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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

#41

Post by toomuchtodo »

philiphodgen wrote: post #7
deciplex wrote: post #3

Earlier quoted context omitted.

After you give up your citizenship you are still required to file with the IRS for the following ten years, correct? (Assuming you ever want to enter the US again.) What are your tax obligations during that time, though?

After you give up citizenship you file a tax return for that year. After that you only file income tax returns if you have income from US sources or you become a US resident. The 10 year rule was repealed in 2008.

> After that you only file income tax returns if you have income from US sources or you become a US resident.

Example: So your US corporation "pays" your Ireland corporation, who than pays you in the EU? Would that avoid the income from being considered US sourced?

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

#42

Post by patmcguire »

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?

The first world ones are all pretty much equivalent in terms of getting you around, one or two countries difference with no Visa among the top, not sure where the discrepancies are...

http://www.ibtimes.com/best-passports-have-unrestricted-trav...

US citizenship means you have tax liability on income overseas and dealing with a few weird things like the Cuba embargo, but you're also a citizen of the most powerful nation on earth, which does matter if you get stuck in a revolution or something.

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

#43

Post by toomuchtodo »

philiphodgen wrote: post #10
nickthemagicman wrote: post #4

Earlier quoted context omitted.

Im very interested in this. Which countries are best for expats from a quality of life and ease of obtaining citizenship standpoint?

You have to solve two problems -- your place of citizenship and your place of residence. Dominica and St. Kitts are the two places most people look to buy citizenship. There are other more expensive places too. Residence - this is easier to arrange. If the country will give you a tourist visa you're in, at least temporarily.

Any places cheaper than St Kitts/Nevis ($400K)?

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

#44

Post by graeme »

philiphodgen wrote: post #7
deciplex wrote: post #3

Earlier quoted context omitted.

After you give up your citizenship you are still required to file with the IRS for the following ten years, correct? (Assuming you ever want to enter the US again.) What are your tax obligations during that time, though?

After you give up citizenship you file a tax return for that year. After that you only file income tax returns if you have income from US sources or you become a US resident. The 10 year rule was repealed in 2008.

Are all non-citizens required to file US tax returns for US source income, or is that a rule specific to citizens?

A large chunk of this forum likely has US source income, so it would be good to know.

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

#45

Post by patio11 »

judk wrote: post #25
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.

Since a lot of us are thinking it: How do you justify you career as a morally acceptable calling?

Taxes pay for government services, which the citizenry of the United States broadly speaking wants, though they quibble every 4 years about the relative mix and funding levels. Tax laws are complex, highly technical, and require application of a voluminous body of rules to the infinite variety of potential fact patterns.

Many citizens, particularly those who have complicated fact patterns in their personal lives, are not capable of calculating their own taxes or would prefer to avoid doing so. Tax accountants and attorneys assist citizens in their obligations to calculate and pay the taxes required by the law, without paying more than they are obligated to pay.

I have a great accountant. (Hiya Cameron. waves) He sherpas me through my increasingly complicated international tax situation every year, which will never include renouncing my US citizenship but does often include such scintillating topics as "Does the US Revenue Code consider Japanese Self-Employment tax to be an income tax or not? If it does, should my income tax return for 2013 reference Japanese self-employment tax paid in 2013 or accrued in 2013? Is it most to my advantage to treat that as a necessary expense incurred by my business or as a deductible foreign tax or in some other fashion defined by the US-Japan Tax Treaty?" I pay Cameron so that I don't have to spend a week figuring that out, and can instead ship software, write emails, and otherwise move the business forward.

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

#46

Post by philiphodgen »

toomuchtodo wrote: post #41
philiphodgen wrote: post #7

Earlier quoted context omitted.

After you give up citizenship you file a tax return for that year. After that you only file income tax returns if you have income from US sources or you become a US resident. The 10 year rule was repealed in 2008.

> After that you only file income tax returns if you have income from US sources or you become a US resident. Example: So your US corporation "pays" your Ireland corporation, who than pays you in the EU? Would that avoid the income from being considered US sourced?

The US taxes you on wages only if you are within the borders when you do the work. So a noncitizen doing work outside the USA and getting paid by a US customer or employer is not taxable in the USA on those wages.

You would not need that intervening corporation in Ireland for income tax reasons but there are probably good business reasons for putting a layer between you and the US company.

If you are a US citizen you are taxed on your wages no matter where you are on Planet Earth. Some relief is possible (first approx $100k not taxable, for instance).

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

#47

Post by Rapzid »

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…

The greatest part is that now most of these banks are required by law to report our accounts to the IRS. So now that the IRS is notified we no longer have to worry about penalties right? Wrong. Now they have an automated way to detect and fine us.

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

#48

Post by hkmurakami »

philiphodgen wrote: post #7
deciplex wrote: post #3

Earlier quoted context omitted.

After you give up your citizenship you are still required to file with the IRS for the following ten years, correct? (Assuming you ever want to enter the US again.) What are your tax obligations during that time, though?

After you give up citizenship you file a tax return for that year. After that you only file income tax returns if you have income from US sources or you become a US resident. The 10 year rule was repealed in 2008.

When you give up your citizenship, don't you owe the IRS capital gains tax on all assets you own, as if you had liquidated them? (iirc)

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

#49

Post by philiphodgen »

graeme wrote: post #44
philiphodgen wrote: post #7

Earlier quoted context omitted.

After you give up citizenship you file a tax return for that year. After that you only file income tax returns if you have income from US sources or you become a US resident. The 10 year rule was repealed in 2008.

Are all non-citizens required to file US tax returns for US source income, or is that a rule specific to citizens? A large chunk of this forum likely has US source income, so it would be good to know.

If the US source income has tax withheld at the correct amount (default is 30%) then no tax return is required.

The magic is in understanding the metaphysics of the definition of US source. Just because the money comes from a US customer doesn't mean that you have US source income.

If I hire a web developer in Canada and he designs my site whilst sitting in a chair in Vancouver, the income he ears from me is not US source. Weird I know. For services, income is sourced where the human body who did the work is physically located. God what an awful sentence.

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

#50

Post by deciplex »

WildUtah wrote: post #37
jessriedel wrote: post #18

Earlier quoted context omitted.

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…

This. Also Iceland and NZ. Pretty much any developed country, really, because among those the US stands alone in subjecting its citizens to this onerous tax filing BS.

Obviously, if you want to live in the US, that doesn't apply. Just plan on staying there, or only living abroad for a year or two.

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