I’m German and my wife is American with US passport + SSN; she has lived in Germany nearly 30 years and after the kids left the house started work again with a part-time job 5 years ago. Our joint earned and unearned income is taxed in Germany.
We found out about FATCA only by chance and, as the amounts are reportable, are now considering the Streamlined Foreign Offshore Procedures to become tax compliant.
Is it as simple as it sounds? Any pitfalls? We have a few questions:
FBAR: We have joint accounts, no problem. The securities/custodian account, however, is in my name, but my wife is a signatory (German bank preferred this arrangement) and has a financial interest in it. In which part of the FinCEN Form 114 should it be reported. As far as I can see, an account is owned separately (part II), jointly (part III) or has signature but no financial interest (part IV).
1040 - My wife is “married filing separately”; I’m an NRA on line 3. How are taxable interest (line 8a) and ordinary dividends (8b) treated. Does she have to show the full amounts or only 50%?
I assume the absence of a W-2 and 1099 (not issued in Germany) will not be a problem.
If FATCA is such a big issue, why didn’t the IRS inform overseas US passport holders ahead of time?
The electronically filed FBAR/FinCEN Form 114 appears to go to a different location than the 1040, Schedules A+B, Forms 8938 and 14653, which have to be sent to Austin, Texas.
Although there are some differences, in terms of their ultimate purpose Form 8938 and FinCEN Form 114 seem to be an unnecessary duplication of work for both the taxpayer and the IRS.
FATCA came into force in July 2014, so why are FBARs required for the last 6, 1040s etc for only the past 3 years?
Aren’t earned and unearned taxable incomes more important than account balances. You could have thousands parked on money market account, which since the financial crisis would have earned very little taxable interest. So why do forms 8938 and FinCEN 114 focus on just the accounts and their balances? It would make more sense, if the FFIs had to report the interest and dividends to the IRS - instead of the balances. I’m all for clamping down on tax evasion, but putting years-long non-resident mothers and housewives through such hell seems a vey cumbersome, uneconomical way to generate a few extra tax dollars - we’ve been researching and working on this on and off for weeks!
Thanks in advance for any help. Regards