Keep the IRS off Your Back! Advice for Americans Abroad

FATCA, FBAR, PFIC… this alphabet soup of tax/financial related acronyms can certainly send chills down the spines of Americans living abroad. And it should – the US is the only country on the planet (besides Eritrea) that taxes its citizens worldwide, and non-compliance can result in hefty penalties. Luckily, by understanding a few simple guidelines, you can better protect your savings while retiring abroad and never have to worry about the IRS. Here is some general financial advice for Americans retiring in the Philippines and elsewhere.

FATCA

FATCA (the Foreign Account Tax Compliance Act) entered into force in 2010, and it has been reinforced during the past several years. Before, the government was relatively lax on tax reporting for Americans abroad. But today, it’s essential to report all your assets and financial activity every year. To ensure overseas Americans are tax compliant, the US has signed deals with thousands of companies and countries (the Philippines included) to ensure they report their transactions with Americans to the IRS.

That means if you’re making investments, or are earning money, or are using a bank account in a foreign country, those entities will report your activity to the IRS. When you file taxes and don’t report the same activity, the IRS sees that it doesn’t match and believes you are evading taxes. We all know that the consequences for tax evasion aren’t good.

My advice to stay FATCA compliant is to report everything each year via a qualified expat CPA. I stress expat because a CPA back home most likely doesn’t have the qualifications or knowledge to work with Americans living abroad effectively, the rules are very different. Even if you’re making under $100,800 (the current foreign earned income exclusion amount) and don’t owe any tax to the government, you’re still required by law to report everything correctly.

FBAR

The Report of Foreign Bank and Financial Accounts, or FBAR for short, is a particular form for reporting foreign bank accounts. The IRS website states that you are required to report an FBAR form if you have “a financial interest in or signature authority over at least one financial account located outside of the United States, and the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year…” If you have a bank account with $10,000 (or the equivalent in foreign currency) or more, you must report it.

FBAR forms are available online and can easily be done by yourself. The most important thing is just doing it. That being said, having a professional review your info is never a bad recommendation, it’s better safe than sorry.

PFIC

PFIC stands for Passive Foreign Investment Company, and they can be quite nasty! In simple terms, most non-US investments, mutual funds, pension plans, life insurance products, etc., can result in a very high tax on gains each year. There are fantastic, tax-efficient investment products available to most foreign nationals living abroad, something that can add significant value to your golden years, but Americans must be very careful when making investments while retiring/living abroad.

At risk of sounding like a broken record, it may be a good idea to have a qualified expat professional review any non-US investments you possess to ensure they’re not PFICs. If you’re looking to make new investments while abroad, ask if they are PFICs or not. As a rule of thumb, if it’s not US-based, there’s a good chance it’s a PFIC. There are indeed specific, SEC compliant investments available to Americans living abroad, but the options are especially limited when compared to what other nationalities have available.

As you can see, it’s best to ask questions and, most importantly, report absolutely everything – honesty is the best policy. The IRS won’t accept “I didn’t know” as a legitimate excuse. If you’re FATCA compliant, you have absolutely nothing to worry about except working on your tan in paradise!

Keep the IRS off Your Back! Advice for Americans Abroad

Are the Guys at RTTP Fascist?

As you can imagine, we get a lot of comments on RTTP, and the fact is, we don’t publish them all.

It’s not that we’re drowning in a sea of comments, that would be a nice ‘problem’ to have.

The reason that comments don’t get published is that either, they add nothing to the conversation or have no relation to the article.

To most reasonable people, this makes complete sense but never a day goes by when I don’t get a nasty, hate-filled email from a visitor who’s angry that we didn’t publish his particular comment.

I say ‘his’ because it always seems to be men that take it as a personal insult that they didn’t get to have their voices heard on a mostly anonymous forum.

In 3 years of administrating RTTP, I’ve never had a single hate-filled email from a woman, so I guess that says something.

Let the Vitriol Flow

One such email arrived in my inbox last week in response to my recent article about how I never actually chose to live in the Philippines.

I’m guessing it must have struck quite a nerve with the author as he seems like he was apoplectic while writing his email.

I don’t want to give his warped view of life in the Philippines too much air-time, but here are just a few of the highlights (or should that be lowlights?)

• ignorant locals


• wild, uneducated kids


• too hot, most of the time


• don’t understand English (to my desired standard)


• women go to work while the men go to cockfights

And the list goes on, and on and on.

I didn’t waste too much time counting all his grievances, but I’d make a rough estimate that there was about 20-25.

Many of his claims I might not necessarily disagree with, but I would argue that most of them could be said about any country in the World.

It was interesting to me how he made mention of the idea that anybody who disagrees with him must be wearing ‘rose colored glasses.’

