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Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

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Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#31

Post by scrumper »

clamprecht wrote: post #23
philiphodgen wrote: post #2

I was quoted in this article. I do lots and lots of this work -- helping people log out of the USA cleanly and permanently. AMA.

Here's something I've been wondering, totally hypothetical but could be real for someone else: Puerto Rico has this new tax law that basically limits taxes to like 4% or less, if you are a resident of PR. Let's say Bob is an American who expects to have a big exit in 2015 (or he has lots of GOOG stock and wants to sell it). Normally Bob would pay US capital gains taxes (15-20%, maybe 23.8%), plus California taxes (as…

US citizens overseas are required to declare all income (and capital gains) to the IRS regardless of source. They still have to file returns in the US. Bob will owe tax as a result, but he can probably write off the 4% he payed in PR against his US taxes. He's not a resident of California, so he likely avoids the state tax.

(Note: I don't know specifically about Puerto Rico, but generally the above is the case for US citizens in foreign countries.)

Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#33

Post by morgante »

judk wrote: post #26

Why does WSJ (and NYT) add extra words to make headlines more awkward? Is WSJ really trying to argue that expats are dodging tax rules , not taxes ?

> Is WSJ really trying to argue that expats ate dodging tax rules, not taxes?

Actually, yes. Maybe you didn't read the story, but it specifically talks about how the major burden for middle class expats isn't necessarily taxes but the penalties for failing to file specific paperwork.

Anecdotally, this is certainly true for the expats I know (including myself). I didn't have to pay any US taxes, but the penalty for not filing excessive disclosure forms on all local bank accounts is very onerous.

Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#34

Post by onetimeusename »

philiphodgen wrote: post #2

I was quoted in this article. I do lots and lots of this work -- helping people log out of the USA cleanly and permanently. AMA.

A few questions if you don't mind. Do you know if any of your clients who have renounced citizenship have had trouble coming back in to the United States to visit friends or family or for business? Is it common for countries to tax personal income if it was earned overseas and the expatriate lives where the income was earned? Does the US do that? Has the IRS taken any interest in the contacts of your clients who are citizens? Finally, have any of your clients regretted the decision?

Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#35

Post by clamprecht »

scrumper wrote: post #31
clamprecht wrote: post #23

Earlier quoted context omitted.

Here's something I've been wondering, totally hypothetical but could be real for someone else: Puerto Rico has this new tax law that basically limits taxes to like 4% or less, if you are a resident of PR. Let's say Bob is an American who expects to have a big exit in 2015 (or he has lots of GOOG stock and wants to sell it). Normally Bob would pay US capital gains taxes (15-20%, maybe 23.8%), plus California taxes (as…

US citizens overseas are required to declare all income (and capital gains) to the IRS regardless of source. They still have to file returns in the US. Bob will owe tax as a result, but he can probably write off the 4% he payed in PR against his US taxes. He's not a resident of California, so he likely avoids the state tax. (Note: I don't know specifically about Puerto Rico, but generally the above is the case for US…

That's why I asked about Puerto Rico. Puerto Rico is a territory of the US, so it isn't considered "overseas". If you google it, you'll see what I'm talking about. Here's a link: http://www.marketwatch.com/story/puerto-rico-woos-rich-with-...

Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#36

Post by philiphodgen »

onetimeusename wrote: post #34
philiphodgen wrote: post #2

I was quoted in this article. I do lots and lots of this work -- helping people log out of the USA cleanly and permanently. AMA.

A few questions if you don't mind. Do you know if any of your clients who have renounced citizenship have had trouble coming back in to the United States to visit friends or family or for business? Is it common for countries to tax personal income if it was earned overseas and the expatriate lives where the income was earned? Does the US do that? Has the IRS taken any interest in the contacts of your clients who are…

No one has had any problems returning to the USA.

The USA is the only country that taxes its citizens who live outside the country. I think that's what you're asking. British citizens living abroad don't pay UK income tax.

The IRS hasn't taken any interest in my clients -- the tax returns are clean and that's all they should care about. But the Lois Lerner affair shows that they are corrupt, unfortunately.

The people I know who give up citizenship almost all do it with extreme regret. I assume this feeling persists even after the fact.

Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#37

Post by WildUtah »

jessriedel wrote: post #18
deciplex wrote: post #8

>"U.S. citizenship is the most coveted citizenship in the world. To give it up, it has to be pretty serious," It's pretty serious to give up your birth citizenship no matter where you're from. But, as someone with American citizenship, this doesn't ring particularly true for me. There are a number of passports I would trade, today, right now, for the one I currently hold. Anyone claiming American citizenship is the m…

What countries's citizenships would you suppose is coveted by more people worldwide than the US?

Any EU citizenship is more useful and less dangerous and more lucrative and more flexible and subjects you to less world-wide paperwork, tax, and business restrictions.

So Estonia, Poland, Romania, Bulgaria, Slovenia (or is it Slovakia?), Lithuania, Latvia, Slovakia (or Slovenia?), and Greece have more valuable passports for their citizens.

If you travel a lot in East Asia, Japan's passport is awfully useful and has much nicer perks than US citizenship.

Obviously, France, Britain, Canada, Germany, Italy, Sweden, and other core wealthy nations have much, much better deals for citizens, too.

The US passport and citizenship is more and more like a third world quality passport every year, with one major exception. That exception, of course, is the right to live in the USA, which is a dang nice country with excellent open country, parks, forests, space to breathe free, big highways, fishing, hunting, the right to keep and bear arms, and fine honest people.

But if you don't love this land, you're better off with Latverian or Hungarian or Freedonian citizenship, because our politicians have done squat to keep our citizenship valuable around the world.

Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#39

Post by philiphodgen »

morgante wrote: post #33
judk wrote: post #26

Why does WSJ (and NYT) add extra words to make headlines more awkward? Is WSJ really trying to argue that expats are dodging tax rules , not taxes ?

> Is WSJ really trying to argue that expats ate dodging tax rules, not taxes? Actually, yes. Maybe you didn't read the story, but it specifically talks about how the major burden for middle class expats isn't necessarily taxes but the penalties for failing to file specific paperwork. Anecdotally, this is certainly true for the expats I know (including myself). I didn't have to pay any US taxes, but the penalty for no…

This is exactly right. HNers who are US citizens will set up a perfectly ordinary corporation in their country of residence and run their company perfectly legally in that country. Years later they hear of Form 5471. The government's SOP on this is to impose a $10,000 per year penalty then force you to beg for the penalty to be removed. Sometimes that happens. Sometimes that doesn't. How many small businesses could stand a $40,000 or $50,000 hit just because you didn't file a piece of paper saying you owned stock in a foreign corporation?

Re: Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules

#40

Post by ebiester »

judk wrote: post #26

Why does WSJ (and NYT) add extra words to make headlines more awkward? Is WSJ really trying to argue that expats are dodging tax rules , not taxes ?

It's really pretty bad. We're not even talking about the wealthy in many cases. You basically have to have an tax preparer who specializes in expat issues handle your taxes, and they aren't cheap. This is not a job for H&R Block.
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