US Citizens get a raw deal...

[Trumplestiltskin 5,791]

....that even if you live and work outside of the US, that the IRS still demands you pay taxes on income you earned in the other country?

Global taxation? How peculiar...

[Gary and Alla 3,696]

....that even if you live and work outside of the US, that the IRS still demands you pay taxes on income you earned in the other country?

Global taxation? How peculiar...

Yes, I knew this. It is in no way a raw deal. The first $88,000 of income is tax free (that gets adjusted every year). Overseas bonuses are tax free. Living stipends are tax free, PLUS being liable to the IRS makes you exempt from the foreign country's tax (in most cases) When I worked in Canada I could choose which country to pay taxes to and get a credit toward the other. When I worked in Ukraine my income was virtually tax free. Many US contractors are working in Afghanistan and Iraq, collecting big money and those areas are completely tax free because they are combat areas. The people still need to file tax returns but pay no tax. In fact, when sponsoring a fiancee they have to attach documentation to their IRS 1040 forms to show they had substantial income which was not subject to tax and did not show up on their form 1040, line 22.

Americans do not get a "raw deal" Gene, that is why you have never seen a boatload of Americans showing up as "refugees" on any other country's shore. It is why Haiti doesn't come to OUR rescue when we have an earthquake (a similar earthquake here in 1989 in San Francisco killed 63 people...compared to...???) That is why Somalia is not here protecting our food distribution system. It is why there have not been 15,000 murders on OUR side of the border with Mexico. It is why we export food, it is why the most rural cabin has electricity and a flush toilet.

As much as Democrats and liberals wake up every day looking for something to be dismayed about, it simply isn't there. I am glad I am not one of those guilty feeling liberals. I will have a great day today and enjoy all I have earned by working for it and not feel the least bit guilty.

....that even if you live and work outside of the US, that the IRS still demands you pay taxes on income you earned in the other country?

Global taxation? How peculiar...

However, I welcome your joining the tax protesters. Will you be going to Tea Party meetings now?

[Jenn! 918]

Yeah, the foreign-earned income exclusion comes in handy. But it is something to consider when deciding whether to go for U.S. citizenship if you plan to live abroad in the future.

[Niels Bohr 72]

That is quite funny. And, there's no way for them to find out that you're receiving foreign income. So, unless you report it, it really is one of those laws that cannot be enforced.

....that even if you live and work outside of the US, that the IRS still demands you pay taxes on income you earned in the other country?

Global taxation? How peculiar...

[mawilson 2,133]

Funny that the same rule doesn't apply to US businesses which can supposedly escape high taxation

by moving their operations overseas (or so we keep hearing!)

[Kathryn41 3,207]

You are required by law to file a US tax return every year, whether you are resident in the US or not. You don't necessarily have to pay taxes, especially as many countries have tax treaties with the US, but you run a risk if you fail to file a return of action taken against you by the IRS. It may be a toothless threat while you are living overseas but if you ever want to return to the US, you may find yourself in difficulties.

This was one of the facts I had to consider when deciding to pursue US citizenship or not. The positives outweighed the negatives, though, so even though I know I now have to file a US tax return for the rest of my life, regardless of where I live, it isn't that big of a hassle - just a nuisance. Now if I had to face double taxation, that would be a different story!

[lovelyalex 99]

The IRS have pretty effective methods of getting hold of information about your overseas income, for the most part. Especially with countries that have tax treaties and systems in place where the major financial intuitions are required by law to disclose information about their clients/customers who are either holding US assets or the beneficiary/ultimate owner of non US assets are a USC. On 19 February, the U.S. government filed suit against UBS AG to reveal the names of 52,000 American customers, alleging that the bank and these customers conspired to defraud the IRS/federal government of legitimately owed tax revenue. Granted these customers were probably all high net-worth individuals, but if you get on their radar, they'll pick you over with a fine tooth comb if they think you are hiding something. I've read some horror stories from my former line of work (for a regulated financial intuition working offshore) where the IRS have made it very difficult for people, even if not present in the US, seizing assets etc.

