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U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

nytimes.com

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Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#131

Post by [deleted] »

wnevets wrote: post #37
colechristensen wrote: post #26

Earlier quoted context omitted.

The fist $100,000 income isn't taxed this way[1]. And it's not abhorrent. If you earned enough money to think it's advantageous to lose one of the most valuable passports in the world, you probably earned that money in large parts due to the support of the people and infrastructure of the United States. You don't get to drop your duties once you win big. [1] $97,600 for 2013, $99,200 for 2014 and $100,800 for 2015

its very typical for people to want their cake and eat it too. They want the benefits of having the US passport but don't want to pay for it.

[deleted]

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#132

Post by seanmcdirmid »

rayiner wrote: post #55
sschueller wrote: post #13

Earlier quoted context omitted.

And the US double taxes their citizens living abroad the same way. As an American making the same money as your non-american co-worker you are left with a lot less just for having a US passport. It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes. Wanna get rid of your US passport? Not before you pay 10 years projected taxes and pay an abhorrent fee. You will also be listed…

> And the US double taxes their citizens living abroad the same way. The tax code has provisions to avoid "double taxes" on foreign income. You file Form 1116 to claim credit for taxes you paid to a foreign country as an offset against your U.S. tax liability.[1] That tax credit is separate from the income exclusion, which excludes the first ~$100k of foreign income from U.S. taxation. Generally, your total tax liabi…

The f1116 (tax credit) only works well if foreign taxes are greater than US taxes. I revoked my f2555 (income exclusion) to make my taxes easier (I hit that point where it was just too much work). Everything was great until I got married abroad to a foreign national, then I had to file "Married filing separately" because my wife didn't have a SSN. This absolutely caused my tax filing to collapse, and now I have a bill from the IRS saying I owe a lot of money (really I don't, I screwed up on the math, but...damn).

It turns out I can get my wife a tax filing number so we can file jointly, and now I have to go back and revise a couple of years of taxes, and will ultimately wind up owing nothing (hopefully!). The IRS helpline really does help (I was incredibly distraught when I found out...getting a huge bill from the IRS for a tax filing 3 years ago is horrible), if you are an expat abroad, use it! But it is still a PITA!

I feel sorry for those in Switzerland, Hong Kong, or Singapore, where the exclusion only goes so far and you wind up paying tax beyond your credit, suffering high VAT and cost of living that those locales entail. You really need a professional accountant at that point to figure out how you can get relief (e.g. by using the Housing Exclusion). The big problem is that each country "works differently", and what is considered income tax in one country isn't the whole story (they might tax differently, like with a high VAT and usage fees, and what about taxes on health insurance and various social security fees you'll never be able to use?), you can still very well be exposed to double taxation.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#133

Post by coolgeek »

apatters wrote: post #117
rayiner wrote: post #55

Earlier quoted context omitted.

> And the US double taxes their citizens living abroad the same way. The tax code has provisions to avoid "double taxes" on foreign income. You file Form 1116 to claim credit for taxes you paid to a foreign country as an offset against your U.S. tax liability.[1] That tax credit is separate from the income exclusion, which excludes the first ~$100k of foreign income from U.S. taxation. Generally, your total tax liabi…

What! How can you not see the injustice in a US expatriate who has not set foot in the US for 20 years paying taxes to the IRS if they earn over $100K and their country of residence has a lower tax rate than America? That is exactly what happens today, no other country does this, and there is nothing just about it!

A "US expatriate who has not set foot in the US for 20 years" seemingly understands at some level that a US passport/citizenship confers benefits that are worth retaining. Those benefits are not without cost.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#134

Post by AnthonyMouse »

caseydurfee wrote: post #105
AnthonyMouse wrote: post #63

Earlier quoted context omitted.

> discretionary spending "Discretionary spending" is a term the left made up to lie about how much of the budget is things they want. Things they want are non-discretionary, other things are discretionary. It's political newspeak, not a comprehensible way to measure the government budget.

