6 ms·

Same goes for US individuals living abroad not having any business relations or even holdings in the US. Yet they are required to file and pay US taxes in addit

Same goes for US individuals living abroad not having any business relations or even holdings in the US. Yet they are required to file and pay US taxes in addition to local taxes.

erickj 9y ago
Moving abroad, I now fully understand the feeling behind "Taxation without representation is tyranny".
- earthtolazlo 9y ago
  You are welcome to give up your American citizenship if that income tax becomes too burdensome for you.
  - onan_barbarian 9y ago
    Amazing levels of ignorance here. Even this has become difficult and awkward thanks to an effort to close the door after Eduardo Saverin et al bolted. Hacker News seems to be a reliable place for people to holding forth on situations that they don't understand; it's no wonder that the brains trust here gets regularly crucified on n-gate.
  - _acme 9y ago
    Only if you have another citizenship to turn to. Being stateless isn't an option.
    - sangnoir 9y ago
      > Being stateless isn't an option. That is unless you're a rich company - then you can create shell entities with effectively no domicile that earn income, but aren't taxed in any country. Corporations are people, my friend. People with extraordinary abilities.
      - valuearb 9y ago
        They shouldn’t be people, and shouldn’t pay income tax.
  - CamTin 9y ago
    There are actually things like the expatriation tax and "name and shame" provisions which discourage people from renouncing for tax purposes. Also (note that I am not an accountant or lawyer and this is not advice), most ordinary people won't see any problem with taxation while abroad beyond the actual inconvenience of filing a 1040 because the foreign earned income exclusion (https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...) allows you to exclude foreign earned income up to $100,000 from US taxation. Since ordinary people pretty much all earn less than this, they only have to pay taxes to whatever country they are actually in. Only people who are rich enough to hire accountants have to worry about double taxation, and they can probably avoid it by other means that are well-studied among rich peoples' accountants.
    - nolite 9y ago
      So making $110k now makes me a rich person with an army of accountants. Got it. Thanks.
    - kogepathic 9y ago
      > most ordinary people won't see any problem with taxation while abroad beyond the actual inconvenience of filing a 1040 because the foreign earned income exclusion Well that and most banks refusing American customers because they don't want to deal with FBAR/FINCEN reporting. My American friends here in Europe have a really difficult time opening a bank account due to this rule.
      - MarchHare 9y ago
        It's not only foreign banks refusing American customers. American companies such as Fidelity, Vanguard, Charles Schwab and so on won't open investment accounts for Americans abroad and will freeze accounts if they discover you are abroad.
    - mrmekon 9y ago
      I guess it depends on your definition of "ordinary people", but if you're going abroad for long-term work in any "middle class" industry, you're eventually going to have extremely complicated taxes. Retirement savings, stock options, real estate, and any sort of investment account makes your U.S. tax return go from "a 1040" to a towering mountain of special forms. A lot of them also lose you the right to e-file, for some reason. And many aren't supported by tax software, or are handled incorrectly. A lot of "foreign" banks – i.e. your _local_ banks – won't even talk to you. They tell you to make your investments in the U.S. instead, so you get to pay international wire transfer fees and foreign currency exchange fees on every investment. And if you want to move it back, you get to pay them again. You won't necessarily owe any tax in the U.S., but you sure pay for it in either filing time (10s to 100s of hours) or expat tax accountant fees.
  - sschueller 9y ago
    Good luck with that, fee has increased significantly and you may be required to pay an exit tax: "The Exit Tax is computed as if you sold all your assets on the day before you expatriated, and had to report the gain. Currently, net capital gains can be taxed as high as 23.8%, including the net investment income tax."
    - nhaehnle 9y ago
