Tags: Foreign | banks | American expats

WSJ: Tax Crackdown Leads Foreign Banks to Dump American Expats

By    |   Friday, 12 September 2014 12:28 PM

The U.S. government's tightening of rules to ensure Americans don't skip out on their tax obligations for overseas income is leading foreign banks to stop doing business with American expatriates.

Provisions of the Foreign Account Tax Compliance Act (FATCA), which took effect July 1, require foreign financial firms to inform the Internal Revenue Service about investment income and balances above certain amounts for accounts held by U.S. citizens.

William Hart, a 24-year-old e-commerce analyst who moved to Berlin from North Carolina, has felt the pain. Deutsche Bank rejected him for an online brokerage account this spring, even though he has a checking account there and served as an intern for the bank, The Wall Street Journal reports.

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"I seem to exist in a no-man's-land," Hart notes. "Can it really be that expats are facing such massive obstacles in basic financial matters?"

Yes, says Marylouise Serrato, director of American Citizens Abroad. "The reality on the ground is that overseas Americans are facing restrictions and lockouts from both U.S. and foreign financial firms," she tells The Journal.

FATCA is leading many expats to renounce their U.S. citizenship. In the first six months of the year, 1,577 did so, which puts 2014 on pace to be a record, according to the IRS.

"What is really driving Americans to expatriate is not that they do not want to pay taxes," David Kuenzi, founder of Thum Financial Advisors, tells CNBC.

"What is driving them crazy is that now filling out tax returns is much more complicated. It requires tremendous work in terms of tax-record keeping and then it can cost thousands of dollars to get a competent person to fill it out."

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The U.S. government's tightening of rules to ensure Americans don't skip out on their tax obligations for overseas income is leading foreign banks to stop doing business with American expatriates.
Foreign, banks, American expats
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2014-28-12
Friday, 12 September 2014 12:28 PM
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