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Have an American Passport? Say hello to the IRS

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According to zDistrict, the Kuwaiti banks will now be complying with FATCA (Foreign Account Tax Compliance Act) which means any American citizen will have their bank information automatically passed on to the IRS for tax purposes. For Kuwaitis with dual citizenship this might end up being a problem with no easy way out. Check out the post [Here]

63 replies on “Have an American Passport? Say hello to the IRS”

Question… What kind of Kuwaitis hold American citizenship or passport?

Once you figure the answer… you’ll know that the parents of those Kuwaitis hold on to their money dearly. They’re also the decision makers in our government and make most (if not all) board members of all banks and companies in Kuwait.

So why will they bend over so easily? I don’t know.

However what I know for a fact, the US would not take income tax from its citizens abroad working in countries that have some kind of agreement with the US (and their own taxing system).

Could that mean our own Kuwaiti version of income tax is on its way? hmmm…

I know many Half Americans/ Half Kuwaitis who live from month to month.. and almost all are dependent on their salary.. but there may be others

@Majeed, yes many of those you’re referring to had one of their parents study probably in the US when they were born. It started like that back in the 70s, then it became fashion and anyone who could afford it was having his kids born either in the US or the UK.

The Kuwaitis with US passports are usually old-money merchants. These people are very influential, they own the private sector and arguably have just as much influence as the Al-Sabah monarchy

The information is a bit skewed to say the least. Kuwaitis who have declared their nationality as ‘Kuwaiti’ with the relevant national ID/passport while opening their bank account here will NOT generally be affected by this undertaking.It’s a different story if they have declared themselves as a US national.

FATCA is heavily dependent on customer volunteered information and for the very same reason ,will end being difficult to identify customers (such as the above case).

That’s something I thought about as well, do you have to open an account with a US passport or does the IRS send them a list of names and if they names are similar then they get access?

It’s not going to be as simple as streetjab thinks. Obviously every dual citizen in Kuwait would have opened their bank account under the Kuwaiti nationality. The issue is that the Central Bank and private retail banks are also under pressure from the US government and the IRS, who obviously have a record of who is a dual citizen.
The IRS WILL have a list of names, and according to the agreements the banks have been forced into accepting, NBK, Gulf Bank, etc. will have to open up those accounts for them to look over.
Currently the IRS has been offering an amnesty for people who haven’t filed, where you pay a nominal fee, file for the last 5 years, and they will devoid any backtaxes owed for previous years, or in the case of actually not owing backtaxes (yes, you have to file even if you owe nothing), waiving the right to prosecute you for not filing your taxes.
This has been coming for a while, and MANY tax professionals have been setting themselves up to directly help dual citizens who have never filed taxes in their life, such as high profile chains like H&R Block.
The days where Kuwaitis go and deliver in the US for their child to have a visa-free passport around the world for nothing are over, the IRS isn’t interested in dual citizens who are small fries, but those with mega bank accounts, and Kuwait having one of the highest concentration of millionaires in the world makes it a tasty morsel to look at.

@Khaled, exactly. And those millionaires you’re talking about are the same people who run the government (through their relatives and family members) and they are also the same people owning these banks (and have family relatives as board members)…. so why on earth would they make it possible for the US government and the IRS to look into their accounts if they are the ones going to get affected in the end?! I’m confused!

Folks, the agreement right now is for all Kuwaiti banks to provide the relevant data to the incumbent regulator CBK) which will streamline it to the IRS.

There are NO lists (at least for now) from the IRS.

The banks presently are only required to provide information which it has. They have also been authorized to unwelcome/close accounts of customers who have identified themselves as US Citizens but refuse to provide additional information as required by FATCA guidelines.

Existing customers who have disclosed only a non-us nationality (via a passport or other identifiers) won’t be targeted.This may change in due time-some of the indicators as per the US Person policy maybe strengthened to address dual nationality holders.

But keep in mind that FATCA is a global phenomenon that will take time to mature. Other governments (UK, Canada) are adopting a wait & watch mode to see if similar schemes can be implemented.

