Is It Still Possible To Get Out Of Dodge?

People have been asking me about a get out of Dodge plan. The fact is, the US government is making it increasingly difficult to get out of Dodge, and those that have not already done so may well have left it too late. The government does not want its citizens living overseas, nor do they want its citizens having assets overseas. Currently there are some 6 million Americans living overseas, and they have assets and incomes that are difficult for the US government to control and tax, and the US government does not like that.

The US is the only country in the world (except for Eritrea) that has citizenship based taxation. No matter where you live, and no matter where you draw your income, the US taxes it. Every other country has residence based taxation – you are taxed only if you reside in the country or earn income in the country. For instance, if you are a Canadian working in the US, you will have no Canadian tax obligations, unless you have income from Canada. If you are an American working in Canada, you are liable for US tax on your Canadian income. If you are an “accidental American” – and there are potentially millions of these around the world – born to an American citizen overseas, or born to a foreign citizen who was travelling through the US at the time of the birth – you are a US citizen, and may not know it. The US does not care – and will happily seek you out and punish you for failing to file and pay US taxes. No leeway is given.

The US has a whole range of laws that penalize US residents that live outside the US. One law is the FBAR law – that law requires that foreign financial assets be reported each year, and requires that all accounts where the citizen is a signatory be reported. Financial assets include bank accounts, mutual funds, CDs, gold, etc. Failure to report these accounts can, and does, result in draconian fines, from $10,000 for non-will failure, to 50% of the balance of all accounts, for failure to report even one account. Per year. Simple errors can, and do, result in the penalties being applied. The signatory provision effects persons who work for an overseas company and can sign business checks. They must report the balances of the account, even though it is not their account. And even though there may be privacy law issues – the US does not recognize the privacy laws of other nations, and can and will prosecute those individuals for failing to breach the laws of the nation in which they live. Note that citizens that live in the US have no such requirements.

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