      This doesn't actually prevent you from leaving though, and is probably seen by many (most?) people as entirely fair.
      - peoplewindow 9y ago
        It prevents you from leaving if you can't afford to pay the tax. And lol, how is an exit tax even remotely fair? Would you have described the USSR's exit visas as fair too? The US acts like it owns its citizens as property. The tax regime around citizenship is dangerously close to crossing the line to slavery.
        abecedarius 9y ago
        Indeed. Almost a quarter of my net worth? The income from the remainder would still be taxed in the new jurisdiction. Slaves in antiquity could commonly buy their freedom, too.
        nhaehnle 9y ago
        Presumably you have to pay the tax due to capital gains on assets you own, so the solution is pretty simple: sell a fraction of those assets to cover the tax. This really isn't rocket science.
  - tallanvor 9y ago
    That's an incredibly ignorant comment. When you give up your US citizenship and the process is complete, as far as the US is concerned, you might as well never have been a citizen at all. This means that when you want/need to visit the country (such as to visit a sick or dying family member), you can be denied entrance - the claim they'll use is that you don't have enough "ties" to your new country for them to be certain that you won't try to stay illegally. While not everyone goes through that, it can and does happen.
    - kogepathic 9y ago
      > as far as the US is concerned, you might as well never have been a citizen at all I guess that's better than the alternative: being treated worse because you're deemed a "traitor" or "deserter" for giving up US citizenship. > This means that when you want/need to visit the country, you can be denied entrance This I can understand. You aren't a citizen anymore and thus have the same rights as any other foreigner visiting the US. If there is no further discrimination against you for being a ex-citizen, I personally don't see why ex-citizens shouldn't have the same requirements as non-citizens for entry. > the claim they'll use is that you don't have enough "ties" to your new country for them to be certain that you won't try to stay illegally. Yeah, that's extra shitty.
  - cr1895 9y ago
    All other things aside, the American taxation-by-citizehship instead of residence has some nasty and unfortunate consequences that your comment suggests you've never considered. Some Dutch people in the Netherlands who were incidentally born in the US (ergo, also US citizens) but have never lived or worked in the US are now presented with the absurd scenario of actually having to do what you suggest. Of course this is just one country; in principle it applies to anyone who returned home to another country after being born in the US. Here is the case of a woman, who was taken by her parents back to the NL as a baby, now has to establish herself first in a country in which she's never worked or lived in order to renounce an unwanted citizenship. She must get a social security number, file six years of previous taxes to a foreign country, and only then can she seek renouncing of her US citizenship. In case you were unaware, simply renouncing also costs several thousand dollars. https://nos.nl/nieuwsuur/artikel/2044332-amerikaanse-belastingdienst-maakt-jacht-op-nederlanders.html https://nos.nl/nieuwsuur/artikel/2044332-amerikaanse-belasti... http://www.dutchnews.nl/news/archives/2015/06/us-tax-service-targets-dutch-nationals-who-happen-to-be-american/ http://www.dutchnews.nl/news/archives/2015/06/us-tax-service... So yeah, just give it up! Piece of cake! /s
  - valuearb 9y ago
    You aren’t allowed to give up your US citizenship without paying at least 10 more years of US taxes. Even if your citizenship was inherited and you haven’t lived in the s since you were a toddler.
  - maehwasu 9y ago
    It's quite difficult and time-consuming to acquire an alternate passport, absent family ties or similar. The US has very strong lock-in with regard to taxes, and they don't hesitate to exploit it.
deleted 9y ago
[deleted]
- nhaehnle 9y ago
  That would indeed be fair. I think what many people here may be forgetting is that this doesn't result in double taxation in practice, because you can deduct the taxes paid in your country of residence from the taxes due in your country of citizenship. The only possible downside is the implied bureaucracy. Not all countries are good at minimizing that.