@streetjab, given how things work in Kuwait…. CBK will be free to strike out whatever name they please before forwarding the list. That make lots of sense now.

only china and usa does that as far as i know, and tax treaties wont help kuwaiti-american, tax treaties between countries are there to avoid double tax (for example if you pay UK 35% TAX AND USA 30% TAX almost nothing left for you)

But for kuwait the us can and WILL tax kuwaiti-american FULL tax so it’s lovely for them

Any bank/country that does not sign would get their investments/cash etc 30% frozen until they sign, the law will be forced march/april 2015 UAE/Qatar/Bahrain already signed it’s serious stuff

Unless there is some kind of agreement and arrangements by the banks and IRS to identify those with american citizens. I’m sure this is not a difficult task for them!! The US embassy has all the information on the Kuwaitis who hold US citizen. At least if you have their civil id’s, you should be able to track them.

I don’t they’ll be looking at customers who declared their nationality as an American when they first opened their account. They wouldn’t create massive system with all banks around the world to be easily exploited. Don’t worry, IRS are damn smart!!

@mak & @aaa, this was exactly one of my points. The only reason why would Kuwaiti officials pretend to be willing to work with the IRS… is the fact that Kuwait government itself is planning to tax the income of its citizens… that way, Kuwait will then enter in a tax double treaty with the US… and the wealthy Kuwaiti will figure a way to avoid paying our government.

I was already contacted last week by NBK regarding my teenage son’s account. He does not even have a social security number, ugh!

I think NBK is just searching the customers with “American” as their nationality. But they did not ask me to come in and add any info to mine???

So the NBK operator told me I have ONE week to come to the bank and fill out his information.

For Americans who earn LESS than $91,000 a year…then that income is not taxable. If you earn more than $91,000, then it is a whole other ball game….UGH!!!

Somewhat right. It is up to around $96,000 now. There are many deductables while living overseas, especially in the Middle East or other areas with high cost of living. Kuwait has a housing rent deductible of around $34,000 anually and car rental for a pretty good amount as well. The banks have started gathering information since the early months of this year requiring U.S. citizens to give them a copy of their passport. The IRS is looking if U.S. citizens who are hoarding money overseas so they can avoid taxes. I wouldn’t think that American citizens like myself would keep large amounts of money in lets say a Kuwait bank, due to the fact that no interest is being made. But since the American dollar is pretty much crap with no backing, the Arab banks are backed by other things and not the American CRAP Dollar. So for money secutrity reasons, it is safer to have money in a Arab bank instead of an American bank. If the stock market decides to take a massive crap tomorrow, due people actually think they will be able to withdraw all their money tomorrow or anytime soon? Nope don’t think so. The US government cronies and Federal Reserve will cause more damage than what Greece and Cyprus had ever done.

That’s… not a lot to have in an account. Unless you are constantly cashing out and keeping all your money in a mattress or something I dunno

I personally know a couple of Kuwaiti Billionaires who renounced their US citizenship because of FATCA.

Goodluck trying to outsmart the IRS 😀

If you want the benefits of being a US citizen, pay your taxes. The tax form that US citizens file shows all the deductions and what a person owes or does not owe. Every US citizen is required by law , to fill a tax form out, and file it, even if they owe nothing. It”s called a form, but many pages are often used in the case of foreign residents. It needs to be filed on time, with any payments included. It’s not about what you earn per year or the amount in the account, it’s about reporting all of the money to see what is owed in taxes.

What is the benefits exactly of being a US citizen?

Seriously, tell me… what is the benefit? Especially if you’re not living in the US… like the case we’re talking about right here right now?

Well, I am a US citizen and to be totally honest the ONLY benefit to being a US citizen is that 98% of the world’s countries will give you a visa upon entry at the airport. So if you are wealthy enough to travel, then having a US passport is beneficial. Other than that there really is no benefit. You can collect on Social Security benefits as long as you paid into them if you never paid into it then you will never be able to collect on it. If you live outside of the US having a US passport is even less beneficial. I was once physically attacked by another American here and when I went to the police station they said I had to contact the US Embassy since they could not do anything when it involved US citizens. When I called the Embassy, they told me that they could not help me and that I should go to the local police. Talk about a catch 22! The funny thing is that since I have been here these last six years I have met people who have the wrong view of what it is to be an American. For example, I once got into a debate with a Kuwaiti who refused to believe that Americans did not receive free housing in the US. He was under the impression that all houses were given a free house and land by the US government. I told him that he watched to many Westerns. He also believed that all US citizens received free medicare and did not pay for University. He got very angry when I told him that he was confusing us for Cuba. LOL. The truth is that I do not understand why anyone would want to face the risk of losing their Kuwaiti citizenship in order to have a US passport. Then again thats just my opinion.

