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  1. Funny – I had that exact coming came up last month because we (my non-resident wife and I) wanted to rent an apartment in Germany. We ended up opening the “Sparbuch” in her name so that I do not have to investigate if I need to add another line to my FBAR. Thanks for providing this example, Phil – it shows that there are still people connected to the realities of the normal, average, US Expat (aka minnow…).

  2. The interesting thing is most US tax lawyers and tax law professors seem to think this is all a okay and outside intervention by myself and other is meddling in their profession prerogatives

    I really love to show the letter below to US tax law professors. Nothing gets them more enraged.

    I love response goddamit the US has the “right” to tax its citizens wherever in the world they are and we aren’t going let some Canadian law professor no matter how prominent he is tell us otherwise..

  3. Now I’m really worried. I think my undeclared ‘foreign’ toaster is the real cause of the US tax gap – and a big part of the US domestic debt.

    Here’s what happened;

    My bank gave me a toaster with my mortgage many years ago. It was a ‘foreign’ toaster, a ‘foreign’ bank, and a ‘foreign’ mortgage. I regularly make ‘foreign’ toast in it – which I haven’t ever declared. The toaster was made locally, and also is not taxable in Canada.

    Does that mean that since the foreign toaster was tenuously connected with the purchase of my house that now the IRS can levy either a 50% tax on it – or the market value of the property – whichever is greater?

    What incomprehensible and obscure IRS form do I use to report it? For simplicity sake, I’ll just assume it comes with the usual penalty in multiples of $10,000., an obscure IRS filing date and unusual processing address.

    Is there a draconian extortionate US voluntary disclosure program for owning a foreign toaster that I can enter?

  4. I’d say that the people that wrote these rules just never considered the case of people living outside the US. Thus the “toaster ambiguities” Even with all the excitement since the 2009 FBAR mess, they still have not learned.

  5. Michael,

    The Form 8938 rules are yet another example of human folly. To imagine that all behavior can be defined in English sentences, and categorized with checkboxes and numbers.

    The government seems oblivious to the friction it creates.


  6. I think there is a never-ending list of items that, if you read the Form 8938 rules literally, would need to be treated as specified foreign financial assets. At the end of the day, you have to every include items that are absolutely ridiculous (contract with the gardener, anyone? agreement with the cable company?), or exercise some common sense. It’s unfortunate (and perhaps a bit outrageous) that the rules are written in a manner that makes this necessary.

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.