> Is WSJ really trying to argue that expats ate dodging tax rules, not taxes?
Actually, yes. Maybe you didn't read the story, but it specifically talks about how the major burden for middle class expats isn't necessarily taxes but the penalties for failing to file specific paperwork.
Anecdotally, this is certainly true for the expats I know (including myself). I didn't have to pay any US taxes, but the penalty for not filing excessive disclosure forms on all local bank accounts is very onerous.
This is exactly right. HNers who are US citizens will set up a perfectly ordinary corporation in their country of residence and run their company perfectly legally in that country. Years later they hear of Form 5471. The government's SOP on this is to impose a $10,000 per year penalty then force you to beg for the penalty to be removed. Sometimes that happens. Sometimes that doesn't. How many small businesses could stand a $40,000 or $50,000 hit just because you didn't file a piece of paper saying you owned stock in a foreign corporation?
The greatest part is that now most of these banks are required by law to report our accounts to the IRS. So now that the IRS is notified we no longer have to worry about penalties right? Wrong. Now they have an automated way to detect and fine us.
It's really pretty bad. We're not even talking about the wealthy in many cases. You basically have to have an tax preparer who specializes in expat issues handle your taxes, and they aren't cheap. This is not a job for H&R Block.
It depends on how much money you earn and where you live, mainly. If you make < 100k a year U.S. and pay taxes on it in the country you live in, you can get by with a 1040 and one or two extra forms as far as the IRS goes, and not have to pay the U.S. anything in income taxes.
However, the issue with the WSJ article, where you would also have to disclose retirement and savings accounts or pay a penalty can be an unpleasant surprise for people. Makes me want to just put everything in my spouse's name and pretend the U.S. government doesn't exist.
Actually, yes. Maybe you didn't read the story, but it specifically talks about how the major burden for middle class expats isn't necessarily taxes but the penalties for failing to file specific paperwork.
Anecdotally, this is certainly true for the expats I know (including myself). I didn't have to pay any US taxes, but the penalty for not filing excessive disclosure forms on all local bank accounts is very onerous.