Thursday, February 23, 2012

Expat Tax Hell

My planned posting was interrupted by this awful story of someone who didn't realize they were a US citizen and is now facing the hell that is the US's war against expats.

Of course, I can't actually know this story is real (unsurprisingly, many affected expats wish to remain anonymous), but as I dig into expat issues I'm reading about stuff like this more and more in the past few months. I've read about quite a few people who have been surprised to find out they're still Americans. I've read about retirees on fixed incomes on the verge of bankruptcy over penalties for not knowing they were taxed abroad. I read about one American woman living outside the who's dirt poor who found out she had to file tax returns, owes no taxes, but can't afford to pay the tax preparer fees for her taxes (you may not need them, but we expats don't get a short form). Being poor shouldn't be a crime.

Read on to understand why so many expats are getting increasingly frustrated with the US government.

I thought it real when I was WARNED that I would relinquish my US citizenship upon becoming a Canadian citizen in 1975 – where is the US’s responsibility to have communicated to me that this was no longer true when the country changed its law? Where was my choice in the matter of retaining my US citizenship? I had made my choice – I took the Oath of Canadian Citizenship in 1975 because that is where I wanted to live, raise my family, work, pay my Canadian taxes, volunteer my time, be a contributing citizen. I liked what I experienced and what I saw for my life here in Canada.

I foolishly thought I had no tax responsibility to the country which I had relinquished my citizenship. The US for decades turned a blind eye to me and to the estimated six million around the world regarding responsibility to file taxes. Did that not set some sort of precedent? Where was the US’s responsibility to absolutely communicate to us, all along, that we did have to file our taxes returns each year, no matter what the cost to us, no matter the little or zero revenue it brought in to the US? Where was our education on FBARs? Why does the US not even have a tax office of any kind in Canada? Why cannot we get answers to our tax questions from the various IRS phone numbers we are to call, usually with long distance charges? Why is the only advice I’ve received from the IRS is to consult cross-border accountants and US tax lawyers for my answers? Why are the regulations so complicated that my compliance depends on me being able to use my retirement savings for fees to cross-border accountants and US tax and immigration lawyers?