hackerguy99 9y ago
When it hits the fan, and you want to come back to the US for safety, unmolested, you'll be able to. Should that be free?
- auxym 9y ago
  It is in Canada, Europe...
  - svennek 9y ago
    But don't forget that those are third-rate (more like fourth-rate) countries, almost undeveloped brutes... <sarcasm/> (as an EU-citizen)
    - pawelkomarnicki 9y ago
      We don't even pay for our health bills in Germany when leaving a doctor's office ;-)
      - chrisper 9y ago
        Hold on! You have to pay 10 euros or so every year or no? I remember there was an outcry many years ago!
        teamhappy 9y ago
        We got rid of that some time ago.
      - ionised 9y ago
        How barbaric!
      - hackerguy99 9y ago
        >"We don't even pay for our health bills in Germany when leaving a doctor's office ;-)" It's impossible to get a family doctor in the majority of my country. But the system is free, so who cares, right?
bmomb 9y ago
But as an US citizen you still use some US benefits like the army and international protection, right? (I'm not from USA or currently living abroad but i think that is "fair")
- onan_barbarian 9y ago
  This is incredibly stupid. A US citizen abroad gets very little additional protection from the "army and international protection" that the other citizens of the country in which they are generally resident get; i.e. a US citizen in Germany or Japan gets a lot and a US citizen resident in, say, China or Indonesia gets nothing. This is one of the dumbest arguments I have ever heard for this kind of wacky double taxation and I wonder at the persistence of its appearance.
  - charlesdm 9y ago
    How else would you sell global taxation to people? People try and find all sorts of reasons why they're paying taxes to their home country when living abroad, while others aren't.
  - yardie 9y ago
    This and "US healthcare subsidizes cheap healthcare for the rest of the world" are 2 of the stupidest, jingoistic statements that people make for paying too much for so little.
  - cr1895 9y ago
    And you've got to pay for all your citizen services anyway (renewing passports, etc).
- yardie 9y ago
  Tell that to the US citizens and NGO workers in Yemen. You think the US military or State department did anything for them? [0] British, Dutch, and German citizens were evacuated by their governments. [0] https://travel.state.gov/content/travel/en/YemenCrisis.html https://travel.state.gov/content/travel/en/YemenCrisis.html
- 9y ago
tomatocracy 9y ago
The US is the only major country in the world that has such a ridiculous and distorting rule for corporate taxation as the repatriation rules. This single rule drives a very large portion of the global tax avoidance industry. It drives economic behaviour which results in misallocation of resources via situations like companies borrowing onshore US against their overseas cash horde and using the proceeds to return to shareholders. They should abolish this silly rule and go with what everyone else does: either tax US corporates on global earnings and allow deductions for foreign taxes paid, or tax territorial earnings only.
- briandear 9y ago
  Eritrea has an expat tax as well. FATCA and CBT are a poison to overseas Americans.
brynx97 9y ago
You can apply for the foreign earned income tax exemption. I work abroad, and I reclaimed all my US taxes for my income earned abroad.
- tallanvor 9y ago
  But you still have to file. No other western nation requires their citizens to file if they are living and working overseas for the full year.
- tjbiddle 9y ago
  While I agree, and have done the same in the past - You still have to file, and it's only the first $100k that is exempt.
tareqak 9y ago
I actually have a hypothesis that US citizens are actually less likely to even consider going abroad to work because of this filing requirement. There are many other reasons too (the US is a large market in its own right and has been for many years now), but it'd be interesting to compare and contrast the local population count of other developed countries with their expatriate population count. A follow on hypothesis would be that a country having a larger percentage expatriate population compared to another all other things equal would have more global outlook e.g. the local population is more favorable towards immigration and free trade, and has a more accurate knowledge of the details behind world events.

