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I have been blissfully married to a very sweet Frenchman (who holds no US citizenship nor green card) for nearly 20 years now. I have also been blissfully under the impression that as an unemployed homemaker earning no income whatsoever that I did not have to file US income forms. I did so (jointly) only whilst my husband worked in the the US for 3 years and then once again in 2007 (as an individual) when I received about $13,000 in inheritance money from my aunt in the US.

I invested that money in stocks in my name in a US internet trading site that same year - happily about half of it went into Apple stocks that have gone up about 250% (the other half was much less fortunate and lost much of its value).

Today while investigating how to declare capital gains in my situation if I sell a few of my Apple stocks - I suddenly came upon tax threads that instilled me with panic and dread that I may be required to file, regardless of my unemployed status, my jointly owned assets that have been earned over the years by my hard-working, tax-paying French hero. This is the first time this has even crossed my mind. I cannot imagine that my husband would owe money in penalties to the American government for the privilege of taking care of one of their citizens all these years!

I am especially concerned as we may be heading to the States next summer as French expatriates. Should I be declaring our jointly-owned assets/debts we own here in France? I wouldn't know where to begin! We are already paying a huge amount to the French government.

Thank you for time in reading this and any advice you may offer!

Stephanie
 

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Relax. From your description you don't have a U.S. income tax filing requirement since you don't meet the threshold for filing due to lack of income. The exception might be the calendar year in which you sell your stock and have capital gains tax to pay. Your spouse has no filing requirement since he resides outside the U.S., has no U.S. source income (I assume), and is neither a U.S. citizen nor U.S. permanent resident.

However, you may have a FBAR filing requirement if you have signature authority over foreign financial accounts which had a total value of $10,000 or more at any time of the year. Joint accounts generally count toward that threshold.

There is no tax obligation associated with FBAR, but there is a penalty for nonfiling. My advice would be to take the Treasury's offer available now to file the past 6 years of FBARs (2007 to 2012) and then file them going forward if necessary (2013 onward). And that will be that. You have to file online, so it won't even cost a postage stamp.
 

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One caveat to what BBCWatcher has said - if you are relocating to the US next year, you will be required to sponsor your French husband (unless his employer is willing to sponsor him for a work visa, as if he was not married to a US citizen). If you are sponsoring him (even with a co-sponsor) you may be required at that time to submit 3 years worth of back tax returns - whether or not you were actually required to file.

You can file as "married filing separately" if you wish. The filing threshold is lower ($3,800) but the same exemptions and exclusions apply. Just one less thing to think about when you're getting ready to move.
Cheers,
Bev
 

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Phew!!

Relax. From your description you don't have a U.S. income tax filing requirement since you don't meet the threshold for filing due to lack of income. The exception might be the calendar year in which you sell your stock and have capital gains tax to pay. Your spouse has no filing requirement since he resides outside the U.S., has no U.S. source income (I assume), and is neither a U.S. citizen nor U.S. permanent resident.

However, you may have a FBAR filing requirement if you have signature authority over foreign financial accounts which had a total value of $10,000 or more at any time of the year. Joint accounts generally count toward that threshold.

There is no tax obligation associated with FBAR, but there is a penalty for nonfiling. My advice would be to take the Treasury's offer available now to file the past 6 years of FBARs (2007 to 2012) and then file them going forward if necessary (2013 onward). And that will be that. You have to file online, so it won't even cost a postage stamp.
Dear BBCWatcher,
Wow! You've made my day!

I am incredibly relieved and am going to look into the FBAR issue right away.

I cannot thank you enough!! :)

Stephanie
 

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If you want to get slightly fancy then take a run through your 2010 tax return calculation. That was the last tax year for something called the Making Work Pay Tax Credit. If you had some earned income that year -- income from work -- then you might qualify for that tax credit. (And also assuming you take only the Foreign Tax Credit, not the Foreign Earned Income Exclusion.) If you qualify for the MWPTC then you'll get as much as $400 from the IRS for your troubles. Occasionally there are perks to U.S. citizenship. :)

The deadline to get that credit is April 15, 2014, so you have to file before then. (Well, maybe June 15, 2014, but that's ambiguous. I'd file by April 15 just to be safe.) If you need those three years of tax returns that Bev mentioned then 2010 would be a very good tax year to check first.

