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I'm a digital nomad. Should I renounce my US citizenship?

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Re: I'm a digital nomad. Should I renounce my US citizenship?

#61

Post by gregjor »

beagle3 wrote: post #30
idontwantthis wrote: post #9

Earlier quoted context omitted.

Yeah this article is really pointless because it doesn't mention this. I'm an American citizen living abroad (still digital, no longer nomadic). I only pay SS and Medicare tax to the US. Do not give up your US Citizenship for tax avoidance unless you are earning > $200k per year or making a lot of unearned income outside of the US. Or you are in some weird situation where you permanently want to be in the US more tha…

How do you pay SS and Medicare? I know someone in your situation who was trying to and was told you can only do that if you have US income source (which they don’t have)

You file quarterly tax returns and pay the IRS. If you have a full-time job in the US your employer normally deducts and pays those taxes as part of payroll processing.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#62

Post by gregjor »

plugger wrote: post #38
idontwantthis wrote: post #22

Earlier quoted context omitted.

No you're not really if you know what the FEIE is. You don't get taxed on the first $112,000 of earned income this year. It's one extra page you need to file with your taxes. That means no income tax on any earned income up to that amount. "Income tax" on "earned income" does not include Social Security, medicare/caid tax so you still pay some. It also doesn't cover "unearned" income like capital gains or rent. I sai…

I understand what FEIE is. but as you said, it's the first $112k. BUT, you still have to file every year, which incurs a time and financial penalty. W2 forms aren't designed for mere mortals to fumble their way through, so most outsource it to a tax accountant at a financial cost. Also, tax accountants abroad that specialise in US tax law are both rare and expensive. > medicare/caid tax so you still pay some exactly.…

If you make more than $100k a year a few hundred dollars a year for professional tax prep shouldn’t be a big deal. And the cost of tax preparation and advice is deductible.

US citizenship has benefits beyond the passport. What that is worth depends on the individual. People from all over the world wait years for US visas and work permits, so there’s some value and demand implied.

I have children and family in the US, so I don’t put a price tag on my passport. Any place desirable enough for me to get citizenship there and renounce my US citizenship is going to tax me too.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#63

Post by gregjor »

mschuster91 wrote: post #37
idontwantthis wrote: post #22

Earlier quoted context omitted.

No you're not really if you know what the FEIE is. You don't get taxed on the first $112,000 of earned income this year. It's one extra page you need to file with your taxes. That means no income tax on any earned income up to that amount. "Income tax" on "earned income" does not include Social Security, medicare/caid tax so you still pay some. It also doesn't cover "unearned" income like capital gains or rent. I sai…

You should not be forced to file taxes for a country you do not live in. Even if there are reciprocity agreements in place.

Yeah there’s always a difference between how the world actually works and how each of us think it should work. The advice here is for the reality-based contingent who want to minimize their tax obligation. For the rest there’s Cryptoland.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#64

Post by gregjor »

Stevvo wrote: post #56
gregjor wrote: post #6

US citizens who live abroad for at least 330 days a year, or establish permanent residence abroad, may qualify for the Foreign Earned Income Exclusion (FEIE). that FEIE excludes the first $112,000 of income from federal income tax, double that for a married couple. Social Security/Medicare (aka self-employment tax) are not excluded. Most states will want state income tax, so establish residence in a state with no inc…

I imagine if someone is considering revoking their citizenship just to avoid tax, they make a lot more than $112,000 I wouldn't call it a tax break; the US is the only country that double taxes its citizens on foreign-earned income.

The US is one of only two countries that taxes based on citizenship.

Double taxation would only happen if you had to pay taxes to a foreign country and the US. If you plan to work or earn income abroad as a US citizen it would be wise to choose a country that has tax reciprocity with the US, to avoid double taxation. That would include most countries that would be on the list of places worth renouncing US citizenship for.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#65

Post by gregjor »

0xy wrote: post #12
gregjor wrote: post #6

US citizens who live abroad for at least 330 days a year, or establish permanent residence abroad, may qualify for the Foreign Earned Income Exclusion (FEIE). that FEIE excludes the first $112,000 of income from federal income tax, double that for a married couple. Social Security/Medicare (aka self-employment tax) are not excluded. Most states will want state income tax, so establish residence in a state with no inc…

>Most states will want state income tax, so establish residence in a state with no income tax before going nomading. Is this true? I thought that was only the case if they could prove you are an active resident. Of course, if you maintain a mailing address or residence in California/NY then you better believe they'll make sure you pay. If you cut ties completely, they don't have grounds to come after you.

Get a driver’s license and an address in a state with no income tax: Washington, Nevada, Texas, Florida, etc. It’s not hard to do but you need to plan a little bit if you want to move overseas long enough that the FEIE will kick in.

Some states hold on to former residents harder than others: California and Virginia are notorious for trying to continue taxing people who leave. How you deal with this will depend on individual circumstances. Get professional tax advice if you expect problems with state tax authorities.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#66

Post by gregjor »

beagle3 wrote: post #36
0xy wrote: post #12

Earlier quoted context omitted.

