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Americans in Sweden suffer US tax crackdown

Americans in Sweden suffer US tax crackdown

Published: 06 Mar 2012 16:42 GMT+01:00
Updated: 06 Mar 2012 16:42 GMT+01:00

US citizens living in Sweden, as well as Swedish financial institutions, are grappling with the effects of a recent crackdown by US tax authorities that has left many US expats facing massive penalties, contributor Judi Lembke discovers.

Pamela is an American who has lived in Sweden for 25 years and has always been diligent about filing her US tax returns, something required of American citizens even if they live abroad.

But after chancing across some information about an obscure US tax regulation known as FBAR, Pamela (not her real name), has been on a roller-coaster ride that has taken her through a difficult maze of dense tax regulations and punishing financial penalties.

"I was potentially looking at a seven figure fine," she tells The Local.

FBAR is the common term used to refer to what US tax authorities officially call a Report of Foreign Bank and Financial Accounts, a law which has been on the books since the 1970s, but which US tax authorities have only recently begun to enforce in earnest.

Any US citizen living abroad who owns assets (checking, savings, pension, brokerage investments, life insurance, property, etc.) registered outside the US equaling a total of more than $10,000 – and that’s for all accounts, whether individual or joint ownership – is required to file an FBAR.

For those living in Sweden this includes not only bank accounts and the like, but also includes items such as Coop MedMera cards, ICA cards, and Rikskupong food vouchers.

Pamela's concerns about what the FBAR requirements might mean for her escalated as she kept coming across the works "FBAR penalty" as she went about completing her tardy US tax return.

Previously she had always done her own taxes but to be sure she was following the requirements correctly Pamela contacted an accountant in the United States, who in turn sent her to a lawyer.

The lawyer advised her that as she hadn’t filed her return on time, it meant she had undeclared income and with the current tough stance taken by the main US tax agency, the Internal Revenue Service (IRS), for non-filers of the FBAR, she should "do the math".

Much to her horror, Pamela discovered that the penalty for non-compliance of FBAR is $10,000 per bank account per year, with the IRS looking back six years.

Because many Swedish banks open a new account each time a stock is bought or a fund opened, Pamela had double-digit number of accounts registered in her name.

By the time she'd followed her lawyer's advice to "do the math", she found herself potentially facing a penalty in excess of $1 million.

According to her lawyer, the only the way to pay a smaller penalty would be to join something known as the Voluntary Disclosure Program set up by the IRS.

"Because I am fully integrated into Swedish society, I thought it would be an opportunity to explain my situation," she recalls.

But the reaction she received from US tax authorities was entirely different.

"I was treated like a criminal. I was told that even in the Voluntary Disclosure Program it would be assumed I was a ‘willful violator’ of the tax laws and would need to pay 25 percent of [the value of] all my overseas assets, based on the highest balance in the sum total of all my bank accounts, retirement accounts, apartment, car, etc. over the last eight years," she says.

Even the total value of Pamela's apartment was to be included in calculating the "lesser" penalty, not simply the amount remaining on her mortgage.

"I was told I should be happy I was not paying the seven figure penalty. But I have never even had close to seven figures in my accounts in my life!" she explains.

The United States is the only country in the developed world that requires its citizens to file tax returns if they have enough taxable income, whether living in the US or not.

However, this requirement is actually separate and distinct from the FBAR filing requirement.

It doesn’t matter that there was no criminal action on Pamela’s part or that she might have had reasonable cause to have not complied with FBAR.

The IRS policy has been one of "no negotiation, one size fits all", although it has softened its stance somewhat recently following an outcry from US citizens living abroad.

Last June, the IRS reduced the penalties to five percent of bank accounts and retirement plans (leaving out assets), but the conditions for qualifying for the lower penalty are very narrow and many expats do not qualify.

And while Pamela may no longer be facing a seven-figure penalty, she's already racked up a bill of $40,000 in accountants' and lawyers' fees.

"‘It’s been more than one year since I started the process and the end is nowhere in sight," she laments.

While Pamela’s story is enough to give any American ex-pat many a sleepless night, even Swedish financial institutions will soon find themselves facing new headaches due demands from US tax authorities regarding Americans living abroad.

Of increased concern for banks and other Swedish financial companies is a regulation with yet another confounding acronym: FATCA, the Foreign Account Tax Compliance Act, which requires foreign banks to report Americans to the IRS starting in 2014.

FATCA regulations require banks to install costly software and have already led some Swedish and other foreign banks to deny service to potential American clients.

A quick survey of some of Sweden’s leading banks shows that most are studying the issue but have not made any concrete decisions as to whether they will either comply with the new regulations or simply stop taking on American clients.

Handelsbanken, SEB and Swedbank all say that they are weighing the options and will come with a decision before 2014.

However, Swedish business daily Dagens Industri (DI) reported recently that Swedish financial institutions are actually becoming more restrictive about taking on American clients, with some going as far as saying they would close the door on US citizens seeking to open new accounts.

Lisa, a Swedish-American who has lived in Sweden for more than ten years, told DI that she had been denied a new investment account by Handelsbanken, whom she has been a client with for almost as long as she has lived in Sweden.

When she attempted to open the account she was asked if she was American. Lisa replied that she was Swedish-American and was told that they didn’t open new accounts for Americans.

She was later told that the rules applied to Americans living in the US and since she lives in Sweden if would be okay after all.

According to Mary Louise Serrato, the Executive Director of American Citizens Abroad (ACA), a lobby organization representing the interests of US citizens who live in other countries, the organization has been swamped with stories from members who have been caught up in the FBAR crackdown.

"We have heard of banks calling in mortgages and refusing pension fund and insurance coverage for US citizens. These testimonials also represent individuals who were levied abusive, financially ruinous FBAR penalties for simple errors of omission or ignorance," she explains.

As Serrato points out, many US citizens are unaware of the FBAR requirements, and the US tax authorities' "one size fits all" approach has left many well-meaning US tax payers concerned about what might happen if they try to comply.

"These individuals have reasonable cause to have been ignorant or IRS laws and requirements: however many have entered or will enter the Voluntary Disclosure Program to try and ‘do the right thing’ but will find themselves being bankrupted by the process," she explains.

All told, ACA has already received more than 150 testimonials from individuals who have lost access to their US-based accounts or who have been shut out by foreign banks unwilling to comply with FATCA.

"Many individuals are not even aware that they are American and should be filing, such as Green Card holders and ‘accidental’ Americans (born in the U.S., left when they were three and never returned), children of Americans now living overseas (even if US citizenship was never claimed)," she explains.

Peter Hallworth, a UK native who lives in Stockholm, has two children who were born in America who, upon reaching the age of majority, will face a lifetime of not only filing US tax returns but also of complying with FBAR.

"I always thought having US citizenship would benefit them in the future; now we’re considering whether it’s worth the price," he says.

"I really can’t believe it! This nice country that I respect – have they gone mad?"

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Your comments about this article

17:44 March 6, 2012 by Reason abd Realism
@ Judy Lembke (if you read comments) or someone who knows about tax laws.

I'm not an American (honestly!!!) but I thought that an American (or any foreign resident from a nation that has a tax treaty with Sweden) living in Sweden for a long time who becomes a Swedish resident simply declares Sweden as their place of resisdency for tax purposes, and from then on pays all the Swedish taxes they owe on all the income they earned in Sweden or elsewhere.

Accordingly the tax bill to the USA should be zero because US tax rates are lower (except maybe inheritance tax or a few odd things like that), and through its treaty the US recognizes the taxes paid in Sweden, and does not double tax people on the same earnings.