I’ve spoken about the various color of people’s glasses in another article, so I won’t write about it again here, other than to say that if my glasses are rose colored, then yours are brown colored.

The color of dog shit!

He’d used the contact form on RTTP rather than post a comment, but yet towards the end of the email, he ponders to himself whether his ‘comment’ will make it to the pages of our site.

Three reasons it won’t be making it onto the site buddy.

1. It’s not a comment.

2. It doesn’t comply with our, very reasonable, comment policy, and, most importantly

3. It’s just a long list of things you hate and find objectionable about living in the Philippines as a foreigner.

What I found almost laughable about reading his email was that he’d been coming here from the UK, since 1998 but apparently he hates it with a passion.

Now I don’t know about you, but if I hated something as much as he obviously does, then I certainly wouldn’t be doing it for almost 20 years!

Some (Not So) Friendly Advice

Here’s my advice to him and anybody else that hates it over here and feels so strongly that they are driven to sit down for 20 minutes and write an email to somebody that they’ve never met or conversed with, to make their feelings known.

DON’T KEEP COMING HERE!!!

Seems logical enough, right?

He has a Filipina wife so is that the reason he keeps coming back?

Is life in the UK so shitty that the guy is willing to suffer such terrible hardships, just to make his wife happy?

Having lived in the UK for the first 30 years of my life I can say that that country didn’t suit me, but I was never tempted to spend my evenings flailing my body with a bull whip just to exorcise the demons that were lurking inside.

Reading his email reminded me of something I saw when I was in Cagayan De Oro a few years ago, visiting a friend, and it just so happened to be Easter.

There was a religious procession that passed by his house, so I went outside to see what all the commotion was.

What I saw almost knocked me off my feet.

In the middle of the procession, there were about 20-30 men with their shirts off, and they were flailing themselves with whips.

You could see the blood flowing from their wounds, and it certainly didn’t look very pleasant.

It looked damn painful, to be honest.

You can read more about it by checking out this interesting article that I found on the Vice website.

Stop the Tangents and Get With It!

Anyway, I digress – which is something I’m prone to do both in life and while writing.

We at RTTP enjoy and encourage reader interaction through comments. It says it right there on our comment policy page, so it must be true.

What we don’t welcome are lengthy diatribes that list all the things that the bitter individual doesn’t like about the Philippines or its people.

My advice to the guy that wrote the email is simple.

If you don’t like it here, then leave and never come back.

If you don’t agree with something that is written on this website, or any website for that matter, post a calm, well thought out comment, and let’s have a debate.

If you feel yourself slipping into a hate-filled tirade, then stop yourself quickly.

Don’t waste our time or yours because, guess what my friend, it will end up in the digital trash bin, where it belongs.

If all of the above fails and you still feel the need to vent your spleen then why not set up your own blog?

If you don’t have the technical knowledge to set up a website, there are plenty of tutorials that will show you how to do it.

If you can’t afford the hosting, then there are plenty of free hosting providers.

WordPress — which is the platform that RTTP and many other popular sites on the Internet use — have their own free blogging solution.

In short, there’s plenty of ways for you to get rid of your anger, but posting on this website won’t ever be one of them.

Conclusion

If you’ve posted a comment and it does not appear on RTTP, then the first thing you should do is to check the comment policy.

For the majority of comments that don’t get approved, not complying with our policy is by far the most common reason.

If you’re sure that you’ve followed the guidelines, then please use the contact form and drop us a quick message.

Once again, we love to get your feedback and welcome reasonable, thoughtful debate, so feel free to reply to this or any other post on the website.

Your feedback helps to make the site better so keep them coming.

You can quickly read the most recent comments and get involved in the conversation by visiting our recent comments page.

If you’re living in the Philippines and can help another reader out, then please feel free.

I’ve been here for over 12 years, but there’s plenty I don’t know about the islands.

No amount of time living here will make a person an ‘expert’ and anybody that claims otherwise is most likely lying or delusional.

Am I a fascist? You decide.

If not wanting to promote hate means being a fascist then color me Trump!

https://www.youtube.com/watch?v=SnxQI97e-jU

Are the Guys at RTTP Fascist?

I Never Chose to Live in the Philippines

People have many different reasons for choosing to live in the location they do.

I’m originally from the UK but now live in the Philippines and have done so for the last twelve years.

However, the truth of the matter is, I never really chose to live in the Philippines…

…it chose me.

If that sounds a bit rich and a little bit ‘hippy-dippy’, then let me assure you its not.

Read this article to the end and hopefully you’ll understand what I mean when I say I never chose to live in the Philippines.

Why Do You Live Where You Live?

For some, the place they live is simply the place they were born, and they never had the desire to move.

