Category: Living abroad

American expats giving up US citizenship

This article explains that more American expats are giving up US citizenship and explores one possible reason – tax laws.

The article claims that The U.S is the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside. This is somewhat misleading, however; in my experience living in Korea the first $80,000 or so of foreign earned income was not taxed. So i had to report it on my tax return and fill out a special form (2555) but it was only a hassle – it didn’t cost me my fortune (luckily my fortune never included an 80,000+ salary).

For expats who don’t have millions hidden in Swiss bank accounts, this is likely to be the main concern:

“Since 2011, Americans, who disclose their non-U.S. bank accounts to the IRS, must file the more expansive 8938 form that asks for all foreign financial assets, including insurance contracts, loans and shareholdings in non-UNN.S. companies. Failure to file the 8938 form can result in a fine of as much as $50,000. Clients can also be penalized half the amount in an undeclared foreign bank account under the Banks Secrecy Act of 1970.”

Reading that article sent me into a panic. I have a bank account in Korea. Am I facing a $50,000 fine?

Luckily for me, the article does a very poor job of explaining which Americans must file form 8938. Really the article is horribly misleading. You see once again my fortune is not big enough for the IRS to care much about. From the IRS website:

“If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.”

Or in my case…

“If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.”

I guess I’m safe. Even if I were single my Korean bank account would be too small to attract notice. Who knew that having less money would make my life so much easier?