So if I am interpreting things correctly, then this nightmare scenario applies to Americans who live here but have never obtained Swedish residency, and /or who choose to report their income and pay their taxes to the US, and who have failed to report the holdings in all of their accounts through an FBAR. Is this correct?
17:52 March 6, 2012 by Mib
Wow.......talk about Big Brother! No wonder only 30% of Americans have gone abroad :0) Seriously, you have a tax organisation that treats people as guilty and big time criminals while the big fish can pay big fees to avoid paying tax or pay the minimum.

You also have to winder why the authorities never brought up this issue before and only now bring it up......is the US so deep in debt that they are prepared to bankrupt American citizens abroad. It's almost penalising people for living abroad!

Sad to see the so called face of democracy turning into a dictatorship and curtain twitching where everyone is assumed as guilty until proven innocent and you wonder wy th likes of Russia and China etc don't listen to the empty words spoken by US politicians. The majority of Americans are decent hard working people....unfortunately, they are being run by a corrupt, self interested, fearful group of people in power whose only interest is hemselves and their rich friends. I fear for America's future unless a strong group of personalities and the masses start to protest and change the system.
18:37 March 6, 2012 by mame88
Reason: Unfortunately America is the only Western nation to impose double taxation on its citizens, irrelevant of where they reside. This is something ACC is working hard to rectify, firstly by trying to get representation in Congress, where expats have no voice but are subject to laws being passed that directly impact them.

FBAR was originally enacted in the '70's in order to go after drug lords, mafia types and corporate bigwigs attempting to hide money in offshore accounts. A few years ago the Treasury started to use it against ordinary citizens living overseas.

-Judi Lembke
18:41 March 6, 2012 by Daniel M
The FBAR Tax For TD F90-22.1 will soon be changed to the more simpler FUBAR Tax Form TD FU2-22.2
18:51 March 6, 2012 by Spuds MacKenzie
This is one of the many reasons I left the Hell Hole that is known as the United States of America. I've earned NO MONEY in the U.S., am a Swedish permanent resident and only earn money here, yet the IRS still wants their share! Being born an American is a living nightmare.
19:17 March 6, 2012 by cogito
This means that Americans living abroad are assumed guilty of a financial crime, even though they owe no taxes, unless they spend time and money proving themselves innocent.

All expats must now live in fear.

Whatever happened to "innocent until proved guilty?"

Is Washington that desperate for money?

Thank you, Ms. Lembke, for information on this scandalous treatment of U.S. citizens. And thanks to TL.
19:25 March 6, 2012 by fikatid
IRS is the worst of the worst. Instead of going after the richest individuals with million ways to reduce tax and hardly pay any, they go after ordinary people.

A friend of mine gave up his US citizenship because of that, but the IRS still requires him to report all taxable income for the next five years...just in case that IRS can collect some money from him.

IRS = It Really Sucks
19:57 March 6, 2012 by calebian22
Unless you make more than 92,900 dollars per year in Sweden, you don't pay taxes in the US.

The reporting of your accounts does not have a payment attached to it either. It is laborious, but painless as long as you do it every year. By the way, every year the deadline to file for the previous year is June 30.
19:58 March 6, 2012 by Reason abd Realism
@ Judi Lemke

Thanks for your comment. But this document, article 23, says there is no double taxation:

http://www.irs.gov/pub/irs-trty/sweden.pdf

This article says that some taxes continue to be applied to Americans living abroad (not yet clear to me what these other taxes are), but the income tax is at least not doubly applied. This is similar to the wording of other treaties.

Do you meanthat the US imposes double taxation on revenue from off shore accounts, or double taxation on income tax, or both?

Thanks
20:00 March 6, 2012 by philster61
America to Sweden : "bend over"

Sweden to America ; "How far"
20:29 March 6, 2012 by kiaat
@philster61: unfair comment. this madness applies to any and every country for usa passport holders.

even if you were born there with parents passing through or on a work assignment . you must pay the price for that blue passport. that price is double taxation.. in all countries.. not just sweden. no matter where you live you have to report and you have to do this forever....

the problem is when you die.. when you die they can claim 30% of your estate. that is when it gets nasty.... what shall you do for your children? how to insure your money stays with them? and as one person pointed out you can give up the passport (and citizenship) but then you have to keep reporting for 5-10 years and each time you go to usa on a trip they will know what you did.. you have to carry a paper with you saying that you were born in usa, but gave up the passport.

it is nasty and was indeed created for multi billionaires and drug lords and criminals, but now it is standard practice to squeeze all passport holders.

be informed and know what you need to share with them once a year...... for the rest of your life....... and who will lobby for this irs nonsense to change? no one overseas has a voice unless you are in the military service....
20:38 March 6, 2012 by cogito
A record number of U.S. citizens feel they are forced to renounce their U.S. citizenship. They are not tax cheats. They merely find compliance with these insane rules more than they cope with.

19:57 March 6, 2012 by calebian22

"Unless you make more than 92,900 dollars per year in Sweden, you don't pay taxes in the US."

For the time being. Just wait....
20:57 March 6, 2012 by Blazes
Canadians of American origin have been aware of this nightmare since the Canadian media began reporting on it last summer.

A Canadian citizen originally from the US has organized an online forum. It was established in the name of Isaac Brock, a Canadian hero who led resistance to an American invasion into Canada in the War of 1812. Two hundred years later, we're trying to again fight the invasion of the US into Canada and internationally. .

Although the majority of participants are Canadian, we have members from around the world--France, Belgium, England, Switzerland, Brazil, New Zealand, Africa, etc.

It would be great if folks from Sweden would consider joining us. I think you will find it is a wealth of information and good support from others in similar situations. Here's the website:

http://isaacbrocksociety.com/
21:21 March 6, 2012 by HYBRED
So if the US government asks the bank here for your financial records they will gladly turn it over, or even report it without you knowing. How sweet.
21:28 March 6, 2012 by Valdemaratterdag
@Hybred,

I'm not sure that is the case. According the the article, "Pamela" was pointed out because she filed her taxes late, presumably without an extension, and the IRS simply assumed that she wasn't in compliance with FBAR (more than $10,000 in total in all accounts). That's a fishing expedition which the article is not clear on. This is why she looked into the Voluntary Disclosure Program. If the IRS already had this information, applying for the program would be a moot point.

The article states that the banks are looking into complying with FACTA (the new reporting requirements) by 2014. Whether they do this or not is uncertain.
21:32 March 6, 2012 by HYBRED
@Valdemaratterdag

If she filed a FBAR she could send in a ammended one to cover the ammended tax return.
21:49 March 6, 2012 by quant18
Reason abd Realism:

First, American citizens who live overseas cannot take advantage of U.S. tax treaties to reduce their U.S. tax bill. The treaties are specifically designed this way (it is called the "saving clause") and Congress will not ratify a treaty without one. In the U.S.-Sweden Treaty, it is Article 1, Paragraph 4: "Notwithstanding any provision of the Convention except paragraph 5, the United States may tax its residents (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if the Convention had not come into effect. For this purpose, the term "citizen" shall include a former citizen whose loss of citizenship had as one if its principal purposes the avoidance of tax, but only for a period of 10 years following such loss." And FBAR fines are not a tax. So a tax treaty is of no help in saving you from them.

Second, the $92,900 exemption only applies to wage income. Not to bank interest, social assistance payments, dividends, gains from selling your house in the country where you live, appreciation of assets inside a mutual fund or a retirement plan, etc. If you have not reported any of those to the IRS, they regard you as a fatcat concealing offshore income and assess you additional fines.