If you didn't have any earned income from work -- even tutoring, an odd job, whatever -- then no MWPTC I'm afraid. But I thought I'd mention it.
 

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FBAR help!

Hello again BBC Watcher and Bev,

Well I am back here after a few months of letting the FBAR subject simmer in the back of my mind having received conflicting advice from a retired tax advisor neighbor of my parents in Florida who strongly advised me against filing as he said it would only "put me on the IRS" radar. I came away very dubious but put it on the back burner. I am now feeling so anguished and sick about it that i can no longer sleep and just want to get it done, but am stuck.

I am going to file as many years as I can/must. The fear I have now is of making mistakes as I have absolutely no tax or investment sense or experience. It is my French husband who has been taking care of the money affairs - unconcerned by the US rules and regulations and therefore never considered the consequences of putting my name on our savings accounts and investments.

I realized while going through our bank statements of the past 6 years that our household savings accumulated and reached its climax in 2011 as he had been working for a French oil company for almost 20 years, and as we were being transferred every 3 years to different cities in France, South America and 3 years in the US, we rented and saved up to buy a house in our home base: Paris. We finally bought our house in the summer of 2011 essentially emptying our accounts and taking on significant debt to boot.

Bare with me please as I am coming to my burning question now! Among his investments through work plans (in his name only) and savings accounts at our bank he opened 2 rather large French "Assurance Vie" or pseudo life insurance investment vehicles widely used in France, one under only his name, and one under mine. To my distress I discovered the Assurance Vie in my name was initiated in 2008 with 78K euros, and was programmed to receive programmed deposits until he cashed it out for our house purchase in 2011. The final paper produced for French tax purposes says that it cashed out at nearly 185K and netted a gain of 10,370€ which was taxed by the French gov't.

He also opened a general savings account in my name totaling 14K in 2010. Further, we had 2 joint checking accounts (with average balances of 14K and 11K) and an investment account that had 37K (that coincidentally gained all of 17€ that year :eek: - as you can see, he is no Warren Buffet either!) And finally, he had opened in 2001 2 "PEL"s (long term investment plans toward buying a home) in our kids' names which reached 74K each before cashing out in 2010.

Please reassure me, if possible, that I am not in trouble here! I have to take care of this asap to get some peace. I don't know where to turn as I've read that some tax preparers can be dishonest and reap even more fear into newbies, charging huge sums and providing complicated returns which look fishy to the eyes of the irs. This is the last thing I want to do to my poor husband's hard-earned savings!!

I have also seen on the gov't website that I can go to the help desk in Paris and get advice there. I would feel better about going in to see them if I know what it is exactly that I have done wrong.

I appreciate any advice you may give and thank you very much for reading this far!!!
Best regards,
Stephanie
 

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You haven't done anything wrong. The chances are that, even with the assurance vie and whatever other investment type accounts you have "discovered" in your name, you don't actually owe any US taxes. (The fact that the French already got their share means that you'd get the foreign tax credit, and that should wipe out any lingering obligation.)

The FATCA stuff is still reasonably new, and you're far from the only person who is trying to figure out just what does and doesn't have to be reported from prior years.

And, you'll be happy to know that I just heard this week from someone in roughly your same situation who went in and talked to the IRS office in Paris and they basically told her not to worry. It has been my experience that the staff in the Paris office are really nice and very helpful. Since you're probably going to have to file no matter what (if you're still planning on moving back to the US and sponsoring your NRA husband), they should be able to help you out. Give them a call and see what they advise - but chances are you don't actually owe anything.
Cheers,
Bev
 

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Dear Bev,

I can't thank you enough for your reassuring words. I know I've done nothing wrong, but it's just such a shock when you discover this situation and discover the damage you expose your family's life savings to just by having American citizenship. It just feels like such hopeless trap I fell into.

