[FallujahJane]

Holders of F and J visas do pay taxes in the US, though they may also be liable for taxes in their home countries. (Depending on treaties with their home countries, they may or may not be better off than a regular US taxpayer.)

You may be thinking of the rule requiring American citizens to pay taxes over their worldwide income, not only their US income. That rule applies to American citizens as well as permanent residents ("green-card holders"), but generally not to anyone in the US on a temporary visa. That means that someone in the US on a temporary visa will generally be paying US taxes over any income from a job or business they have in the US, but if they have, e.g., income from renting out real estate in another country, that income may be taxed in that other country, but not in the US. Only US citizens and permanent residents are required to report any such foreign income in the US and pay taxes over it, even when they move abroad (with some exemptions).

FATCA is not as onerous as you describe for most regular people. As a US taxpayer (whether a citizen or permanent or temporary resident), you have to report foreign bank accounts that at any point during the year contain more than the equivalent of something like $10,000. That's it. There is no requirement (as far as I'm aware) to report "every single foreign transaction."

You're right that retirement planning can be complicated for immigrants and temporary visitors. Many countries have rules like the US, where you have to pay into the system for a certain number of years before you become eligible for social-security payments in old age. So for many immigrants retirement becomes a patchwork of sources (a bit of social security, a bit of foreign social security, and otherwise savings in whatever accounts are available in the US and abroad.)

[sprite]

That seems correct. On my FBAR I have to report every foreign bank account I have and the highest balance each account has had during the year. I've never had to report individual transactions and have not ran into any problems with my banks.

[beagle3]

> You may be thinking of the rule requiring American citizens to pay taxes over their worldwide income, not only their US income. That rule applies to American citizens as well as permanent residents ("green-card holders"), but generally not to anyone in the US on a temporary visa.

It is indeed what I'm thinking about, but I believe you are wrong about the "temporary visa" thing - As far as I know, only F and J visas (inherently temporary) are exempt; H-1B, L-1, E-1, O and K visas which are temporary in the sense that they expire on job termination / divorce, but they still subject you to taxation of your worldwide income.

> There is no requirement (as far as I'm aware) to report "every single foreign transaction."

There is a requirement to report the details of every transaction that has capital gains and losses associated with it, if that transaction did not happen in the US.

A few years back, I got a call from my foreign bank one day, saying that because I was a US taxpayer (for several years, at that point, well documented with the bank), they could no longer maintain any of my accounts other than checking and saving. At that point, my bank was also my broker keeping some long term bonds, stocks, mutual funds, etc. So, they had me choose whether I want to transfer them to a SEC-regulated bank/broker (impossible - non had the facilities), or liquidate them -- which is what I did.

Had this been done in the US, I would just have to report aggregate capital gains/losses. and that's it. However, as this was outside the US, I had to fill a 2-page form describing every liquidation transaction that the bank did. I ended up filing north of 300 pages that year. "Luckily", now I can't purchase any of these securities so that won't happen again, except ....

> You're right that retirement planning can be complicated for immigrants and temporary visitors.

No, I'm not talking about retirement planning, which is indeed complicated.

Almost every country has a pension saving system independent of the social-security (or equivalent) system. In the US, for example, it is IRAs and 401K. These things get preferential tax treatments, usually "no tax (up to some limit) as long as you only cash it when you retire". However, the US does not recognize any other country's preferred retirement saving. Those savings are in 99% of the cases, a PFIC from the perspective of the US tax system.

Which leaves you with three choices: Either cash it, retroactively forfeiting any tax benefit (possibly 20 years of it), and move it to a US equivalent; Or .. pay a tax each year on the theoretical profit of those pension accounts ... or, pay a lump compounded interest-and-penalty tax the day you actually cash it, which will likely be 50%-100% of that sum.

Now, if you've moved to the US for good, then, by all means, you have to take the hit to switch systems. However, if you can't guarantee that you can stay forever, all your options regarding taxation of your pension saving are awful.

[piotrkaminski]

> However, the US does not recognize any other country's preferred retirement saving.

This is not completely true: Canadian RRSPs are recognized by the IRS at the federal level due to a tax treaty, though may not be recognized by all states. (For example, I had to figure the interest on the investments for my California return, until I decided to sell the RRSPs to simplify my life.) Other countries may get special treatment for their tax-deferred retirement accounts via a tax treaty too, though it can be tricky to ascertain -- you may end up actually having to read the treaty!