And finally, not only do you have to report all the above types of income to the IRS, you have to report it on complex forms which most US domestic tax preparers have never heard of: forms 3520 and 8621. If you only filed a 1040 for the above types of income, you are NOT COMPLIANT. The IRS sees you as guilty of concealing an offshore (constructive) trust or offshore "passive foreign investment company" and may assess you penalties for failure to file. Look at the instructions for those forms and see what the failure to file penalties are. FATCA will bring non-compliance to the IRS' attention.
21:51 March 6, 2012 by HYBRED
@ Trowbridge H. Ford

"Fortunately, being an American who always over pays his American taxes and doesn't make a penny in Sweden, I have nothing to worry about, and have contacted none of the scofflaw advisers. "

That may not be true. If you had over $10,000 in the bank here in Sweden at ANYTIME you have to file the form. It makes no matter if you paid your tax's fair and square.
22:09 March 6, 2012 by Reason abd Realism
@ quant18

A lot of legaleaze in the treaty, but the following line that you quote:

For this purpose, the term "citizen" shall include a former citizen whose loss of citizenship had as one if its principal purposes the avoidance of tax, but only for a period of 10 years following such loss

could be interpreted to mean that the US reserves the right to chase tax evaders, i e. people who leave the US specifically to avoid a legitimate tax debt incurred within the US, to the ends of the earth, for up to 10 years'.

Anyway as I posted initially (post number 1), I am not an American, but I had simply assumed a basic level of independence granted to US citizens who are former US residents who declare a new country to be the country of their residence for tax purposes, and I assumed further that no additional taxes would be charged to these people, particularly if the rates they paid in their newly adopted country of residence exceed tax rates in the US. This also assumes that investment and dividend income and capital gains etc. are declared and taxed in the new country of residence, and not are kept quiet.

In other words I had assumed that the nightmare scenario in the article was for people who chose to report their income in the US while living overseas, but who did not disclose all of their off shore accounts or investment revenues.

If I wrong then I am very surprised by this, but it does not affect me personally, so I will not be hiring a lawyer anytime soon to pour over the treaty.

In any case thanks for your comment.
22:36 March 6, 2012 by quant18
@Reason abd Realism: Sorry to have missed your earlier post that you're not an American. Lucky you! The 10 years' limitation is related to the old Section 877 exit tax. Exit tax applies not just to people who left the US with unpaid taxes, but anyone who renounced US citizenship (even if they had lived overseas for decades and were renouncing to naturalise in the country where they lived and made all their money), and either met (fairly high) asset threshold OR had failed to file some tax forms in the past 5 years. They would have to continue to pay US tax as if they were US citizens, but only on US-source income. This tax raised very little money, because most people who have lived overseas for decades didn't have any US-source income or investments. (Congress failed to realise this in advance --- the jingoists and egocentrists there assume that everyone in the world invests in the USA and wants to live there).

So since 2008 there's a new exit tax in Section 877A: instead of 10 years of tax on US-source income, you're charged capital gains tax on all of your worldwide assets as if you had sold them on the day before you lost citizenship. 877A is actually similar to what happens when you make a "non-resident" declaration in most civilised countries. Except that you have to give up your citizenship to do it, you may not be able to do until years after leaving the US (because you had to wait to qualify to naturalise elsewhere). Which is yet another reason why this is such a sore subject for many of us overseas Americans. Sorry to be taking out my anger on you.
22:46 March 6, 2012 by brash
It's taxation without representation.

And it's unconstitutional.

The fact that the US is the only developed country to tax its citizens even if they live and earn their income abroad has always been unfair. But what makes it even more unfair is that Americans abroad have no real representation in Congress and no real influence. And because they can't politically defend themselves, the 6-million plus ex-pat Americans are easy pickings for grand-standing politicians who want to plug the hole in the huge US deficit, much of it due to their own incompetence. In short, it's taxation without representation--the very reason Americans fought the revolutionary war and declared independence in 1776. It's completely outrageous, unfair and unconstitutional but politically there's nothing Americans abroad can do about it.

For more information on this, check out: www.isaacbrocksociety.com
23:04 March 6, 2012 by Reason abd Realism
@quant18

No need to apologize for your rants. They are informative :)

If I understand you correctly then: if I am American and live overseas, I can continue to hang on the US investments that generate taxable US income, and must pay US tax on that. If I declare a new country of residency, then this invokes an instantaneous virtual sale of all assets, to enable a settling of accounts in terms of realized capital gains etc.. but I can then importwhat is left of these assets untaxed into my new country of residence (where they may begin to generate dividends etc.. and be taxed locally from then on).

Agree that it is a colossal drag to have to rennounce citizenship, and that alone is enough to be extremely angry about, but , if I can ask an ultra naive question that may imply that I have not understood some of what you or others wrote earlier, please describe a simple situation of a Swedish resident who is an American citizen and who earns say 10,000 bucks either via employment or as a result of his investments (10K above and beyond the 92K exemption amount if that is relevant), and must pay taxes to both Sweden AND the USA on that same 10,000 bucks in the same tax year. Thanks.
00:58 March 7, 2012 by sunnchilde
It seems to me the only solution is to renounce your American citizenship, be stateless and apply to Sweden as a refugee. How do you renounce your citizenship? Is there a form you need to fill out? I need to look in to this.
01:26 March 7, 2012 by KPOM
Now maybe you can understand why Americans despise income taxes so much. The IRS is probably the most hated government agency in the US, because with them, you are guilty until proven innocent. The tax forms are ridiculously complicated, and they have zero tolerance for error. Even my relatively simple tax return was 26 pages long (it was even longer when I lived overseas). Add state taxes and it was 44 pages long for 2011.

As for the FBAR, enforcement really started stepping up after 9/11. It was another chance to use "terrorism" and money laundering as an excuse for revenue. It's bad no matter who is in power. Republicans like to burnish their "law and order" credentials, and Democrats see overseas bank accounts as a treasure trove (they play on the assumption that anyone with $10,000 abroad must be a cheating "1%er").

That said, the double-taxation isn't as bad as it sounds. For income not eligible for the exemption, you can take a credit for foreign tax paid.

However, FBAR is now extremely burdensome because they want bank and branch addresses for all your overseas accounts.
01:34 March 7, 2012 by Monark540
Reason and Realism - its not quite that bad. Declaring that you are a resident, of say, Sweden, as an American, does not trigger a sale of assets. Americans continue to file tax returns and pay any tax due when they are living abroad. If they earn money here in Sweden, they receive credit for the Swedish taxes paid on their U.S. Tax return. Sweden is one of some thirty-plus countries that has a tax treaty with the U.S.

But, as others have said, the financial asset reporting requirement is not satisfied simply by paying your taxes every year. I think that its not widely understood nor do people understand the potential magnitude of the penalties for failure to file these forms.
01:35 March 7, 2012 by rolfkrohna
We fought Hitler, why don't we fight USA
01:38 March 7, 2012 by Atlas
Al Capone was one of the big Mafia gangsters ever lived in US...And guess what he went in prison for...let me spare you the Wikipedia search...Al Capone was indicted for tax evasion and for failing to file tax returns. That basically ended his career as a mob boss.

