Will FATCA stop you going for a Greencard or US citizenship
#1
Will FATCA stop you going for a Greencard or US citizenship
In 2013 the US will introduce FATCA legislation that aims to stop US citizens and Greencard holders living outside the US from evading their taxes. The way the do this is to assume everyone is on the fiddle and they require US banks to with hold 30% of any transfer made to a foreign financial institution. Does this make you think twice about the "benefits" of having a Greencard or US citizenship?
#2
Re: Will FATCA stop you going for a Greencard or US citizenship
is it going to stop you??????????????????????????
#5
Forum Regular
Joined: Dec 2010
Posts: 288
Re: Will FATCA stop you going for a Greencard or US citizenship
What exactly does this mean in real terms? If you have money in your account and you move it to an account outside the USA they are going to retain 30% of it? What if the money is just your tax paid savings? The only tax due on it would be on the interest not the whole sum.
#6
Re: Will FATCA stop you going for a Greencard or US citizenship
What exactly does this mean in real terms? If you have money in your account and you move it to an account outside the USA they are going to retain 30% of it? What if the money is just your tax paid savings? The only tax due on it would be on the interest not the whole sum.
Storm. Teacup.
#7
Re: Will FATCA stop you going for a Greencard or US citizenship
You have to prove that there's no tax due on the money. If the bank transfers the money without with holding 30% the bank becomes liable for any tax. If it with holds 30% in error theres no penalty. The practical upshot is that banks will automatically with hold the 30% and make you claim it back.
#8
Re: Will FATCA stop you going for a Greencard or US citizenship
There is a $50k foreign account limit where the legislation kicks in, but I don't understand how the US bank knows if you are under that limit, so they'll default to the with holding.
Your disclosure comments are correct, but I'm having a hard time getting info from UK banks about whether they are in compliance or intend to become so. I'm assuming they'll comply and charge a fee to US clients to cover costs.
Last edited by nun; Dec 30th 2010 at 3:47 pm.
#9
Re: Will FATCA stop you going for a Greencard or US citizenship
Can you explain the types of income it doesn't apply to.
There is a $50k foreign account limit where the legislation kicks in, but I don't understand how the US bank knows if you are under that limit, so they'll default to the with holding.
Your disclosure comments are correct, but I'm having a hard time getting info from UK banks about whether they are in compliance or intend to become so. I'm assuming they'll comply and charge a fee to US clients to cover costs.
There is a $50k foreign account limit where the legislation kicks in, but I don't understand how the US bank knows if you are under that limit, so they'll default to the with holding.
Your disclosure comments are correct, but I'm having a hard time getting info from UK banks about whether they are in compliance or intend to become so. I'm assuming they'll comply and charge a fee to US clients to cover costs.
I'm not actually sure that the $50k limit applies to the withholding element of the law. The issue is about untaxed income being moved out of the country and the US Govt simply wants reassurance that it is going somewhere where it will be declared and tax paid - otherwise it is holding back a chunk in lieu of taxes. The US is simply enacting something similar to (not the same as) the EU savings directive - disclose or withhold. Yes, the big question is whether foreign banks will be compliant, but I don't expect them to charge clients as they do not charge for similar EU work as, once the changes are in place as part of the process, there's no cost to cover.
(I know, that has never stopped banks charging their clients , but they don't, for instance, charge Spanish residents with UK accounts any fees for complying with the EU savings directive laws.)
#10
Re: Will FATCA stop you going for a Greencard or US citizenship
The way I read FATCA, unless you prove there is no tax to be paid, any transfer to a Foreign Financial Institution will have 30% with held. I bet US banks will even with hold on transfers to compliant banks as it protects them from the IRS. I've searched and I can't find any type of US source income, gains, divs etc. that are exempt from FATCA if you transfer it to a non-compliant FFI.
#11
Re: Will FATCA stop you going for a Greencard or US citizenship
The way I read FATCA, unless you prove there is no tax to be paid, any transfer to a Foreign Financial Institution will have 30% with held. I bet US banks will even with hold on transfers to compliant banks as it protects them from the IRS. I've searched and I can't find any type of US source income, gains, divs etc. that are exempt from FATCA if you transfer it to a non-compliant FFI.
#12
Re: Will FATCA stop you going for a Greencard or US citizenship
I think that even transfers from after tax accounts, like your checking account etc will have 30% with held. The reason being if you sell some US stocks or mutual funds and have a capital gain, or take income out of a retirement account and put that in your US bank account, how does the US bank know the tax status of the money. If you now co-mingle it with money that's already had the tax paid on it what is the bank to do if you want to transfer some money abroad? 30% will be with held on all transfers and if you owe no tax you'll just have to claim the 30% back at the end of the year. Of course you won't be earning interest on that 30% in the mean time
#13
Forum Regular
Joined: Dec 2010
Posts: 288
Re: Will FATCA stop you going for a Greencard or US citizenship
I think that even transfers from after tax accounts, like your checking account etc will have 30% with held. The reason being if you sell some US stocks or mutual funds and have a capital gain, or take income out of a retirement account and put that in your US bank account, how does the US bank know the tax status of the money. If you now co-mingle it with money that's already had the tax paid on it what is the bank to do if you want to transfer some money abroad? 30% will be with held on all transfers and if you owe no tax you'll just have to claim the 30% back at the end of the year. Of course you won't be earning interest on that 30% in the mean time
My understanding is that if you have money in a US account that you have earned and paid tax on then there us no restriction to moving it. It is the income from this money that they can withold the 30% on and only if not being transferred to a country with a mutual tax treaty.
I would be interested to hear your interpretation?
#14
Re: Will FATCA stop you going for a Greencard or US citizenship
I ave just looked this up and can't come to the same conclusion you have. Can you explain more please.
My understanding is that if you have money in a US account that you have earned and paid tax on then there us no restriction to moving it. It is the income from this money that they can withold the 30% on and only if not being transferred to a country with a mutual tax treaty.
I would be interested to hear your interpretation?
My understanding is that if you have money in a US account that you have earned and paid tax on then there us no restriction to moving it. It is the income from this money that they can withold the 30% on and only if not being transferred to a country with a mutual tax treaty.
I would be interested to hear your interpretation?
"The U.S. has never before required withholding on the proceeds of the sale of U.S. securities by foreign persons. FATCA ups the ante by requiring withholding of 30% of those proceeds - regardless of the amount of gain, or even whether there is a gain or loss on the sale – unless the appropriate disclosures are made. Custodians and brokers will need the ability to distinguish between U.S. and non-U.S. securities and withhold tax when necessary. Transfer agents who also act as custodians will need to prepare to withhold on proceeds as well"
Last edited by nun; Dec 30th 2010 at 10:32 pm.
#15
Forum Regular
Joined: Dec 2010
Posts: 288
Re: Will FATCA stop you going for a Greencard or US citizenship
Securities are not the same as cash in your account or inter account transfers. I hold a number of securities as investments and can now see where you confusion may be arising. Securities can be disposed of in a number ways and it is quite popular for those with significant assets in securities to dispose of them off shore to avoid tax liabilities.
I don't see these rules effecting mr and mrs Average who have probably never bought a security in there life and probably have no idea what one is.
I don't see these rules effecting mr and mrs Average who have probably never bought a security in there life and probably have no idea what one is.