Comments

  1. Wow… I did hear something about a 30% tax on overseas wires for Americans (from a Canadian friend) but wasn’t sure the person sharing the info was really correct! I’m very irritated about this and still somewhat confused. We are planning to wire funds into a CD in a foreign country in August, which I assume will be before the banks or Cooperatives are set up to report to the IRS. Will we be exempt from the “30% tax withholding” since they are not yet set up to report, or will this be enforced retroactively? What if we bring cash, or cashiers check instead of wiring from our US bank institution? Is there any way of getting around the 30% tax withholding? I feel that the IRS has no business messing with my savings and where I choose to put it!

    • FutureExpat says:

      Brad, I don’t think anyone’s happy with this law, and the US has delayed implementation several times. I saw just yesterday that they may delay yet another 6 months.

      It’s not a 30% tax per se, it’s a 30% withholding in case you owe tax. If you don’t owe anything you get it back when you file. But the IRS still gets to use YOUR money. . .

      There is no penalty for banks if they withhold it when you don’t owe tax, but there are big penalties for them if they don’t withhold and you do owe, so of course their default position will be to always withhold.

      I totally understand your frustration, but there’s not a lot you can do about it as the US is one of the very few countries that taxes your worldwide income. If you’re a US citizen, you have an obligation to file every years, and I certainly don’t advise that you try to circumvent the law.

      • Venu Pillai says:

        OK, will the IRS pay interest (at the rate it charges people who owe it taxes) on the return? Someone needs to sue them if they don’t!

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