I will try to make an appointment with the help desk in Paris first thing tomorrow. I have a feeling they may be swamped so I am not out of the woods yet!

Just for info regarding my husband's transfer to his employer's US office, I won't be sponsoring him at all as they will make all of the visa arrangements. So luckily I won't have to do any other kind of filing to make matters even more complicated.

Thank you again Bev, and I will report back to you to let you know how it goes.

All my best,

Stephanie
 

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I know I've done nothing wrong, but it's just such a shock when you discover this situation and discover the damage you expose your family's life savings to just by having American citizenship.
Let me offer some more reassuring words in the form of a couple questions. What "damage" are you talking about? It's a private disclosure report -- nothing more. Substantially the same information you just posted publicly in this forum. ;)

I keep saying it over and over in various ways, but let me try again. Evasiveness is way more interesting than truthful FBAR and FATCA reporting. Why do you think the U.S. government requires these disclosures? Do you think law abiding people -- illegal drug dealers, terrorist financiers, money launderers -- are filing these reports? Think about it rationally, because it is very rational.

If anybody in your family is involved in the global heroin trade or financing Al Qaeda, yes, sure, worry. For many reasons. Otherwise, where is this worry coming from?

If you're worrying about this, how do you get out of bed? Except then you'd be worried about staying in bed.... No wonder psychotropic medications are so popular! ;)
 

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Dear BBC Watcher,

Ok, you seem to imply that it is irrational to worry about these disclosures. Good!!!

And I can understand from your perspective as a tax expert who has known about this law for years and has never missed a beat, my worry must look silly and maybe even childish! That is reassuring! But let me explain that as a homemaker (yes, they still exist) who, I am ashamed to admit, blindly let's her husband take care of all of the family finances, when I come upon these reports of droves of American expats dropping their nationality in fear of massive penalties for not having reported their local bank accounts and investments I panicked!

My husband works very hard to provide for us with no financial help from me. :( The idea that he would be greatly penalized by the IRS for the mere fact that he married an American and put her name on some of the family accounts - I just feel awful! It seems an absurdity but apparently that is the law. From what I've read, for now it is honest people like me who have made the mistake of unwittingly not reporting who are paying the most outrageous fines relative to their account balances.

I understand that the law was written to root out the tax evaders (which when you know how high our taxes are in France - I would hardly consider us tax evaders!!!) but articles in the press suggest the result is quite different.

Thank you again for your patient attention and helpful comments. I am embarrassed but somewhat relieved. I will sleep better once this thing is filed and I am in compliance.

Kindest regards,

Stephanie
 

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That hasn't been happening. FBARs have been around since the 1970s, by the way. I haven't heard of too many American homemakers living in France who've had their foreign spouse's joint bank accounts seized by the U.S. Treasury in the past 40 years, have you? :)

Now that you're aware of the FBAR and FATCA reporting requirements, just get your reports prepared and submitted and that will be that.
 

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Just one further note about the "worry" factor in all this US tax stuff. The IRS has LONG been known for their "shock and awe" tactics with regard to publicity. Way back in the Dark Ages, when I was in business school, our tax professor explained how the IRS only issues press releases about arrests and raids stages against tax evaders during the week or two just before the tax deadline each year. It's a tactic designed to "inspire" those undecided types to fill out and submit their forms.

Unfortunately, the big US expat organizations tend to play into this. (Possibly because of the number of tax attorneys who serve on the board of these groups, or maybe just because the groups do tend to draw on Americans of "means" for their membership.) Those of us with no ties to the US expat organizations hear little or nothing about the issue. The IRS just isn't nearly as omnipotent as they would have you believe. Give it a good faith effort, while respecting the privacy of your non-American spouse and it's highly unlikely you'll have any difficulties.
Cheers,
Bev
 
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