Besides “IRS,” Americans can now add another item to their list of ominous acronyms: FATCA. Like most things related to income taxes, the FATCA issue has a lot of people in a dither. As if US tax law wasn’t already complicated enough, along comes FATCA to gum up the works even more, especially for US citizens living overseas and earning income from a non-US source.
All US citizens or resident aliens living abroad are obligated to pay income taxes to the US Treasury, even if they haven’t lived in the United States for years, have no intention of returning, and even if their income comes solely from foreign sources. The United States of America is the only modern, industrialized nation that taxes the worldwide income of its estimated six million citizens who live abroad, even if their income is generated in a foreign country and they never return to their homeland. Continue reading