An American veteran and his wife just want to live a normal life abroad
“In my 14+ years of living in Europe, I have met many, many US expats, and without any exception, they have all been regular folks. Not one mega-millionaire or billionaire among them.”
— Micah Brown
Dear Congress,
I was born in the Quantico, Virginia Naval Hospital, the son of a US Marine Corps commissioned officer and an English teacher mother. I was raised predominately in Arkansas. After completing my education in Arkansas and serving on active duty with the US Army, I, along with 3 other coworkers, founded a small but quite successful business, employing around 14 full time employees, all in the US. After getting married, my wife and I moved abroad to allow my Czech-born wife to be closer to her family once our son was born and allow that son to acquire the language skills necessary to have a relationship with his non-English-speaking relatives.
Significant costs of being an American abroad
I work remotely (and always have) as one of the founding partners mentioned above. Our business is a US-based Independent Registered Investment Advisory firm working exclusively with US citizens, the vast majority of whom are US based. As a US citizen living abroad, I have experienced significant, challenging and ongoing costs and difficulties in dealing with being double taxed.
As my US Congressional Representative Michael Burgess (TX-26) only has a few hundred (if that) members of his district who live abroad and tens of thousands who do not, it is perfectly understandable his efforts are for the many, not the few, but that leaves those of us like me literally taxed without representation.
Over the 14 years I have lived abroad, I have been forced to close a foreign bank account (ironically enough, opened to hold 1 month’s rental deposit per local regulations...I had to instead purchase a rental deposit insurance policy, that costs around $200 per year..., so not only do I not earn any interest on a deposit, but I also have to pay a yearly premium). I have been audited by the IRS for (an understandable) mistake my US-based CPA made on application of the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC) and have had to pay taxes in both jurisdictions (the FTC in no way ever completely covers the foreign taxes). I have also incurred significant compliance expenses just to keep up and file the necessary documentation annually (some years my US tax returns have exceeded 800 pages.).
Rules so complex even the IRS is confused
The auditor from the IRS was so confused himself, he allowed the statute of limitations to expire on 2 of the 4 years he was auditing. I voluntarily agreed to an extension for him, on advice of my US-based CPA, to both demonstrate our intention to fully cooperate, and candidly, to see it through to the end out of my own curiosity. At the end of a 2-year audit period (and of course extra billing by the CPA who made the mistake in the first place), it turns out I owed the US Treasury about what they owed me (I owed in 2 of the years, and they owed me in the other 2 years). They agreed to waive any interest and penalties since I had agreed to extend the audit past the statute of limitations. In short, pretty much a wash. The experience was a total waste of my time and money, and of the IRS's time and money.
I then hired an American CPA based in Zürich (after having parted ways with the previous US-based CPA by mutual agreement). I ended up paying the Zürich-based CPA 3 times as much to do the same job. I finally found another US-based CPA in Arkansas who seems to know what she is doing.
If even an investment adviser struggles…
I am a Certified Financial Planner® and Registered Investment Advisor with more than 25 years in the financial services industry. In addition to being an active-duty US Army veteran (and therefore experienced in dealing with US Government bureaucracies), I hold a number of Financial Industry certifications in addition to the CFP® and have an MBA as well. IMAGINE if I didn't have all that experience and specialized education in finance, how confusing and difficult it this would all have been?
In my 14+ years of living in Europe, I have met many, many US expats, and without any exception, they have all been regular folks. Not one mega-millionaire or billionaire among them. Most were here because a spouse or parent was assigned here (think my US-born son, for example). Either the US government or a US corporation sent them here. Many are scientists, lawyers, teachers, housewives, au pairs, tutors, athletes. Some volunteer at NGOs. Some are missionaries, living almost exclusively on faith.
Normal people trying to lead normal lives
Americans abroad are just normal Americans who, through their daily actions, represent the finest characteristics of our great country. We serve as unofficial (and sometime official) ambassadors for our fellow Americans. We do more to counter the stereotypes, misinformation and prejudices fomented by well-meaning but often clueless US tourists as well as organizations hostile to our way of life than the US State Department, the Voice of America and the Peace Corps combined. Think of that as an in-kind contribution to the US Treasury to go along with our extra taxes.
In conclusion, Members of the US Congress, will you please replace the U.S.’s wasteful, discriminatory taxation of its citizens abroad with the global standard of residence-based taxation so that we can just live normal lives like our fellow Americans in your home States and districts?
Sincerely,
Micah Brown