>Most states will want state income tax, so establish residence in a state with no income tax before going nomading. Is this true? I thought that was only the case if they could prove you are an active resident. Of course, if you maintain a mailing address or residence in California/NY then you better believe they'll make sure you pay. If you cut ties completely, they don't have grounds to come after you.

If you maintain a mailing address in a state, it will be on you to prove you don’t live there (and expect to have to do it on a yearly basis). If you have an address outside the US, it is a good idea to tell the IRS to mail you at that address, the states seem to be content with that as evidence that you live out of state.

Until you renounce US citizenship I would advise keeping a US address in a no income tax state, and a US bank account. Don’t tell the IRS or your bank that you moved out of the country. You don’t have to prove where you live or don’t live, just file the forms, pay the taxes, they don’t care. No one comes to the house looking for you unless you have done something criminal.

If you don’t have family or friends that will let you use their address you can use a mail receiving service (I used Traveling Mailbox for years). An attorney will usually let you use their address for a nominal fee. There’s actually a pretty big selection of services geared to expats and constant travelers, like people who live in RVs. Do some research, it’s not a big deal.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#67

Post by toastal »

gregjor wrote: post #57
toastal wrote: post #41

Earlier quoted context omitted.

> Medicare What a joke. I'm all for getting medical care to people in general, but you can't redeem Medicare abroad. There are no shared medical treaties. You can't get a voucher. You can't even get exemptions for living abroad. You just pay in, and if you want value for paying in your whole life, you have to expend greenhouse gases flying back to the US and pay their extortionate health care prices which are probabl…

Medical insurance and health care abroad for expats costs a lot less in most places, compared the to US. As a US citizen you can’t get out of paying taxes for Social Security and Medicare, just cost of citizenship the way I look at it. Not something I get too wound up over. Even if I can’t benefit from Medicare I am paying in for my parents and other people who can benefit from it, while I pay $50 for a doctor’s visi…

If the goal is to get more people health care, then letting them deduct visits for cheaper care in the country they reside in would be a good thing. It more strain on the US healthcare system and the planet to have expats traveling back for a procedure and the deduction would be less because the healthcare cost is less.

And remember the reaction to the House press secretary Jen Psaki saying the US would provide vaccines to all Americans and then immediately walking that back when a reporter ask about those abroad with, "we have not historically provided private healthcare for Americans living overseas, so that remains our policy"? I'd say this was joke if it wasn't about the health of US citizens not getting care while paying their whole lives for it (this isn't Medicare, but still the reaction and aversion to health services aboard).

Re: I'm a digital nomad. Should I renounce my US citizenship?

#68

Post by toastal »

gregjor wrote: post #60
brobinson wrote: post #49

Earlier quoted context omitted.

There's also FATCA, FBAR, and a bunch of other nonsense you still have to deal with. Lots of foreign banks won't do business with Americans. You're also paying for an unnecessary tax return preparation each year. Renouncing in light of all this stuff makes sense for a lot of people.

TurboTax has the FEIE worksheet and forms. If you make enough money that renouncing citizenship looks like a good option the cost of tax preparation and opening a foreign bank account are going to be trivial details someone else will handle for you. It’s a hassle for Americans to open bank accounts in some countries because of IRS reporting, but if you have a few million dollars to deposit you won’t have any problems…

TurboTax lobbies to keep the taxes overly complex so they can sell their services, so actually screw them. Almost all of their competitors don't offer service to those without a US address and US filing so your other choice is hiring a CPA.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#69

Post by toastal »

gregjor wrote: post #66
beagle3 wrote: post #36

Earlier quoted context omitted.

If you maintain a mailing address in a state, it will be on you to prove you don’t live there (and expect to have to do it on a yearly basis). If you have an address outside the US, it is a good idea to tell the IRS to mail you at that address, the states seem to be content with that as evidence that you live out of state.

Until you renounce US citizenship I would advise keeping a US address in a no income tax state, and a US bank account. Don’t tell the IRS or your bank that you moved out of the country. You don’t have to prove where you live or don’t live, just file the forms, pay the taxes, they don’t care. No one comes to the house looking for you unless you have done something criminal. If you don’t have family or friends that wil…

One option: Schwab offers international accounts that can help once you lose your address and can no longer open any US accounts. You can't use ACH or their roboadvisors, however they do pay ATM fees internationally.

Re: I'm a digital nomad. Should I renounce my US citizenship?

#70

Post by anonymoushn »

peppermint_tea wrote: post #53
anonymoushn wrote: post #31

Earlier quoted context omitted.

Do you think U.S. medicare covers services outside the U.S.?

Unsure, I am not from the U.S, but I tought maybe you can get back to the country for treatment...

Travelling to the U.S. and then paying medicare premiums would generally cost more than paying locally without insurance.
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