So, the bottom line is: If you are a US citizen, or a legal immigrant in US, or just born there remember to : Render unto Uncle Sam the things which are Uncle Sam's...(a quote from Bible, but modified for the new Caesar ;) )

FYI, i was an international student for 1½ year in US, and even i had to file a tax return. I didn't had a social security number (not needed for just studying) or engaged in an activity that had economical profits but i still had to file one. And i did it, it was strange but had to be done.
02:29 March 7, 2012 by mnphoto87
"children of Americans now living overseas (even if US citizenship was never claimed)"

Let me get this straight, if an American expat (who is an official Swedish resident) chooses to give birth and raise their kids in Sweden, whom never claim US citizenship, they will have to file US taxes the rest of their lives?
03:02 March 7, 2012 by TheWatchman
@mnphoto87

I think you are automatically an American citizen if your parent is one unless you revoke it. I might be wrong. I actually discovered this just now, and more research will have to be done about this because I am an American who lives outside of U.S. territory.
03:04 March 7, 2012 by Marc the Texan
This is what really irritates me. I'm sure the IRS had a good laugh naming that law FBAR. This doesn't affect me personally, but I find the implications to be oppressive. This is ridiculous for people who are living permanently abroad. The only way it will change is if people start making an issue of it. So if it affects you, start agitating about it politically.
05:17 March 7, 2012 by LisaPio
U.S. tax liability is based on citizenship, not residence. Therefore if you were either born in the U.S. or have a parent who is a US citizen, you must file a U.S. tax return if your 2011 income earned anywhere in the world is USD 9500 or more. Look at Chart A in the 2011 Form 1040 instructions for more information.

It does not matter what other residence or citizenship you have. As a US citizen, or even Green Card holder, you are obligated to file a tax return each year if you meet the income threshold described in Form 1040 instructions.

Even if you did not know or claim you had US citizenship, you are still obligated to file a US income tax return. The U.S. has a term for this kind of "US person". They call this type of citizen an "accidental American" and in their voluntary disclosure program they like to fine you 5% of your overseas bank accounts if you fall into this category and have not filed tax forms and the FBAR form.

The FBAR form is an information form, not a tax form. You must file it if the sum total of all your bank accounts is over USD 10k during the year. The FBAR form does not go in with your taxes. It goes in at a different date to a different address and requires you list all your financial accounts with the name and address of the bank as well as the account's highest balance. The penalties for not filing it are life altering.

The definition of financial account is also quite broad as is pointed out in the article. Simple customer cards of stores that are debit cards must also be reported with their highest balance. Non-US prepaid SIM cards are reportable with their highest balance as they fall into the category of debit cards. The reporting requirement is quite onerous.

Getting back to the tax form, do not think that just because you already file taxes in your country of residence and there is a tax treaty that you do not need to file the tax form. You still need to file in the US and you can be guaranteed that will be more complicated. What takes me 3 pages to declare in Sweden usually takes 48 - 64 pages to declare in the US and I file a simple personal return.

As for the USD 92,500 income exclusion, as someone has already pointed out, that only covers earned income so if you have investments or get a pension you may need to pay tax on them. A way this could happen in Sweden is if you have invested in a Privatpension (the tip of the pyramid for those of you who read what comes in the orange envelope). These are not usually taxable in Sweden, but the US does not recognize this and will tax you on this investment and you will have no equivalent tax credit from Sweden to offset these taxes.

Tax credits for taxes paid in Sweden can be used to offset US taxes, but don't count on it being a one to one credit. Filing a tax credit can automatically trigger that you have to file the Alternative Minimum Tax forms and the AMT often serves to only reduce your tax credit.
08:19 March 7, 2012 by brash
Welcome to the nightmare of being a US citizen living abroad.
08:37 March 7, 2012 by Soft Boiled
Its all explained very clearly in the Aaron Russo documentary

"America: Freedom to Fascism" on Youtube. Get the pop-corn its quite long
08:41 March 7, 2012 by Reason abd Realism
@ Monark540 thanks for you comment

@ LiaPio Thanks for the extensive clarification.

To potentially answer my own question at the end of my post 23, if I make 92.5K USD in Sweden as a Swedish resident, the US ignores this exempt amount and lets the Swedes tax me for this, but for earned income above this 92.5K amount, such as say 10K USD that is provided to me with the orange envelope Swedish pension contribution, then the USA will say that that this 10K is deemed earned income that exceeds my 92.5K exemption, and must then be taxed at some US federal rate of 28%. If true this would be extremely annoying because it is as if the US does not recognize what is essentially a 401K contribuiton in Sweden as a tax exempt retirement savings mechanism.

The other aspect of the story that has become clear is that the reporting requirements are so exhaustive as to be ridiculous (SIM card accounts?), and the fines for not reporting a number of small accounts (A million dollars in fines for the example in the article) are so large that this can be only be called financial terrorism.
09:00 March 7, 2012 by brash
A lot of people are choosing to renounce their US citizenship due to the high accountant's fees, paperwork, fear of huge penalties, intimation by the IRS and general anxiety over the uncertainties. Apparently, the numbers have increased from just a couple of hundred per year a few years ago to some 1700-plus last year--and the numbers are rising. At the embassy in London, for example, there's a six-month to one-year waiting time to get an appointment.
09:04 March 7, 2012 by LisaPio
If you are a US citizen or Green Card Holder and plan to stay long term in Sweden, financial planning in Sweden becomes hard because any investment by a US person in a mutual fund is considered an investment in a Passive Foreign Investment Company (PFIC) and that investment is usually taxed by the US as if you sold it each year (even if you didn't) which could lead to phantom gains that you could pay tax on.

To make it even more difficult to be a US citizen overseas, if you own a house or a stock or mutual fund, you are not just taxed at the profit you make in current dollars. You must go back and figure out what the dollar cost was when you bought your investment and what the value is when you sold the investment and you are taxed on the difference. If there is a loss, losses are not always deductible.

I have a Swedish private pension that I took out many years ago, and even though I never touch it, it is taxed by the US as if it is sold each year. As the Swedish Kronor is currently high and the dollar quite low, the refusal of the US to recognize other currencies caused me to pay thousands of dollars to the US in taxes on the pension one year even though the value of the pension in Swedish Kronor had dropped way below what I paid for it initially. It is very frustrating to be subject to reporting this way when your currency of operation is the Swedish Kronor and you could not care less about the USD.

Retirement investments that make sense for other residents of Sweden are extremely punitive for US dual nationals, US citizens and Green Card holders who reside here. I have met other Americans in Sweden who are dual nationals and report suffering because they cannot have the same investments other Swedes use to plan for their financial future. As it has become next to impossible for non-residents of the US to obtain US bank accounts for investment, many who are dual nationals feel stuck between a rock and a hard place.

American Citizens Abroad has a webpage that lists the basic filing requirements for US citizens and searching that site can give you a good feel for some of the tax issues that are unfair to US citizens and Green Card holders living overseas.

http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=506&Itemid=46
09:09 March 7, 2012 by Satch
If I understand it right, It's important to also understand that income above 92.5K USD if taxed in Sweden is NOT subject to double taxation due to the reciprocal tax agreement.

I believe that the only element that is important to complete is filing and disclosing all held assets. It is the failure to disclose that will result in the penalties
09:15 March 7, 2012 by cogito
@LisaPio. #39 Thanks for the link. Excellent information

As has already happened in, for example, Germany, banks will be forced to refuse new American clients and drop old clients.

I watch in mounting grief and horror the criminally insane new laws being passed that are slowly turning every expat American into a criminal. And even their non-U.S. spouses are coming under the Treasury's scrutiny due to the intertwining of financial resources.
09:17 March 7, 2012 by OUIJA
Nothing to write about the subject, but my congratulations to the many experts who have written this eye-opener about taxation in the US.
09:21 March 7, 2012 by LisaPio
@satch You must always file a US income tax declaration. If you meet the requirements for being resident overseas, you may choose the FEIE (Foreign Earned Income Exclusion) of USD 92,900 for your earned income. Other earned income above that amount and income from investments are not excludable under the FEIE and are taxable by the US, however, the Tax Treaty will allow you to apply a Foreign Tax Credit (FTC). To get the FTC you have to file the correct forms. Non-filing of US income tax forms is a criminal offense. There are also penalties that mount up quickly for failure to file and failure to pay and for accuracy. In addition, you must file a separate form called the FBAR at a different time and to a different address and on this form you must report your overseas financial accounts.This is the form with the non-willful penalties of USD 10k per account you have not reported. If you willfully did not file the form, the penalties are even higher.

@Reason abd Realism - you have it a little confused, but your conclusion that the US does not recognize Swedish IRS 401K like investments as being tax free is absolutely correct.
09:22 March 7, 2012 by stenhuggaren
Imperialism coming home to roost.
09:49 March 7, 2012 by Satch
@LisaPio. Thanks, though I think you just presented a much more detailed version of "you need to file the right forms but you won't be liable to pay the US any money if you pay your Swedish taxes."

Or are there circumstances that despite paying Swedish tax on earned or unearned income additional tax would be levied and owned to the US/IRS?
10:02 March 7, 2012 by OUIJA
#44 @stenhuggaren

"Imperialism coming home to roost."

No, dictatorship coming home to spoil the thread.
10:27 March 7, 2012 by LisaPio
@Satch As Swedish tax is much higher than US tax, if you were taxable in Sweden on certain income, it is unlikely that you would owe tax to the US.

One way you could pay more tax to the US is if you have gain in a mutual fund. In the US, you will be required to pay tax on the capital gain as well as any potential currency gain from the date you bought the fund and sold it. Even though Swedish tax on investments is higher than the US tax, it could happen that you could still owe to the US because of the currency fluctuation.
12:58 March 7, 2012 by lilsocks
I'm confused as to why the person referred to in the article who has lived in Sweden for TWENTY FOUR years did not think to change her nationality. I can understand people working abroad for long periods of time but 24 years is extreme and as such I have no pity for her.
13:15 March 7, 2012 by LisaPio
Perhaps she believed, as the man whose children are US nationals, that keeping US nationality would benefit her in some way in the future. Perhaps she is a dual national. Sweden allows dual nationality so on the surface it would appear good to keep them both.

The problem comes in that the US, unlike the rest of the world, practices citizenship taxation and has constantly changing tax rules that are not adequately communicated to its overseas citizens. There is also a serious lack of US trained tax advisors in Sweden

It appears that she was filing for years without problems. Perhaps she thought she was doing everything right and was not aware of the pitfalls. US taxes for overseas citizens are more complex than those of Americans who reside stateside.
13:28 March 7, 2012 by Valdemaratterdag
@lilsocks,

Many are dual citizens because it's easier to enter and exit the respective countries. There's also the pride of citizenship and voting rights. Some of us have homes or family in two countries. It isn't so easy to just give up citizenship once you've acquired it. The U.S. recognizes you as a tax citizen for ten years after giving up your citizenship (which now costs $450). So, even if you were to give up your citizenship today (which I believe takes two trips to the proper office to do so), you would still be beholden to the U.S. government for ten more years. Also, I believe that if you travel to the U.S. on vacation after losing citizenship, there is extra scrutiny placed on you in customs because of this mark on your record.

The article goes overboard, however, with the number of accounts that this woman had to deal with and report. Coop MedMera cards and ICA cards? Come on. Who's going to check those? Do you think the U.S. government is going to send a subpoena to ICA to see who owns a debit card, even if ICA could even determine who is an American or not? All for what? 200 Crowns in coupons?

This is why it all comes down to self reporting. This is why the U.S. government has a voluntary disclosure program. Why allow people to self report old accounts? Because the IRS doesn't have the money or manpower or legal standing to go after every MedMera or SEB account in Sweden potentially belonging to American citizens.

IF, the banks in Sweden get in line with FATCA by 2014, then I think it would behoove any American who hasn't disclosed to close all those accounts well before then. The voluntary disclosure program seems to not be a good way out, according to the article. You're treated as a criminal whether you disclose or not.

Now, if you have been staying up on on your FBAR (and now also FATCA for this year), then what do you have to worry about? Filling out the FBAR for me took like five minutes. FATCA looks more complicated, but not extremely so.
14:25 March 7, 2012 by cogito
@Valdem. Not extremely complicated? The instructions alone are baffling.

My guess: Stiff penalties will be levied even for the slightest errors in reporting, no matter how inadvertent.
15:24 March 7, 2012 by SimonDMontfort
Whew! Certainly an expensive time to be an 'American Abroad'
16:11 March 7, 2012 by becks41
This is a great article and is something that all US expats should be aware of.

However, there needs to be some clarification between filing your taxes and filing the FBAR. You file your taxes in the US with the IRS, you file the FBAR with the Treasury department - there are two separate governmental agencies. And you only need to file the FBAR if you have net assets of over 10k in foreign accounts (bank, pension, investment, etc). It's a huge pain in the ass because they expect you to know the high watermark for all of these accounts in the reporting year, this means what specific date did you have the highest balance across all of your accounts - this is not only impossible to determine (unless you track your daily balance over the year) but also incredibly stupid.

The earned income exclusion is absolutely necessary for US citizens abroad, regardless of whether or not there are tax treaties between the US and resident country. A lot of foreign tax is not income based, look at the VAT rate, there is no sales tax in the US that is even close to that high. It's even worse if you live in Dubai where there is no "income tax" however you pay a ton of "fees" that amount to taxation, however they are not recognized as "tax" by the US government so your entire income is not subject to US income tax.

It's also important to note that Swedish income tax is not that high, yes, it is not that high. If you make under 28.000 SEK a month (or somewhere close to that) your tax rate could be lower in Sweden than in the US (depending on the exchange rate), this means that a lot US citizens in Sweden who don't earn too much might suddenly be subject to US tax if the foreign income exclusion goes away. When I lived in Stockholm, my effective tax rate was around 27-28% (I owned an apt so I was able to deduct more off of my income) yet I earned over 40.000 SEK a month. (I also contributed to a pension which lowered my taxable income as well).

Also, the one major thing missing from this article was State tax. Did you know there are states (California being one of those states) which will assess a state tax on your earned income while you live abroad. States do not have tax treaties with foreign governments, therefore if you're not careful you will end up with a huge state tax bill if you ever return to your home state. (this applies when they still consider you a resident even though you are a resident in a foreign country, and yes, this does happen).

Sadly until things change, there will be a lot more US expats giving up their citizenship because of stupid tax and treasury laws! When I am here long enough to get citizenship, I will seriously consider giving up my US citizenship so I won't have to deal with this nightmare!
16:17 March 7, 2012 by mnphoto87
LisaPio or anyone else,

I am a US expat with Swedish residency. Let's say have a child in Sweden. As I understand from the article, my children will have to file US taxes even if they never claim US citizenship? And if children of US citizens automatically become US citizens, would that mean that their children (my potential grandchildren) would automatically become US citizens too? Would the best way to avoid this be to renounce your child's US citizenship before they start working?
16:42 March 7, 2012 by LisaPio
@ mnphoto87 The answer is technically, yes, to all your questions except the last one.

As for the last one, you cannot renounce your child's citizenship. They have to do it themselves once they are of age. They get 6 months to do it with no hassles when they turn 18. After that they are subject to renunciation rules/expatriation requirements, or relinquishment requirements.

If your child has over USD 10,000 in any kind of bank account whether they are working or not, they have to file an FBAR.

