBCWatcher

Oh, one other important thing: the IRS is focused on the dollars within their statute of limitations periods. That's quite understandable since their job is to collect tax revenue. So if you or your accountant did something in the Streamlined Program filings or in subsequent filings that deprived the U.S. Treasury of substantial revenue it is legally entitled to, that's when the IRS gets excited and sometimes aggressive. It is quite possible to make many mistakes even when trying to clean up past mistakes, but the IRS isn't likely to be too concerned about such mistakes unless the IRS feels there's some missing tax revenue.


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## Nononymous

vogener83 said:


> Hi, my accountant told me that even if you renounce, you can be called for an audit in any moment during your “whole life” because with IRS obligations never expire.
> 
> So, according to this, if I go with the streamlined process and then I renounce, that doesn’t mean they forget about you at all. I thought renunciation is a “goodbye forever”, but it is not…!!
> 
> Is there any time frame after renouncing when you can feel free from this crazy tax laws?
> Is it true that they can call you any time or year of your life asking to go back on time and pay taxes for more than those 3 years? This sounds so crazy…
> 
> Thanks


First off, your accountant sounds like an idiot.

Second, it is "goodbye forever" if you have left the US and left no assets behind. What are they going to do, send bill collectors to Germany?


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## Bevdeforges

Statute of limitations runs 4 years (I think it is) - and a tax preparer friend of mine actually suggested shredding everything once it has run the statute of limitations. (I find that a tad extreme.)

There is no statute of limitations on unreported income... so I'd be wary of an accountant who says "IRS obligations never expire" as it does kind of suggest he's aware of some unreported income. But that's between you and your accountant.

And yes, US source income remains open to taxation requirements (usually with a 30% withholding automatically taken) - but that's standard operating procedure for most countries. 
Cheers,
Bev


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## iota2014

Nononymous said:


> First off, your accountant sounds like an idiot.
> 
> Second, it is "goodbye forever" if you have left the US and left no assets behind. What are they going to do, send bill collectors to Germany?


They're practicing. 
https://www.irs.gov/Businesses/Corporations/International-Practice-Units

It looks like there's quite a learning curve.


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## Bevdeforges

I notice, too, the usual disclaimer - that just because this stuff is written down, you can't rely on it when filling out your forms. 
Cheers,
Bev


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## iota2014

I don't think there's anything there that could be useful. I just think the general level of ignorance about Foreign is quite remarkable.


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## maz57

The US government, and by extension, the IRS, hates anything foreign (i.e. non-US). In the eyes of the IRS, any foreign account owned by a US citizen is automatic evidence of deceit, evasion, and general malfeasance unless proven otherwise every year by all of the obnoxious information forms. 

I think it was one of the fathers of FATCA (Chuck Schumer) who was famously quoted as saying "There is no legitimate reason why any US citizen would ever have a foreign account".


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## BBCWatcher

Do you have a reliable citation for that quotation? I cannot find one, thus I doubt Senator Schumer said any such thing.


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## iota2014

Google says it was an IRS person. Probably the same one who created the IPU on how foreign-dwelling Americans conceal offshore bank accounts.


> Most U.S. taxpayers using an offshore entity or structure of entities to hold foreign accounts are simply hiding the accounts from the Internal Revenue Service and other creditors. Such accounts may be the repository of funds skimmed from a U.S. business activity. Funds invested through secret offshore accounts may grow at a faster rate than domestic investments, because current earnings escape taxation. In addition, funds accumulated offshore are often passed to future generations free of transfer taxes.


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## JustLurking

In 2012 Carl Levin stated that "There is no such thing as an ordinary Swiss bank account."


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## BBCWatcher

So Senator Schumer is an unnamed "IRS person" now? What?

Facts matter, folks. Come on, get real. If you want to quote somebody, then please provide at least a reasonable citation. Otherwise this sort of b.s. happens.


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## BBCWatcher

Yes, he did. Now here's that quote in context: "....There is no such thing as an ordinary Swiss bank account. Now, there may be a few exceptions where you've got Americans who are living in Switzerland who have bank accounts, but as far as I know, Mrs. Romney was not living in Switzerland."

I agree with Senator Levin. If he had said "Qatari bank account," for example, I would also agree with him.

There are actual data bearing on this, and it's not even an arguable point. Insert any country you like -- Qatar, to pick a random example. It's simply not "ordinary" to have a Qatari bank account if you have no discernible connection to Qatar. This is not controversial. Practically every government around the world shares the same basic view, including the membership of the OECD.

Not being "ordinary" does not mean illegal. Senator Levin didn't say that. He merely pointed out that it's odd. True! My uncle, cousin, and sister in law don't have Swiss or Qatari bank accounts either. They don't live in Switzerland or Qatar.


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## iota2014

BBCWatcher said:


> So Senator Schumer is an unnamed "IRS person" now? What?
> 
> Facts matter, folks. Come on, get real. If you want to quote somebody, then please provide at least a reasonable citation.


Citations are so yesterday. Sounds like you need to hone your search skills - took me less than 3 minutes to find out the fatuous remark is generally attributed not to Schumer but to an IRS person. 



> Otherwise this sort of b.s. happens.



Couldn't happen to a nicer person.


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## maz57

BBCWatcher said:


> Do you have a reliable citation for that quotation? I cannot find one, thus I doubt Senator Schumer said any such thing.


I Googled this morning and I can't find it either, but I don't think I'll let it ruin my day. As I recall, I seem to remember hearing him say those words in an interview on Youtube. That's possibly why it doesn't show a return on Google. At the time, I remember thinking to myself "did he really just actually say that?" It was a few years ago.

There is plenty else on the 'net about this idiot; the guy is an obvious expat hater. In addition to his "work" on FATCA, he's the one who went ballistic when Eduardo Saverin renounced and he's the one who keeps trying year after year with the Expatriot act. He's not a nice guy.


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## Bevdeforges

There is an overwhelming image/stereotype in Washington of the "typical American expat" - which is that of a high powered executive living high off his expense account, with the kids all sent to private international schools, the company providing a fully subsidized luxury car, and lots of expensive and exotic "business" travel, as well as annual "home leave" paid for by the employer. The two main US expat organizations (AARO and ACA) report this nearly every time they return from one of their lobbying runs to the US. Unfortunately, their membership and governing board kind of do nothing to contradict the stereotype.
Cheers,
Bev


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## iota2014

maz57 said:


> I Googled this morning and I can't find it either, but I don't think I'll let it ruin my day.


Attributed to someone called Jack Blum, not Schumer. Not that it matters, it does seem to be a widely-held view, as Bev says.


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## BBCWatcher

Yes, it does matter, a lot! If you're going to criticize somebody for something he/she said, criticize the _right_ person for what he/she _actually_ said.


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## iota2014

BBCWatcher said:


> Yes, it does matter, a lot! If you're going to criticize somebody for something he/she said, criticize the _right_ person for what he/she _actually_ said.


Actually, it wasn't me who brought up either the quotation or Schumer's name, but I can't say I care tuppence if one nincompoop gets credited with another nincompoop's blatherings.


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