The “Readers Digest Version …
It’s difficult to be a U.S. citizen living outside the United States. The U.S. extra-territorial tax regime has created an industry of professionals who “feast off the injustice” of the U.S. tax and regulatory regime. U.S. citizenship taxation reinforced by FATCA has truly created for tax, financial planning, and immmigration professionals:
“The gift that just keeps on giving.”
The messaging to Americans abroad includes:
Americans abroad who don’t file U.S. taxes are constantly warned of the consequences of non-compliance.
Americans abroad who DO file U.S. taxes are constantly warned of the consequences of mistakes in their attempts at compliance.
Americans abroad attempting financial and retirement planning outside the United States are constantly on the search for financial products that wont’ conflict with U.S. tax rules.
Americans abroad who want to escape by renouncing U.S. citizenship are constantly being warned of possible tax and immigration consequences associated with renunciation.
(It’s clear that U.S. citizens living outside the United States are being punished for who they are and NOT what they do or don’t do.)
In this context, there continues to be a significant “fear mongering” coming from various players in the U.S. tax compliance industry. I suggest that Americans abroad should exercise caution in how they respond to these messages. In 2013 I wrote a post suggesting eleven principles for how one should respond to the U.S. tax compliance (or noncompliance) problem. This 2023 post is intended to provide an update to the 2013 post. The 2013 post is reproduced as Part C of this update.
This general purpose is to provide suggestions for how to RESPOND rather than REACT to your possible situation as a U.S. citizen living outside the United Staes. My thoughts are organized in the following four parts: