Taxes and the american citizen...

[MichaelB]

Technicality. You are completely ignoring the point.

With all the hyperbole and rhetoric I thought this "technicality" would be helpful, especially to uninformed readers.

 

[F M All]

With all the hyperbole and rhetoric I thought this "technicality" would be helpful, especially to uninformed readers.

By the time readers get to this point in the thread they are informed.

 

[Alan]

I'm afraid of being refused a UK bank account when I return to the UK, or of having to pay extra fees just to get basic service.

You shouldn't have a problem since you will be a UK citizen residing in the UK with a UK address. You will also, presumably, have your National Insurance number. (if you've lost it there is a UK gov site where you can enter some personal details and they'll tell you what it is - we did that for DW a couple of years ago).

We have a checking and a savings account in the UK with a US address. Not having a UK address does exclude us from holding anything other than a basic checking and savings account. (we had the accounts before we left the UK).

 

[nun]

Nun, if you were to return to the UK and renounce US citizenship, would you be able to keep your US investments? I believe a UK citizen cannot use Vanguard (US), for example, though perhaps an existing customer may be able to keep an account by some means.

Vanguard will service existing accounts owned by US non-resident aliens, but they won't open one if you have a foreign address, even if you are a US citizen.

However, I've been reading the 8854 IRS expatriation form and Part V 7a is a kick in the teeth as it says

7a Do you have any eligible deferred compensation items? Checking the “Yes” box is an irrevocable waiver of any right to claim any reduction in withholding for such eligible deferred compensation item under any
treaty with the United States . . . . . . . . . . . . . Yes No

So I assume eligible deferred compensation is retirement funds and if I waive the US/UK tax treaty exemption I end up as a non-resident alien without the advantages of the tax treaty and I they'll be 30% withholding on income from my retirement accounts and I'll have to file a 1040 to claim the tax back.....

So now I won't be giving up US citizenship as I'd loose the cover of the tax treaty and have a more complex situation. The bigger issue would seem to be for Green Card holders who have US retirement accounts and expatriate. If they do this they give up all treaty rights as far as the US goes.

 

[MichaelB]

By the time readers get to this point in the thread they are informed.

Experience has shown that many people do not read all the posts, just the last few, and some not even that, and when they post, it is sometimes out of context. The issue of mutual fund taxation was not part of the original thread. If you want to introduce it, fine, but in that case it would be helpful to make sure it is "technically" defined correctly.

 

[nun]

You shouldn't have a problem since you will be a UK citizen residing in the UK with a UK address. You will also, presumably, have your National Insurance number.

Yes to all of those, but I'll also have to answer "YES" when they ask me if I'm a US citizen and deal with whatever consequences that has.

 

[Alan]

Yes to all of those, but I'll also have to answer "YES" when they ask me if I'm a US citizen and deal with whatever consequences that has.

When will they ask if you are a US citizen? I've not seen an application form for opening a bank in the UK for a long time. As a result of the new legislation does the application form specifically ask everyone in the UK that applies for a bank account if they are also citizens of the USA?

 

[theOAP]

Not really. The post appears to disagree with a comment of mine, but instead of indicating why it only links to an external document that may or not be related. A brief summary would inform the causal readers and also give those interested enough information to know whether they should pursue the link or not.

It's an IRS document. It's 143 pages long, dealing only with issues for the international tax payer. From the 1st page:

"The complexity of international tax law, combined with the administrative burden placed on these taxpayers, creates an environment where taxpayers who are trying their best to comply simply cannot. For some, this means paying more U.S. tax than is legally required, while others may be subject to steep civil and criminal penalties. For some U.S taxpayers abroad, the tax requirements are so confusing and the compliance burden so great that they give up their U.S. citizenship."​

From the header for page 206:​

"The IRS’s Offshore Voluntary Disclosure Program “Bait and Switch”

May Undermine Trust for the IRS and Future Compliance Programs"​

"Bait and Switch" are Nina Olsens words, not mine. I'm not about to start paraphrasing the Taxpayer Advocate when her exact words are within easy reach.

 

[F M All]

Experience has shown that many people do not read all the posts, just the last few, and some not even that, and when they post, it is sometimes out of context. The issue of mutual fund taxation was not part of the original thread. If you want to introduce it, fine, but in that case it would be helpful to make sure it is "technically" defined correctly.

Michael, again not helpful and wrong, this thread is about taxation and reporting to the IRS, the different treatment of funds in US and overseas is one of the issues. Your input is extremely irritating in an otherwise very interesting thread. Why don't you recuse yourself and moderate elsewhere.

 

[theOAP]

Interesting, but I thought Vadio was refused a "higher yielding account" not a basic bank account, so the issues might be more to do with foreign trusts and PFIC.

For a resident of the UK, it is a standard account. Every time a termed account matures the individual is offered one of these accounts, at least that's what has happened with every bank and building society I've delt with. A US citizen should know better.

(Sorry for the delay. That will teach me to stop for a meal.)

 

[theOAP]

When will they ask if you are a US citizen? I've not seen an application form for opening a bank in the UK for a long time. As a result of the new legislation does the application form specifically ask everyone in the UK that applies for a bank account if they are also citizens of the USA?

There has been a request for all the account holders citizenships on the application forms from several Banks and Building Societies for several years. Others are now starting to ask that question. In days past, you could open an account with your driving license. The new photo license now gives your country of birth. At the tailend of last year, I did some movement between accounts in one of the larger building societies. I've always made it clear I'm a USC. During the process, a screen came up saying "WARNING: YANK" (Well, maybe not that blatant.)

Many institutions are issuing new 'Terms and Conditions'. If you read those carefully, you discover some of the changes involve the ability of the bank to supply details of the account to 'foreign' authorities, beyond those requested for criminal inquiries.

 

[nun]

When will they ask if you are a US citizen? I've not seen an application form for opening a bank in the UK for a long time. As a result of the new legislation does the application form specifically ask everyone in the UK that applies for a bank account if they are also citizens of the USA?

I believe that UK bank applications ask for nationality now. I just looked at Halifax's online application and it asks for nationality. However, it doesn't let you enter two nationalities or press both the "UK and "Other" radio buttons. So I could correctly answer British and never be asked if I'm also a US citizen.

 

[Alan]

There has been a request for all the account holders citizenships on the application forms from several Banks and Building Societies for several years. Others are now starting to ask that question. In days past, you could open an account with your driving license. The new photo license now gives your country of birth. At the tailend of last year, I did some movement between accounts in one of the larger building societies. I've always made it clear I'm a USC. During the process, a screen came up saying "WARNING: YANK" (Well, maybe not that blatant.)

Many institutions are issuing new 'Terms and Conditions'. If you read those carefully, you discover some of the changes involve the ability of the bank to supply details of the account to 'foreign' authorities, beyond those requested for criminal inquiries.

I believe that UK bank applications ask for nationality now.

It only asks for one nationality, right? If you have UK nationality and are residing in the UK with a UK address, why would the bank need to know other nationalities? HMRC will need to know about the US nationality and US income etc.

 

[theOAP]

It only asks for one nationality, right?

No, not on all the applications. Some applications ask for 'all' or 'other' nationalities.

 

[nun]

It only asks for one nationality, right? If you have UK nationality and are residing in the UK with a UK address, why would the bank need to know other nationalities? HMRC will need to know about the US nationality and US income etc.

The bank needs to ask if you are a US citizen to comply with FATCA. The UK has agreed to take all the US citizen information from UK financial institutions and pass it on to the US......this gets around the problems this would have cause if the banks had to communicate directly with the US.

http://www.hm-treasury.gov.uk/joint_intl_statement_fatca.htm

 

[Alan]

No, not on all the applications. Some applications ask for 'all' or 'other' nationalities.

I had a look at an on-line application for HSBC (which is my UK bank) and didn't see it asking for a list of other nationalities, but you may be correct. Certainly by the time the law comes into effect they will have to ask new customers if they are US citizens.

The bank needs to ask if you are a US citizen to comply with FATCA.

Sure, but I don't see why it would prevent you from opening an account since you will a UK citizen residing in the UK.

I believe the UK is still proposing a country to country solution where there tax treaties in place, so things may change a little, but not much I expect.

Treasury calls for FATCA exemptions on eve of proposals

A Treasury source said the difficulties in implementing FATCA (the Foreign Account Tax Compliance Act) are considerable, as the legislation goes further than anything the UK has had to deal with before.
However, it is understood to be seeking a ‘country to country’ solution which may build on the existing tax treaty the UK has with the US. It is hoped this will reduce the systems UK institutions will have to introduce, and minimise the burden.

.
.
​

.
.
.
Originally set to come into force in January 2013, certain aspects of FATCA have been postponed until 2014 and 2015. FFIs, including banks, pension schemes and asset managers, will have to register with the IRS by June 2013.

 

[theOAP]

The bank needs to ask if you are a US citizen to comply with FATCA. The UK has agreed to take all the US citizen information from UK financial institutions and pass it on to the US......this gets around the problems this would have cause if the banks had to communicate directly with the US.

Joint Statement regarding an Intergovernmental Approach to Improving International Tax Compliance and Implementing FATCA - HM Treasury

From the above:

5. In this regard the United States is willing to reciprocate in collecting and exchanging on an automatic basis information on accounts held in US financial institutions by residents of France, Germany, Italy, Spain and the United Kingdom. The approach under discussion, therefore, would enhance compliance and facilitate enforcement to the benefit of all parties.

7. In light of these considerations, the United States, France, Germany, Italy, Spain and the United Kingdom have agreed to explore a common approach to FATCA implementation through domestic reporting and reciprocal automatic exchange and based on existing bilateral tax treaties.

I know I should know the answer to this, but I don't. Has the legislation proposed in both the House and Senate relating to the reciprocal exchange been passed? I seem to remember that it was facing opposition from the banking communities in Florida.

 

[theOAP]

I had a look at an on-line application for HSBC (which is my UK bank) and didn't see it asking for a list of other nationalities

Not that you would want to try it, but I wonder what would happen if you completed that application from a US based computer? HSBC was recently stung by the IRS over accounts based in it's operations in India involving US residents.

 

[nun]

Sure, but I don't see why it would prevent you from opening an account since you will a UK citizen residing in the UK.

US citizenship shouldn't prevent me from opening a UK account as UK banks are supposed to give accounts to UK residents.......but who knows how banks will react until the final FATCA agreements are reached. Given the proposed overhead on servicing foreign bank accounts owned by US citizens, I can easily see a bank refusing to open an account for a US citizen. If passing the info onto the UK Government is all a bank has to do that will probably get around the problem as far as the bank is concerned........but not as far as my personal liberty is concerned.

 

[nun]

From the above:

5. In this regard the United States is willing to reciprocate in collecting and exchanging on an automatic basis information on accounts held in US financial institutions by residents of France, Germany, Italy, Spain and the United Kingdom. The approach under discussion, therefore, would enhance compliance and facilitate enforcement to the benefit of all parties.

7. In light of these considerations, the United States, France, Germany, Italy, Spain and the United Kingdom have agreed to explore a common approach to FATCA implementation through domestic reporting and reciprocal automatic exchange and based on existing bilateral tax treaties.

I know I should know the answer to this, but I don't. Has the legislation proposed in both the House and Senate relating to the reciprocal exchange been passed? I seem to remember that it was facing opposition from the banking communities in Florida.

The reciprocal legislation will never pass in the US because of arrogance and the vast amounts of foreign money in the US.

 

[MichaelB]

Have we established that UK banks are refusing accounts to dual US/UK and US citizens, or is this an expression of a fear we hope does not come about?

 

[nun]

Have we established that UK banks are refusing accounts to dual US/UK and US citizens, or is this an expression of a fear we hope does not come about?

I've read of a few issues, but as far as bank accounts are concerned I think it's mostly fear mongering. The situation may well be different for smaller institutions and brokerages. And it would be ridiculous if UK pension funds had to comply with IRS regs just because they have US citizen participants so I could easily see them refusing to enroll US citizens.

 

[nun]

Getting back to expatriation ie renouncing US citizenship or giving up a Green Card. If you leave the US as a US citizen you can choose whether to also expatriate, but as a Green Card holder you don't have the choice as if you decide to live abroad you loose your US residence.

If you have US retirement funds and you file form 8854 to notify the IRS of your expatriation you will give up all your treaty rights and have 30% tax withheld on any retirement income.

So I would not expatriate if you have US retirement funds. FATCA and US tax filing may be a pain, but it's better than having 30% tax withheld and having to file a 1040NR to claim back excess withholding. If you are a Green Card holder you are "rotating helix"ed

If you have no financial accounts in the US, want to avoid FATCA and 1040s and fall below the income/net worth thresholds to pay the exit tax, then expatriation seems like a way to simplify your tax life.

 

[Alan]

Have we established that UK banks are refusing accounts to dual US/UK and US citizens, or is this an expression of a fear we hope does not come about?

I firmly believe that you can open an account as a UK/US dual citizen living in the UK. I just went onto Barclays UK website to find out more (I am already an HSBC UK bank customer with a US address).

To open an account at a branch it says a Foreign Passport and proof of UK address such as electricity bill is all that is needed.

To open one of our bank accounts in branch we need confirmation of who you are and where you live to meet government regulations. We need two original documents (not photocopies) from the lists below.
To confirm who you are, we need one of the following:

• Full, current UK passport
• Full, current foreign passport
• Current passport in your former name. Make sure you also supply supporting documents regarding your change of name, such as a marriage certificate, Decree Nisi with birth certificate or Deed Poll document
• Current UK photocard driving licence or UK full paper driving licence
• A current Blue Disabled driver's pass
• European Union member state identity card
• A current firearms licence
• Police warrant card
• UK Armed Forces ID card

To confirm where you live, we need one of the following:

• Current UK photocard driving licence or UK full paper driving licence (if you haven't already used this to prove who you are)
• Current European Union member state identity card
• UK bank statement that's less than 3 months old (internet statements are not acceptable)
• UK credit card statement that's less than 3 months old (internet statements are not acceptable)
• UK mortgage statement that's less than 3 months old (internet statements are not acceptable)
• Foreign bank statement
• Gas, water, electric, cable TV or landline (not mobile) phone bill that's less than 3 months old
• Local authority council tax bill issued within the current financial year
• Council rent book (must be current)
• Household or motor insurance certificate issued within the last 12 months

If you're applying for a joint account, we will need this identification from both of you, although you don't have to visit the branch at the same time.
If you have any questions about the documents you need including other options available, please speak to a Personal Banker at any branch.

An instant chat window opened while I was reading so I asked if I could open a checking account, explaining that I have UK and US nationalities and currently live in the USA. The lady had to go away and check, took her 7 minutes, then she came and confirmed that I did spend most of my time in the USA. She said that I would be able to open an International Barclays account in £ while living in the USA and sent me the following link if I wanted to proceed. I also confirmed with her that on return to the UK I could open an account regardless of my dual status.

International bank account - Banking and Cards - International - Barclays

 

[rodi]

Interesting article going over the tax issues for folks living abroad.

Wealthy Americans Queue to Give Up Their Passports - Bloomberg