General discussion of how the PFIC rules work in theory:
Discussion of the incredible unfairness and stupidity of the PFIC rules in practice (don’t enter OVDP):
And a comment that says it all:
The deadline is fast approaching. Mr. FBAR has been updated and modernized.
He has a new name (Form 114).
He has a new look.
He must now be filed online.
He is still one of the U.S.A.’s deadliest forms.
But, the question still remains:
What exactly is required to be reported on your FBAR?
Taxpayers “navel gaze” in fear!
Tax professionals continue to educate!
This is a nicely done article by Deborah Jacobs of Forbes.
As you know, a U.S. citizen who is is married to a non-U.S. citizen does not have the benefit of the unlimited marital deduction. Although I recommend the complete article, the following is of particular note:
Are there special rules for married couples?
Yes. The most important one is that the usual limits on lifetime gifts don’t apply. If your spouse is a U.S. citizen, there’s an unlimited marital deduction for most gifts, even if they exceed the annual exclusion amount and you generally are not required to file a return.
A different rubric applies if your spouse is not a U.S. citizen. In that case you must file a gift-tax return if your gifts to him or her total more than $145,000 per year. Additional gifts to a non-citizen spouse count against your $5.34 million basic exclusion and must be reported on the gift-tax return.
As you U.S. tax compliance for “U.S. persons” living outside the United States is very difficult. The reason is that most (if not all of your activities) are considered to be either “foreign” and/or “offshore”. San Francisco tax lawyer Robert Wood recently write a couple of posts that illustrate how the fact of living outside the United States can actually extend the number statures of limitations for an audit. I draw your attention to:
The gist of the posts is explained in the tweets. That said, I recommend reading both of Mr. Wood’s posts/articles. Although they are not written specifically for Americans abroad, they do illustrate how punitive the U.S. Internal Revenue Code is when applied to Americans abroad.
Why so punitive?
The answer is that U.S. tax law is punishes things that “foreign”.
For Americans abroad their lives are foreign.
I came across this incredible summary while researching another issue. It’s enough to make anyone want to avoid the U.S. entirely. Please note that this was written in 2007. Therefore, it should be read to identify “issues” and NOT as a final statement on the law as applied to those “issues”. As you know, times change and the law changes. Nevertheless, you will be horrified by the sheer number of rules/regulations and the complexity thereof.