You’re forgetting about security. This part of the world is not very stable. Many Kuwaitis still remember the Iraq Invasion, and current events in Iraq and Syria are not very comforting. Putting security aside, many Kuwaitis also realize that the population is increasing and the oil is decreasing, so in the long run USA seems more financially sound too.

I’ve been in the USA now for about 7 weeks and of course I’m an American citizen and I think it’s true that the USA is more “financially sound” than parts of the world in the Middle East, but I don’t know how I lived here all my life — and that in no way renounces my citizenship or my love for this country. It’s my home, but it has become so difficult to live here. Price of gasoline, food/restaurant costs, and then the insanity of things — a first grade teacher showed up drunk at a local school; cops killed a guy outside of St. Louis (and maybe rightfully so, but riots resulted), thousands of illegals are crossing the Tex/Mex border, Obama is (supposedly) going to make 5-million illegal immigrants legal, and it goes on and on and on — everyday it’s something new and generally not positive. When I tell people that I look forward to returning to Kuwait because our life is so much simpler (and safer) there they think I’m pretending to like it! And of course now they say: “Well, good luck when ISIS invades Kuwait!” But of course Americans tend to think that everyone in the Middle East is a terrorist — a friend asked me, “How do you feel about living among terrorists?” I laugh and explain that so far none of them has introduced himself or herself to me! . . . It’s also interesting to me that in spite of the negative feelings people share about the USA, every week in Kuwait someone will ask me, “How can I get to the USA to live?” Lots of people want in, in spite of paying taxes (of course, they don’t fully understand that phenomenon, but US citizenship comes with a high price.)

I think it’s the media blowing everything out of proportion sometimes. We have a lot of political problems in Kuwait but they’re usually covered by the Arabic newspapers since the English ones tend to stick to things related to expats for the most part. I mean we haven’t had a parliament complete a full elected term in how long now 10 years? Constant problems between government and parliament, and a lot of important projects being put on hold because of personal issues.

As for the US thing… yeah. As someone who studied in the US I always get asked why I didn’t stay and people think I’m an idiot when I tell them I prefer Kuwait. I think everyone thinks “Living in the US” means having a $3 million apartment in Manhattan.

I think it’s the media blowing everything out of proportion sometimes. We have a lot of political problems in Kuwait but they’re usually covered by the Arabic newspapers since the English ones tend to stick to things related to expats for the most part. I mean we haven’t had a parliament complete a full elected term in how long now 10 years? Constant problems between government and parliament, and a lot of important projects being put on hold because of personal issues.

As for the US thing… yeah. As someone who studied in the US I always get asked why I didn’t stay and people think I’m an idiot when I tell them I prefer Kuwait. I think everyone thinks “Living in the US” means having a $3 million apartment in Manhattan.

Kuwait’s population is not increasing. 10 years from now, there will be 700,000 Kuwaitis.

The Kuwaitis with US passports are usually old money merchants. These people are very influential, they own the private sector and arguably have just as much influence as the Al-Sabah monarchy.

Kuwait’s oil is decreasing but that’s not a problem because Kuwait has a large sovereign wealth fund.

I am of Indian descent, was born and raised in Kuwait like my father and Grandfather, but had an Indian passport. Compared to the Indian passport, I love my US citizenship. I get to travel to almost anywhere I want, and definitely get a lot more respect than I did with the Indian passport. It shouldnt be that way, but it is.

I have written numerous articles about FATCA and this thread includes some exaggerations and some inaccuracies.

Banks are being pressured to comply, and if they do not their holdings in the USA fall into jeopardy. Many Kuwait banks keep holdings in the USA so they take this seriously. The IRS does not care if you are a Kuwaiti — the IRS cares if you are an American citizen or hold a green card. Every wage earning American is required by law to file a tax return annually — no exceptions. Failure to file is a Federal offense. It doesn’t matter if you live in Kuwait or earn no money in the USA. You must file. How much you have to pay depends on numerous factors — but many may owe nothing.

