Anybody Know About Impact of "Hire Act" 30 % Withholding on U.S. Expats' Funds?
Read about this law on an International Living publications. Naturally, they are selling an international workshop to address this topic, but I did wonder how it might affect ex pat U.S. citizens who are hoping to relocate to Nicaragua on a pensioners visa, relying on their social security payments to meet the requirements.
"The provisions are found in a jobs' bill, H.R. 2847 (also known as the HIRE Act), which became law in March 2010. Title V of the law largely encompasses the Foreign Account Tax Compliance Act of 2009, or FATCA, also referred to as the 'Offset Provisions' of the bill.
"On their face, these provisions appear intended to force U.S. tax compliance with regard to foreign accounts and transactions between the United States and individuals in countries that are considered to be tax havens (meaning the banks and financial institutions in those countries do not share account information with U.S. authorities).
"Section 1474 refers to 'withholdable payments' to Foreign Financial Institutions that don't meet U.S. standards for information sharing. The law requires that any financial institution (U.S. or foreign) remitting any foreign payment to a bank in such a country withhold 30% of the amount of such payment and remit that percentage to the Internal Revenue Service (IRS) as a tax.
"A withholdable payment is defined as any payment of interest, dividends, rents, salaries, wages, premiums, annuities, compensation, enumerations, emoluments, and other fixed or determinable annual or periodical gains, profits and income, if such payment is from sources within the United States.