Filing income taxes depends on the amount of income you earn. Again, every year you have to check the 1040 to see the minimum amount of income that requires filing.
16:50 March 7, 2012 by Kzelnio
What a super informative comment thread!

One thing that hasn't been addressed that is pertinent to my situation is how do freelancers who live in Sweden, but still earn money in US currency from clients make do? We are moving in April to be closer to my wife's (a swedish citizen, and US perm resident) family and because we genuinely feel it is a better place to raise our kids. Since I can work anywhere with an internet connection, the decision was a no-brainer.

I had planned to just have fees for my services (writing and consulting) deposited to my current bank and pay US taxes on it, though I would be a resident of Sweden (I already have residency). I am naturally looking to get more steady employment in Sweden and buy into the system there, or even open up my consulting business as firm there as my business has been increasing steadily each month. I understand this is a different set of conundrums...

Perhaps I am stumbling into this too naively, but I assumed I would just pay taxes on my US currency jobs that I kept payments in my US bank (ie all the fees paid to me and reported on 1099 MISC forms) and then pay taxes on any income I made in sweden. Occasionally transferring money from my US bank account to a swedish one me or my wife would open when we needed it... Nothing about this seems illegal. I don't plan on making much money (certainly not $97,500/yr! at least for foreseeable future).

I have no investments, just a credit card and a debit card, both issued from my current bank. Am I just plain offbase here? I admit I am a novice and just figuring all legal stuff out as I stumble along. Thanks in advance for comment.
17:10 March 7, 2012 by LisaPio
@Kznelio

Sweden has residence based taxation. If you have residence in Sweden and are physically present in Sweden for either 180 days /183 days or more (I forget if it is 180 or 183 days), you likely have to pay tax in Sweden on the income you earn while present in Sweden. Check with Skatteverket. They are usually very helpful and while you may not like what they tell you, they will try to understand your situation. You can even request to meet with them. It is better to talk to them than to take the risk of getting it wrong because the penalty if tax is owed is usually 40%. You will likely also be able to get credit for the taxes you pay in the US. Whatever decision you make, at least you will be informed.
17:23 March 7, 2012 by soultraveler3
"U.S. tax liability is based on citizenship, not residence. Therefore if you were either born in the U.S. or have a parent who is a US citizen, you must file a U.S. tax return if your 2011 income earned anywhere in the world is USD 9500 or more. Look at Chart A in the 2011 Form 1040 instructions for more information."

I have a question about this if anyone has a minute. This is the information that I read on the irs.gov website prior to and after moving to Sweden almost 4 years ago.

Am I right to assume that since I only make about $1000 per year (about 7k in sek) that there is no need to file an income tax report?

What about FBAR and FATCA? I'd never even heard of those before, so I'm a bit worried now after reading this article.
17:57 March 7, 2012 by Valdemaratterdag
@soultraveler3,

You don't meet the requirements for filing a 1040 since your income is too low. FBAR only needs to be filed if you have over 10,000 usd (70,000 sek) aggregate (all your accounts total). If you do have that, you must file an FBAR, but not a 1040 since you don't meet the minimum requirements.

FATCA is only for us FATCATS. The levels before you need to report are much higher, between 50,000 usd and 200,000 usd or more depending on marital status and where you are a resident.

I'm not a tax attorney or an accountant, so do your own diligence.
18:07 March 7, 2012 by soultraveler3
Thanks Vald!

I looked more into it after posting the first comment and think I'm okay. It's just scary and ridiculous that they make it so difficult and that the fines can be so much.

Just in case anyone else is worried I found the American Citizens Abroad website here http://www.aca.ch/joomla/index.php. They have lots of good info plus an online petition that's hoping to repeal FATCA if anyone is interested.
20:50 March 7, 2012 by Mrs Robinsson
(from the IRS website)

Exceptions to the Reporting Requirement

Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts:

Certain foreign financial accounts jointly owned by spouses;

United States persons included in a consolidated FBAR;

Correspondent/nostro accounts;

Foreign financial accounts owned by a governmental entity;

Foreign financial accounts owned by an international financial institution;

IRA owners and beneficiaries;

Participants in and beneficiaries of tax-qualified retirement plans;

Certain individuals with signature authority over but no financial interest in a foreign financial account;

Trust beneficiaries; and

Foreign financial accounts maintained on a United States military banking facility.
20:55 March 7, 2012 by stevo1
Maybe Sweden needs to tell the US of A, to get farrked!

A simple alternative would be to apply for permanent residency in Sweden, then gain citizenship, and tell the US of A to get faarrked!

the acronym seems to be missing a crucial letter "U"....FUBAR, not FBAR, FUBAR - farrked up beyond all recognition.....seems fairly pertinent to the US of A :P
22:17 March 7, 2012 by si
faarrrrk - Throw another shrimp on the barbie !
23:10 March 7, 2012 by Cat47
Read the IRS information, people! This article has some truth in it, but is also misleading.

The FBAR and a related form 8939 both have to do with foreign assets, but the dollar limits are VERY different.

Yes, it is true that filing the FBAR late will cost you. (Sounds like the womean in the article was able to get some relief through the Voluntary Disclosure Program. Readers of these comments may be able to, too.) No, it doesn't likely include your Rikskuponger, car, house, or even your insurance or retirement savings except in specific cases. The form 8939 MIGHT.

I am American, in Sweden over 5 years but not a Swedish citizen. All the money in my Swedish accounts (except a pitiful amount of interest and a miniscule Swedish pension) comes from US sources and has already been taxed.

Note: Sweden is going after money in "tax havens", too. I haven't heard--yet--that my bank no longer wants me as a customer., so maybe they're discovering that there's some give and take in the international financial scene.
11:48 March 8, 2012 by LisaPio
@Cat47

The FBAR and Form 8938 (not 8939) have different filing triggers. For the FBAR, if at any one time during the year the balances in all your accounts added together are more than USD 10,000, you have to file it. A single overseas resident filer of Form 8938 needs to have USD 200,000 overseas in order to have to file that form (different amount for married couples), although it appears that just about everything you have except a personal residence and personal effects has to be declared on Form 8938. Anything that might guarantee you a future payment appears to be required to be reported on 8938. Some US-Swedish residents might think they do not have USD 200,000, but, if reporting on pension plans is required on this form, they could well be over this amount. Pension plans are mentioned in the instructions for the form. It is worth investigating. Here's a link to an interesting summary of the form written by a 30 year veteran of the IRS. http://mopsicktaxlaw.blogspot.com/search?updated-min=2012-01-01T00:00:00-08:00&updated-max=2013-01-01T00:00:00-08:00&max-results=4

As for the woman in the article getting relief from the Voluntary Disclosure program, that does not appear so sure. The Taxpayer Advocate of the IRS, which is like an Internal Affairs Division of the IRS, has written a scathing report of the administration of the programs in which it is stated that taxpayers were pushed into the program through intimidation and were assessed with higher fines than would have normally been assessed under the law had the program not been in existence. She also says "Bait and Switch" tactics were used. The Taxpayer Advocate has issued a Taxpayer Advocate Directive (TAD), which is like a cease and desist order. A TAD is rarely used and only used in cases of egregious misconduct. The IRS was supposed to respond to this on 26 January, but so far there has been no public information on this response, if there was any. You can read the report yourself at the link below. Specifically, look at pages 191-272.

http://www.irs.gov/pub/irs-utl/2011_arc_internationalmsps.pdf

What is encouraging for overseas US persons and dual citizens who may not have known about these US requirements and want to be compliant is that there was guidance issued in December called FS-2011-13. It seems to push people away from the Voluntary Disclosure program and encourages them to file 6 years of back returns and FBARs if they owe no tax or deminimis tax. Hopefully, it is not a Bait and Switch tactic. There are supposed to be procedures being issued for overseas dual-citizens and US people who have not filed, but apparently, they are not issued yet. They were promised in January.