I'd not like to get on their wrong side!

[w¡n9Nµ7 §£@¥€r 123]

Especially with countries that have tax treaties and systems in place where the major financial intuitions are required by law to disclose information ...

Yeah, it's tough getting around all that intuition.

[Ali G. 37]

That is quite funny. And, there's no way for them to find out that you're receiving foreign income. So, unless you report it, it really is one of those laws that cannot be enforced.

Maybe not with Cambodia but they have treaties with various other countries. If I hid my Aus income, I guarantee you that one of the governments would be knocking on the door.

Funny that the same rule doesn't apply to US businesses which can supposedly escape high taxation

by moving their operations overseas (or so we keep hearing!)

You can thank our republican buds for this. Companies are apparently above the law for them.

Edited February 19, 2010 by Booyah

[Darnell 8,480]

....that even if you live and work outside of the US, that the IRS still demands you pay taxes on income you earned in the other country?

Global taxation? How peculiar...

Is it a raw deal? I never thought so. I gots me that 'freebie' on the first 85K as 'non-taxable' income when I worked overseas.

I thought it was a GOOD DEAL !!!

Of course, the 'rest of story' wasn't so bad - I'm happy to paid the tax over 85K, each time. But if ya know what yer doing, understand the tax code, and know which deductions are allowed and do-able - it's fun !

The one thing I hated - any financial instruments in the USA that paid ME interest or dividends, that was still taxable without the 'ceiling'.

Can you tell me, please, how any of this taxation has affected you or yours?

[Trumplestiltskin 5,791]

I am thinking of applying for citizenship before I go back to the UK for a couple of years.

From what I understand the UK charges income taxes based solely on residency (this is actually quite common - most countries do this). I am not required to file detailed tax returns with the Inland Revenue to establish my overseas income and pay tax on that money - since it is, at best, questionable to pay taxes on services that you are not taking advantage of (like the NHS).

The US, on the other hand, requires me to file a detailed tax return for money you earn anywhere in the world, based on citizenship (not residency). Now the first $91,500 is supposedly tax free - but you have to file your income in US dollars (based on the prevailing exchange rate?), so if you are working in a country that has a high rate of exchange with the dollar, then that 91 grand isn't a whole lot.

[Ali G. 37]

The US, on the other hand, requires me to file a detailed tax return for money you earn anywhere in the world, based on citizenship (not residency). Now the first $91,500 is supposedly tax free - but you have to file your income in US dollars (based on the prevailing exchange rate?), so if you are working in a country that has a high rate of exchange with the dollar, then that 91 grand isn't a whole lot.

You're kidding.. So you are telling me that the first $91K is tax-free, yet you have to pay an additional tax to the US if you earn above that amount. Does that apply even if you are already been taxed on this amount in the host country? Americans would basically be double taxed.

Edited February 19, 2010 by Booyah

[DainandVicky 4]

You're still remaining eligible for Social Security benefits too unless you abdicate your citizenship by becoming a citizen of another country, so... yes, it does make sense you'll still pay into the system that will help pay your retirement, even if you're living overseas it still says citizen of USA in your passport. If it doesn't, then you aren't paying taxes.

[one...two...tree 2,762]

Funny that the same rule doesn't apply to US businesses which can supposedly escape high taxation

by moving their operations overseas (or so we keep hearing!)

Yep...

[Ali G. 37]

You're still remaining eligible for Social Security benefits too unless you abdicate your citizenship by becoming a citizen of another country, so... yes, it does make sense you'll still pay into the system that will help pay your retirement, even if you're living overseas it still says citizen of USA in your passport. If it doesn't, then you aren't paying taxes.

I thought your SS is based on credit or the amount you pay into it. If I became a US citizen and moved back to AUS, I would almost certainly use their much more successful private retirement system. Why should I or my wife be forced to pay into the US system, without actually living here?

Edited February 19, 2010 by Booyah