Perhaps they lack the resources or imagination to live somewhere else.

I make no judgment at all on anybody who chooses not to relocate, as long as they’re happy where they are then I say ‘more power to ya!’.

But the truth is, I know for a fact, that many people live their entire lives in a place that brings them little happiness or in some extreme cases…

…none at all.

For me, moving to the Philippines was something that was born out of a need to be somewhere else.

Anywhere else.

I’d always felt uncomfortable and out of place. Like I had an itch that I could never scratch.

Does that make sense?

I just wanted a place where I could feel happy and relaxed and free from worry and stress. It never seemed like an unreasonable goal to me but yet it was something that I could never achieve while living in the West.

Finding a Wife in the Philippines

For many people, getting married, having kids and settling down is what they think will bring them happiness. If that’s you and you’re genuinely happy then, that’s awesome!

I know that many visitors to this site are interested in finding a wife, and that’s great. I wish them well, and hopefully, someday, I’ll follow suit.

Finding a wife was never my primary reason for moving here.

Having been married twice before, I was never overly concerned with finding a spouse nor does it occupy too much of my time.

That’s not to say that I’m against the idea because I genuinely believe in the institution of marriage.

Committing to another person and promising to spend the rest of your lives together, sounds pretty sweet to me.

It’s just not something I’ve seen too much evidence of in my lifetime and can count the great unions on the fingers of one hand.

The Philippines is also a ‘no divorce’ country and annulments can be expensive and take a long time.

The next time I get married will have to be the last, and so I’m even more cautious than normal.

Negativity is Everywhere

I recently read a comment from somebody on our Facebook page, something to the effect that we – as in Retiring to the Philippines – are lying to our visitors by only promoting the beauty and benefits of living in the Philippines.

Initially, I was mad and was going to post a snide rebuke, but then I stopped myself and thought about it for a moment.

There are indeed quite a few posts on this website espousing a seemingly idealistic view of life in the Philippines for foreigners, but there is also some that point out the dangers and pitfalls that one might encounter.

The fact is that most of the guys that choose to write for our website are genuinely really happy with their lives and grateful to be living here.

That’s not to say it’s all roses and candy and we don’t encounter hassles and things that annoy us.

Of course, we do, and you know what? That’s life!

Whether those things are something that you allow yourself to be defined by is your call entirely, and nobody else’s!

The difference between us and some other foreigners that live in the Philippines is that we don’t try to impose our views or opinions on the locals or their government.

We accept and acknowledge that we are visitors and it is a privilege to be here, and not a right.

As I mentioned above, my reasons for living in the Philippines are to find personal happiness and avoid stress.

For me, it’s working out just fine, but it’s certainly not the traditional lifestyle of an expat in the Philippines.

My idea of happiness may be different from yours and to be honest, I expect it is.

I’ve always been the type of person that enjoys their own company, and I don’t necessarily need other people to make me feel whole.

I was speaking to my stepfather the other day, and I commented that “most of the problems that I’ve had in my life were caused by other people,” and that’s true.

Left to my own devices, I tend to do just fine.

Too Anti-Social to be Sociable?

Somebody over here – a foreigner – once referred to me as ‘anti-social, ‘ and to some degree, they may have been right.

I would argue, however, that I’m not so much anti-social as hyper-selective and cautiously skeptical of people and their motives.

When I am in the company of others, I’m usually the life of the party and am an engaged and inquisitive conversationalist.

The fact that I’m not constantly surrounded by people and for the most part, don’t feel a personal need for permanent companionship, doesn’t make me anti-social.

It just makes me, me.

Conclusion

So to answer the question of why I live in the Philippines, I’d say, because it makes me happy and for the most part, people leave me alone.

That’s it!

Nothing magical and no great secret. It is simply a country and lifestyle that suits me and allows me to live my life the way I want.

Will it suit everybody? I’m guessing not.

Will it suit you? I have no idea.

One thing I can say though is that if you come over here with some pre-conceived notion of how you think things ‘should’ be, then you’re probably going to be disappointed.

I came here because of my need to be somewhere other than where I was, and at the time, it was Hawaii.

I’d also tried Australia, Canada, the Canary Islands and my homeland of the UK. I’d been searching for someplace to call ‘home’ for forty years and now I’ve finally found it in the Philippines.

I had no preconceptions, and I even had to check the map to see where the Philippines was!

That was twelve years ago, and for me, it’s been the best decision I NEVER made.

All the best!

If anything in this article resonates with you, then please feel free to post a comment below. Make sure you read our comment policy though before you do as I’m not a fan of negativity and they will no doubt end up in the trash before they see the light of day.

All part and parcel of working to keep my life positive and make myself a happy and content individual.

I Never Chose to Live in the Philippines