Incorrect, it has a perfectly precise legal meaning. Discretionary spending is government spending allocated through an appropriations bill. It's useful to distinguish between entitlement programs and non-entitlement programs. Where did you get the idea it was simply "political newspeak"? Perhaps you should reassess the value of your contributions to these types of discussions in light of your demonstrated ignorance…

It's political newspeak because the large majority of the federal budget is social programs and so is the overwhelming majority of "non-discretionary spending." Excluding it diverts focus away from the primary source of government expenditures.

It's language designed to make a particular thought unthinkable, which is the defining characteristic of newspeak.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#135

Post by seanmcdirmid »

Area12 wrote: post #122
rayiner wrote: post #55

Earlier quoted context omitted.

> And the US double taxes their citizens living abroad the same way. The tax code has provisions to avoid "double taxes" on foreign income. You file Form 1116 to claim credit for taxes you paid to a foreign country as an offset against your U.S. tax liability.[1] That tax credit is separate from the income exclusion, which excludes the first ~$100k of foreign income from U.S. taxation. Generally, your total tax liabi…

Try putting money in a retirement fund in the country you live in. The bizarre requirements the IRS puts on reporting will see your compliance costs exceed the yearly growth of the fund. Sorry, but if your foreign investments include a retirement fund or a family trust, you may well be shafted.

Do you know how it works for mandatory retirement accounts enforced by your host country? China started including foreigners in their SS system, and I have no idea how that money works...I've just been ignoring the contributions (treating them as straight income taxed in full) for now.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#136

Post by slyall »

st3v3r wrote: post #121
slyall wrote: post #108

Earlier quoted context omitted.

> "And the US double taxes their citizens living abroad the same way." > Except they don't. You have an exemption for foreign income. Because all the other 20 year olds working part-time at Starbucks employee the best accountant in town for a few hours per year to do their taxes. > "It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes." > I don't believe this for a second. Y…

"Because all the other 20 year olds working part-time at Starbucks employee the best accountant in town for a few hours per year to do their taxes." Your inability to do your taxes is no one's problem but your own. "Ever hear of a guy called Ted Cruz?" You mean the guy who's going all over the country right now?

The point I mean with the kid working at Starbucks is that most wage earners will have a very simple tax requirements. In many countries they won't even need to send in a tax return since it'll be done automatically. If they are a US citizen on the other hand they will now need to employee a specialist tax accoutant to handle tax requirements from the US and put in their paperwork. All to determine they owe the US nothing.

Ted Cruz was born in Canada. HE was a US citizen at the moment of his birth without having set foot in the US. If his family hadn't moved back to the US then he could have grown up in Canada as a US citizen and he would have had to file US taxes once he started making money. All without ever having set foot in the US.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#137

Post by [deleted] »

cohomologo wrote: post #70
benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

Foreign taxes are effectively a business expense for corporations in the US, since the foreign tax credit allows them to not pay taxes on the taxes paid to foreign countries. I think this makes sense. If I live in the US and make some product and sell it in Germany, then whatever profit I bring home from Germany (less German taxes) is still an income that was effectively earned in the US, since I am living and workin…

[deleted]

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#138

Post by lisivka »

kspaans wrote: post #119
lisivka wrote: post #115

Earlier quoted context omitted.

If you pay two taxes instead of one, as everyone else, then it IS double taxation.

Wikipedia disagrees with you: https://en.wikipedia.org/wiki/Double_taxation Specifically, double-taxation is when you pay taxes twice on the SAME earnings. Take the example of a US citizen living abroad in a country with lower income taxes. They will have to pay foreign as well as US income taxes: two like, you point out, rather than one. But the IRS agrees that double-taxation is mean, so they give you a foreign tax…

Wikipedia agrees with me:

Double taxation is the levying of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes).

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#139

Post by lisivka »

st3v3r wrote: post #120
lisivka wrote: post #118

Earlier quoted context omitted.

Just count taxes and countries: a) you pay taxes to one country only - normal taxation; b) you pay same taxes to the country BUT you are also paying additional taxes to US - double taxation.

No. That's not how it works.

Yes. That's how it works.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#140

Post by tn13 »

benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

This is most BS thing about USA. Every year I have to make sure I do not transfer money to my own accounts in India but transfer it to may father's account etc.

Most BS system ever.

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