As for things like Rikslunchen cards, Medmera cards, etc., I checked with my accountant and he told me, "While it is not the intent of the law, technically, you have to declare them." So they will be on my FBAR. It is a pain and seems silly, but that is my decision.
15:25 March 8, 2012 by cogito
@Cat47 (#63)

Washington wants to know what you have in your FFIs (Foreign Financial Institution), regardless of how many times it has already been taxed and regardless of the source. This includes your pension funds and, in some cases, your spouse's.

No "give and take." It was thought that Swedish and other European banks would refuse compliance rather than sacrifice their own client confidentially. But the EU commission recently signed a statement on compliance. Sweden is in the EU. Brussels calls the shots now.

It's all take. Treasury needs the money. It's not about tax havens (c'mon, Sweden? a tax haven?). It is rather that the penalties which they levy for neglecting to file a perfect FBAR and FATCA will help pay the bills.

@LisaP. thanks for link to mopsick. Good article.
10:08 March 9, 2012 by DamnImmigrant
Living without a bank account in Sweden is next to impossible. If my 18 year old daughter files her American taxes and fills out the FUBAR, the US government will know her banking information. Her Swedish bank will then find out she is an American citizen and she will then be denied a bank account. The bank currently sees her as a Swedish Citizen with no American ties. If she DOES NOT file taxes in the US, then US government will be oblivious to her existence and not be able to contact her bank and therefore she will be able to keep her bank account and continue living her normal life.

Her choice is to comply with an American Law and loose her ability to live as a Swede or to break the American law in order to continue living in Sweden.

It is interesting that the assets that I own house, car, boat ... that are not a part of a bank account do not have to be declared.

My daughter was actually excited about filing her first US tax return to formally declare that she is indeed an ADULT US citizen but now I have to stop her from doing it!

The implications would be too severe for her.
11:08 March 9, 2012 by LisaPio
It's clear that Swedish financial institutions will be cooperating with FATCA. Here's a post that explains what the US is requiring them to search for and the manner in which to search in order to identify Americans.

http://www.moodystax.com/blog/33-us-taxation-services/187-new-regulations-clarify-how-non-us-banks-will-find-and-report-us-customers-to-irs.html
17:23 March 9, 2012 by skylarkpilot
Financial terrorism by the good old U S of A, and once again a european country bowing to them in a one way show of willingness to comply with whatever lunacy they come up with.

The UK is just the same. When the USA starts to reciprocate all well and good. Before that the Swedish government should tell them to go to hell.

Are the Yanks really going to invade Sweden ?

Actually I'l shut up 'cos they probably would, they invade everywhere else that disagrees with them !
17:36 March 9, 2012 by zoroastrina
My only comment is that I am an anti-American American. I do not like the U.S., the land of "liberty and justice for all" and one nation under [g]od, whom I do not recognize.
17:42 March 9, 2012 by LisaPio
Here is some more wonderful amendments that appear to have just been passed obviously written by legislators who have no clue about expats, nor about visitors to the US from other countries. In typical US style, it is hidden in other legislation, this time a "Surface Transporation Bill". Take a look at the Isaac Brock Society post: http://isaacbrocksociety.com/2012/03/09/senators-cram-multiple-anti-expat-amendments-into-surface-transportation-bill-s-1813/#more-4916

1. U.S. Treasury would block a non-FATCA compliant bank's credit and/or debit cards in the US. This will be great for Swedish residents/tourists visiting the US.

2. U.S. passports will be blocked or revoked if a tax debt reaches USD 50,000.
07:15 March 10, 2012 by Marc the Texan
There is only one one positive outcome I can see from these laws. Making foreigners who fly into the US for 6 weeks to have babies think twice about doing it. Or have foreigners who have gained US citizenship this way, renounce it. Flying in to give birth, then flying out again is becoming a real problem.
09:51 March 10, 2012 by HYBRED
So I guess to avoid a situation like this in the future this is what you have to do; everyday you have to go to every US government office website and read policy changes. Including reading every law and bill that congress passes.

I did a FUBAR search in the US Embassy in Sweden website and it come back zip.

If you don't have a residence in the US there is no US Rep or Senator to represent you. Nor anyone else for that matter.

Couple this with a recent decision by the US Justice Department that it is okay for the US Government to kill Americans on foreign soil.
13:49 March 10, 2012 by cogito
@HYBRED (#72). "kill Americans on foreign soil." That is perhaps how they intend to punish those who do not fill out the FACTCA/FUBAR correctly.

Surely you understand that the embassy has higher priorities than providing information:

"She is now singing itsy-bitsy spider in Swedish. I can't even do that," ambassador Brzezinski tells The Local..."the Brzezinskis are also the first US ambassadorial couple to co-write a blog…"

http://www.thelocal.se/38854/20120201/
14:54 March 10, 2012 by DamnImmigrant
@HYBRED sorry for the technicality question but I assume you really searched for FBAR and not FUBAR ;)

Also @HYBRED is correct that we become American Citizens without representation. But then I got this idea that all 535 Members of Congress, the 100 U.S. Senators and the 435 members in the U.S. House of Representatives, will in fact be our representative. So we should contact each and every one as being "OUR" rep.

Unfortunately it sounds like FAXING each and every one of them is the only real way of reaching them - but Skype should make that very affordable.
08:25 March 11, 2012 by exhale
Thanks Mrs. Robinson for posting that info.

Freaking out a bit yesterday after reading this article and researching.

But here is a link to FBAR that was updated on March 5th .2012

http://www.irs.gov/businesses/small/article/0,,id=148849,00.html

Exceptions to the Reporting Requirement

Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts:

Certain foreign financial accounts jointly owned by spouses;

United States persons included in a consolidated FBAR;

Correspondent/nostro accounts;

Foreign financial accounts owned by a governmental entity;

Foreign financial accounts owned by an international financial institution;

IRA owners and beneficiaries;

Participants in and beneficiaries of tax-qualified retirement plans;

Certain individuals with signature authority over but no financial interest in a foreign financial account;

Trust beneficiaries; and

Foreign financial accounts maintained on a United States military banking facility.
10:46 March 11, 2012 by HYBRED
@DamnImmigrant

Actually it was FBAR I searched at the embassy.

Due to my pessimistic nature, I don't see a congressman being the least bit interested in the issue because we are not a potential vote or campaign contributor.
12:30 March 11, 2012 by LisaPio
@exhale You would be well advised to carefully read the FBAR instructions. I think we have all at some point fallen into the trap of believing that these laws are generously and broadly written, or there is some exception that applies to the average overseas American. Hope is great to have, the reality is another matter.

Some of the things that you mention that would seem to allow one to think that the FBAR does not apply to them, but when examined may not give the expected relief are:

- certain financial accounts owned jointly - what this means is that one owner has to be filing the FBAR

- governmental entity - the entity must be related to the US government

- international financial institutions - the United States must be a member - this applies to something like the UN. Banks like SEB do not have the US as members.

