How the U.S. tax system applies to Americans abroad: Learning just the right amount of information

Understanding how the U.S. tax system applies to “U.S. persons” who do NOT live in the United States

I once wrote a post describing the circumstances of what I would call “The four kinds of Americans abroad“. It is referenced in the following tweet:


Understanding how full U.S. tax compliance affects the life of a “U.S. citizen” living outside the United States

U.S. citizens (including dual citizens) living outside the United States who are compliant with their U.S. tax obligations will NOT have the same life opportunities as their friends and neighbors. The price of retaining U.S. citizenship is extremely high. To understand why this is, I recommend the following two sources/posts:


In the world of “taxation-based citizenship” …

There are two groups of people who must take steps to educate themselves about the U.S. tax system.

Group 1: Those who have not previously known about U.S. citizenship-based taxation and realize that they have “compliance” (or should I say (non-compliance) problems. Members of this group may or may not have a U.S.Social Security number. They are considering how to respond to their “non-compliance” problem.

Group 2: Those who have been filing U.S. taxes (whether accurately or not) and want to better understand how the U.S. tax system affects their taxes, their lives and their life decisions.

Learning about how the U.S. tax system will impact your income, your job, your family, your retirement …

Learning about U.S. taxes is difficult and time consuming. Many of the “education sources” are too simple and superficial (you will never owe U.S. taxes – it’s just a filing obligation) or too difficult (what’s a “foreign trust”, a “CFC“, “PFIC“, “Subpart F income“, etc.) Furthermore, there are many different kinds of people who offer U.S. tax preparation services. It’s important to understand the different kinds of U.S. tax preparers.
I began the project of education by creating a a series of article/posts designed to acquaint people with many of the issues that affect “Taxpayers Abroad” (meaning those who live outside the United States). I also created a “Citizenship Taxation” blog. This blog provides basic information. Obviously I would recommend these sources as a starting point.

A second (and more practical) recommendation is the book “U.S. Taxes for Worldly Americans: The Traveling Expat’s Guide to Living, Working, and Staying Tax Compliant Abroad“. Check out the “Look Inside” option at the Amazon site. The book, written by Olivier Wagner, CPA is an excellent and inexpensive way to acquaint yourself with the U.S. tax system. The book is an excellent resource for any person located outside the United States, who must navigate the pitfalls of the U.S. tax system. Whether you see yourself as an: “American Expatriate”, “dual citizen”, “digital nomad” or “Green Card holder” you are subject to the same requirements.

Full disclosure!!!!!! I know Oliver Wagner personally and have worked with him on various projects. His outlook and the perspectives in the book reflect that his business – 1040 Abroad – is the business of assisting Americans abroad navigate the difficulties of a tax system that imposes difficult compliance costs on those citizens who move from the United States.

I wrote the following testimonial for his book:

American citizens living outside the United States are obligated to comply with a system of rules, regulations and procedures that are cumbersome, difficult to understand and punitive. Compliance with these rules (which are unique to American citizens) requires annual filings with the IRS. These filings include (but are not limited to) detailed information on most non-U.S. bank and investment accounts.
Olivier Wagner’s book is an exceptional U.S. tax guide for Americans abroad, which contains JUST ENOUGH information so that you CAN ‘understand your tax requirements’, but NOT SO MUCH information that you ‘CAN’T understand your tax requirements’.

The title suggests that the book is for “Worldly Americans”. Actually, the book is for “Every Day Americans” who are trying to live ordinary lives in a complex world.

John Richardson – Toronto, Canada

For a short ebook by Olivier Wagner, summarizing some of the issues:

Olivier provides a daily dose of important “U.S. tax happiness” on twitter.