The “OMG Moment” is the moment people learn that the U.S. considers them to be “U.S. persons” and thus taxable on their worldwide income.
It’s important to understand what the “OMG Moment” means in the life of a hard working, responsible, honest person, who has worked hard raising a family and saving for retirement. (One minute you are a “Free Person”. The next moment you are threatened with the “Prison of Citizenship Taxation“.)
The “OMG Moment” is a moment of crisis that often includes:
– disorientation on a personal level. This can’t really be happening. Am I a criminal? How could I have not known about this? Have I done something wrong? What will happen to me?
– an attempt to “characterize the nature of the problem” as a tax problem
You are then seeking to achieve “a course of action” that makes sense for YOU. This will be based PARTLY on your financial circumstances and PRIMARILY on what you need to move forward with your life. Generic advice is useless. People are different.
‘There is no course of action you will be completely happy with’
Seeking a solution
You are seeking a solution that you can “live with”. There is no solution that you can be “happy with”. After all, you are subjected to extreme injustice based on the “immutable characteristic of place of birth”. Therefore, think it terms of “better vs. worse” solutions. Your decision takes place on an emotional continuum – Fear at the one extreme and anger at the other extreme
You are being threatened with taxes and penalties. You are being treated like a criminal. You feel betrayed by a government that you may have supported (USA). You feel betrayed by your home government (because it signed a FATCA deal with the US).
In some cases, you are experiencing an extreme disorientation of identity, because you did NOT think that you were a U.S. citizen. (Make no mistake about it. Many of the people affected by this do NOT consider themselves to be U.S. citizens.)
Okay, that’s all terrible. It really is. But, the reality is that your “non-compliance” problems are based on simple ignorance. Nothing more. It’s important for you to know that the “problems of taxes” are solvable (for most people easily). There are (I would guess) millions of people living outside the United States who have not been filing U.S. taxes. That problem can be solved. The larger problem is having to live under the “jurisdiction of a foreign country”. That problem is not quite as easily solved.)
“It’s unjust, it’s inhumane. You didn’t choose where you were born!”. Fear and Anger – The two primary emotions you will experience:
1. Incapacitating fear at one end of the spectrum; and
2. Incapacitating anger at the other end of the spectrum.
However you can’t live with either extreme of fear or extreme anger. Therefore, you must adopt a “solution” that puts you somewhere in the middle. Add a “bit of fear” to a “bit of anger” and you are on the way to a “rational decision”.
John Richardson is a Toronto based lawyer with a clear understanding of the legal, tax, Retirement Planning and investment climate in Canada. He also has a good understanding of the obligations of U.S. citizens abroad. He provides “citizenship counselling” for U.S. citizens abroad. Quote: The truth is that citizenship counselling is a form of life counselling.