Those who do not file and who have holdings in the USA, such as real estate and savings, may see the IRS put a freeze on those holdings. Many influential Kuwaitis have significant holdings in the USA.

Several months ago I helped a young Kuwaiti entrepreneur establish the American Tax Bureau in Kuwait for the purpose of answering all of the questions raised in this thread. ATB’s main business is the preparation of tax returns. To tell people that they need a tax attorney to deal with FATCA is erroneous except in special cases. ATB is fully capable of handling 99% of the returns coming out of Kuwait and the region. Check out americantaxbureau.com.

I presume they will still need official proof from the US embassy, some Kuwaitis never applied for A US passport although they were born there. Regardless, the law here in Kuwait does not allow any entity to investigate local bank accounts, so my guess they need to change the existing bank accounts privacy law, which I believe will not pass easily by the MPs in the Parliament for obvious *wink* reasons.

The basic assumption while opening an account is that the customer holds one nationality. To cater for FATCA, the Relationship Officer has been tasked with asking new customers whether they hold ‘additional nationality’ and add this detail.

There is a distinction between being born in the US (nativity) and actually being a citizen and this has been clearly ironed out in FATCA questionnaire. So you could be born in the US, citizen of lebanon but holding a US greencard and therefore fall under the US Person Policy.

The banks may not know, but the IRS knows. It’s not clear how the process will work although supposedly bank accounts with less than $10,000 at any given time will not be checked. It’s easy to imagine the IRS inquiring for specific names at the banks. I doubt the Embassy is involved although IRS appointed auditors may work through the Embassy and reportedly have been working in Kuwait for many months. … This is actually a simple matter and there’s no reason for alarm except for US citizens who do file an appropriate return. Of course if you’ve never filed and you earn more than 100k US you may face some challenges — on the other hand the IRS also offers some assistance in meeting the requirements. The easiest place to go in Kuwait: americantaxbureau.com.

In my previous post I meant to say there’s no reason for alarm except for those who do NOT file …

True that they can denounce citizenship, but not without officially notifying the USA, and when they notify they open themselves to investigation and they may be liable for tax returns and payments with penalties for the previous (up to) 10 years . . . so it’s not as simple as many seem to think.

The US Government is terrorizing the Swiss banks et al. and forcing them to give out confidential information that belongs to their patrons. So yes, that is terror to me. They have no right to stuff their noses into MY private life or what I privately do or how much money I privately have when I do not live in the US and do not benefit from the services they tax me on.

I’m not necessarily disagreeing with you, but the US Government is like any other Government….THEY will decide what rights you have and do not have. If the US Government tells Kuwaiti Banks to jump, they only reply will be “How high, Sir”? That’s the reality.

Given all the discussion here about FATCA and what Kuwaiti/Americans might or might not do, it was interesting just now to read a blurb from Hamid Alansary, General Manager of Privilege Holding, who decided he needed to learn more about FATCA since he’s a U.S. citizen and had never filed a tax return. Rather than go to a tax attorney, which I think is costly, Mr. Alansary went to the American Tax Bureau in Kuwait to get educated and ultimately to file his return. Nothing wrong with consulting with a tax attorney, but as a first step that’s probably overkill. You can get Mr. Alansary’s story from the ATB web site at americantaxbureau.com.

Parallel to that is FATCA (Foreign Account Tax Compliance Act) which started in tax year 2012 (filed in 2013) and should be filed if your aggregate foreign holdings sum up to $50,000 and you reside in the United States. If you live abroad, higher thresholds apply: unmarried – $200,000 at year end or $300,000 during the year; married filing jointly – $400,000 at year end or $600,000 during the year; married filing separately – $200,000 at year end or $300,000 during the year. The FATCA report is Form 8938 filed each year with Form 1040 (if applicable).

https://americansabroad.org/issues/taxation/us-taxes-abroad-dummies/

I would not trust a 3rd party organization such as the advertised in the above post, those guys MAY be getting commissions. so watch out dudes and dudettes

Dr. Hayes – this is your third mention of American Tax Bureau in these posts. As the head of the business faculty at GUST and certainly an expert in business ethics, I would at least expect disclosure of your ongoing relationship with American Tax Bureau before the obvious promotion of this organization.

IRS probably wants to know which Kuwaiti American is funding terrorists from Kuwait more than actually taxing purposes. There is always an ulterior motive with them.

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