- IRAs - these are purely US plans, not foreign private retirement plans

- Tax qualified retirement plans - The US does not recognize most foreign tax qualified private retirement plans as being non-taxable in the US.. The notable exceptions are RRSPs in Canada and ISPs in the UK. Even so, people who have these recognized plans must file special forms if they wish to have them exempt from US taxes

- Signature authority only, but no financial interest - this applies to someone who is an officer in a company or club, like the treasurer of a hobby club, who can sign on the account, but has no financial interest or right to the money

With the FBAR and FATCA you will learn to realize that rules and exceptions are often added, but they are rarely in the favor of an American trying to live a normal middle class life overseas.
13:26 March 11, 2012 by cogito
"I don't see a congressman being the least bit interested in the issue because we are not a potential vote or campaign contributor."

@HYBRED. Right. It's called "taxation without representation." Wasn't that why they overthrew the Brits?
13:35 March 11, 2012 by HYBRED
I made a mistake earlier, there is reference to all this at the US Embassy,(in Stockholm) website.

http://sweden.usembassy.gov/consulate/acs6.html

@cognito> For some of us it doesn't have to do with taxation. It is about filing some obscure form that you were not aware of, and failure to do so is threatened with some heavy penalties.
17:59 March 11, 2012 by cogito
@HYBRED, In mentioning "taxation without representation" I was agreeing with you: It is naive to think that writing to a congressmen would be anything but a waste of time.

Of course it has mainly to do with the outrageous abuse of expats.
19:08 March 11, 2012 by exhale
LisaPio,

Thanks so much for the info.Yes I guess I am probably being optimistic. This is such important news to have, I have 5 other Americans that I work with and I'm sure none of them know of this new ridiculous requirement,

Thanks for all the info you have posted!
11:23 March 13, 2012 by ameribrit
Kzelnio,

In your situation I would keep the US accounts and so long as you transfer money to a Swedish account but maintain under the 10 000 threshold in the Swedish accounts you can have as much as you want in the US held accounts without the requirement to file a FUBAR. Also, and I may be pushing the envelope a bit here, as the US don't recognize the "sambo" relationship as being a "spouse" if your accounts in Sweden are in a non US citizen/green card holder sambo's account then they are not covered so long as you don't have independent access to the funds. How much access will be the question here. To be safe I would have anything over 70 000 sek in an account to which you have 0 access.

On the general point here. I fully expect there to be many of these type of loopholes built into the system because those that are writing this legislation are also the very same ones that have all the money squirreled away in the Cayman Islands, and they sure as hell are not going to want to have to declare all of their ill gotten gains to the Treasury.
13:06 March 13, 2012 by LisaPio
@kzelnio - No comment on what you do with your bank accounts. Just remember that if you have residence in Sweden and are physically present in Sweden over the magic number of days (around 183), you need to declare your worldwide income (even if earned and taxed in America) and pay Swedish taxes on it. Again, speak with Skatteverket for the exact rules. Skatteverket has a lot in English on their website. You can start going through the documents on this pagee: http://www.skatteverket.se/otherlanguages/inenglish/individualsemployees.4.70ac421612e2a997f85800095591.html

Because you are American, you must also declare your worldwide income, whether earned in Sweden or the US to the IRS. You will need to do some investigation to decide how to correctly account for the taxes paid to each of the two countries so that you can avoid double taxation.

Note, if your girlfriend has a Green Card, she will subject to the same reporting requirements to both countries as you are, even if she is Swedish and in Sweden.

As you are an FBAR newbie, for an article with lots of links to information about FBAR and FATCA, take a look at the following article including the comments.

http://www.forbes.com/sites/robertwood/2012/03/12/despite-fatca-fbar-penalties-still-under-fire/
16:30 March 13, 2012 by tadchem
The American Government has become addicted to spending. The addiction has spiralled out of control.

To finance their habit they are creating taxes tey have never used before, and empowering agencies like the Environmental Protection Agency to levy fines to generate extra income.

The US EPA brags every week in their newsletter about the multi-million dollar fines they collect from small companies that can't afford the top-quality lawyers to beat the rap in court.

The only prevention comes through large contributions to the political party re-election campaigns.
14:13 March 14, 2012 by cogito
tadchem,

Washington's spending addiction can be further fed with the penalties on those who are unaware of the new rules or unable to understand the byzantine instructions for compliance.

Collecting revenue through fines might well be the whole point, as is the case with the Environmental Protection Agency.

Someone said (on another forum) that he called the IRS office for information. They not only refused to answer his questions about FATCA, but they have explicit instructions not to answer questions about the form.
02:57 March 16, 2012 by Grokh
tax evasion in sweden = 20 years

child molester who abused 100 children = 4 years

prisioners get internet, and free university = priceless

-_-x
04:16 March 16, 2012 by charstravels
Does anyone know if the reporting requirement applies to the public pension scheme, such as PPM accounts?
23:38 March 16, 2012 by LisaPio
Always check any advice you get on a blog so think of what is said here as a starting point for your investigations.

For the FBAR likely no. You are not the owner of the PPM account ( the government is) and you do not have signature authority.

For Form 8938 there are reporting exceptions allowed for government pension programs. Take a look at the Form 8938 instructions if you want to be sure.
16:22 May 1, 2012 by Michael Whitfield
All this talk of tax implications of American citizens living abroad, makes one wonder if maybe the US govt was a better steward with your tax dollars this would not be such a controversial issue.
20:31 October 22, 2012 by kailani
Would it make any difference if a person has dual nationality, i.e. US and (Western) EU? He has never lived in that EU country, but lives now in Sweden.
11:45 December 7, 2012 by GYOB00
If you are going to be a cheap fool and do your own taxes without understanding the international implications each and every year, you open yourself up to some interesting problems. Even the cheesy nine dollar online tax service I used in the USA informed me of FBAR. Also, someone living abroad who does not file taxes in a year, does not enjoy the statute of limitations that normal USA citizens have. The IRS can audit that tax year at any time, even if you believe you made no money that year. If you file, then you enjoy the statute of limitations. Be sure to ALWAYS file and if you have any doubts, employ a professional (its not that expensive, if you shop around. I only paid $250, its deductible, and its worth every penny)
19:03 March 22, 2013 by Linkdead
Can someone answer some questions for me? I live have lived in sweden for awhile and never filed taxes to the US. the first years here I had no job at all, 0 income.(my planned employer was bought up and moved shop outside of sweden 2 months after i arrived). Durring that time i incurred a rather large debt.

After about 3 years I became the sole provider for my family on an income that was equal to a mcdonalds fry cook. ( 17000 sek before taxes). 1 year ago I went to school and just now started a decent job and have begun paying off my debts. when checking over all the records I have keep since I have moved here, I noticed my TOTAL in my bank accounts has always been negative. (Kontokredit account)

on average 50-60k in debt for the last 6 years.

I am just now starting to pull my family back to a normal living, "still negative balance though" .

Do I start filling out taxes now? Im not making any of this up. didnt know about this Fatca stuff till the company handling my pension ( which is a grand total of 12k sek after 13 years) notified me that they would likely be droping me due to my nationality.

So Im sitting here just now ALMOST emerging from a hole of debt, and faced wondering am I in trouble for barely squeezing by . Do I owe uncle same a % of my debt? (no im not in kronofog. I have barely escaped them over the years).

Whats the best course of action? I havent lived in america for over a decade and it looks like if i dont give up my cititzenship I cant start saving for pension here.
21:50 April 28, 2013 by GYOB00
If your income is so low, and you have been paying Sweden taxes, due to tax treaty between the 2 countries, you likely don't owe anything.

You must file every year if you live abroad. People living outside USA do not get automatic Statute of Limitations protection. You get NO statute of limitations protection unless you file when you live abroad. Ideally, you should file for each year. This way you protect yourself. You should get quotes from various tax professionals to see what it would cost to secure your protection. It might not be that much money.
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