Same goes for US individuals living abroad not having any business relations or even holdings in the US. Yet they are required to file and pay US taxes in addition to local taxes.

erickj 9y ago

Moving abroad, I now fully understand the feeling behind "Taxation without representation is tyranny".

earthtolazlo 9y ago
You are welcome to give up your American citizenship if that income tax becomes too burdensome for you.
- onan_barbarian 9y ago
  Amazing levels of ignorance here. Even this has become difficult and awkward thanks to an effort to close the door after Eduardo Saverin et al bolted. Hacker News seems to be a reliable place for people to holding forth on situations that they don't understand; it's no wonder that the brains trust here gets regularly crucified on n-gate.
- _acme 9y ago
  Only if you have another citizenship to turn to. Being stateless isn't an option.
  - sangnoir 9y ago
    > Being stateless isn't an option. That is unless you're a rich company - then you can create shell entities with effectively no domicile that earn income, but aren't taxed in any country. Corporations are people, my friend. People with extraordinary abilities.
    - valuearb 9y ago
      They shouldn’t be people, and shouldn’t pay income tax.
- CamTin 9y ago
  There are actually things like the expatriation tax and "name and shame" provisions which discourage people from renouncing for tax purposes. Also (note that I am not an accountant or lawyer and this is not advice), most ordinary people won't see any problem with taxation while abroad beyond the actual inconvenience of filing a 1040 because the foreign earned income exclusion (https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...) allows you to exclude foreign earned income up to $100,000 from US taxation. Since ordinary people pretty much all earn less than this, they only have to pay taxes to whatever country they are actually in. Only people who are rich enough to hire accountants have to worry about double taxation, and they can probably avoid it by other means that are well-studied among rich peoples' accountants.
  - nolite 9y ago
    So making $110k now makes me a rich person with an army of accountants. Got it. Thanks.
  - kogepathic 9y ago
    > most ordinary people won't see any problem with taxation while abroad beyond the actual inconvenience of filing a 1040 because the foreign earned income exclusion Well that and most banks refusing American customers because they don't want to deal with FBAR/FINCEN reporting. My American friends here in Europe have a really difficult time opening a bank account due to this rule.
    - MarchHare 9y ago
      It's not only foreign banks refusing American customers. American companies such as Fidelity, Vanguard, Charles Schwab and so on won't open investment accounts for Americans abroad and will freeze accounts if they discover you are abroad.
  - mrmekon 9y ago
    I guess it depends on your definition of "ordinary people", but if you're going abroad for long-term work in any "middle class" industry, you're eventually going to have extremely complicated taxes. Retirement savings, stock options, real estate, and any sort of investment account makes your U.S. tax return go from "a 1040" to a towering mountain of special forms. A lot of them also lose you the right to e-file, for some reason. And many aren't supported by tax software, or are handled incorrectly. A lot of "foreign" banks – i.e. your _local_ banks – won't even talk to you. They tell you to make your investments in the U.S. instead, so you get to pay international wire transfer fees and foreign currency exchange fees on every investment. And if you want to move it back, you get to pay them again. You won't necessarily owe any tax in the U.S., but you sure pay for it in either filing time (10s to 100s of hours) or expat tax accountant fees.
- sschueller 9y ago
  Good luck with that, fee has increased significantly and you may be required to pay an exit tax: "The Exit Tax is computed as if you sold all your assets on the day before you expatriated, and had to report the gain. Currently, net capital gains can be taxed as high as 23.8%, including the net investment income tax."
  - nhaehnle 9y ago
    This doesn't actually prevent you from leaving though, and is probably seen by many (most?) people as entirely fair.
    - peoplewindow 9y ago
      It prevents you from leaving if you can't afford to pay the tax. And lol, how is an exit tax even remotely fair? Would you have described the USSR's exit visas as fair too? The US acts like it owns its citizens as property. The tax regime around citizenship is dangerously close to crossing the line to slavery.
      - abecedarius 9y ago
        Indeed. Almost a quarter of my net worth? The income from the remainder would still be taxed in the new jurisdiction. Slaves in antiquity could commonly buy their freedom, too.
      - nhaehnle 9y ago
        Presumably you have to pay the tax due to capital gains on assets you own, so the solution is pretty simple: sell a fraction of those assets to cover the tax. This really isn't rocket science.
- tallanvor 9y ago
  That's an incredibly ignorant comment. When you give up your US citizenship and the process is complete, as far as the US is concerned, you might as well never have been a citizen at all. This means that when you want/need to visit the country (such as to visit a sick or dying family member), you can be denied entrance - the claim they'll use is that you don't have enough "ties" to your new country for them to be certain that you won't try to stay illegally. While not everyone goes through that, it can and does happen.
  - kogepathic 9y ago
    > as far as the US is concerned, you might as well never have been a citizen at all I guess that's better than the alternative: being treated worse because you're deemed a "traitor" or "deserter" for giving up US citizenship. > This means that when you want/need to visit the country, you can be denied entrance This I can understand. You aren't a citizen anymore and thus have the same rights as any other foreigner visiting the US. If there is no further discrimination against you for being a ex-citizen, I personally don't see why ex-citizens shouldn't have the same requirements as non-citizens for entry. > the claim they'll use is that you don't have enough "ties" to your new country for them to be certain that you won't try to stay illegally. Yeah, that's extra shitty.
- cr1895 9y ago
  All other things aside, the American taxation-by-citizehship instead of residence has some nasty and unfortunate consequences that your comment suggests you've never considered. Some Dutch people in the Netherlands who were incidentally born in the US (ergo, also US citizens) but have never lived or worked in the US are now presented with the absurd scenario of actually having to do what you suggest. Of course this is just one country; in principle it applies to anyone who returned home to another country after being born in the US. Here is the case of a woman, who was taken by her parents back to the NL as a baby, now has to establish herself first in a country in which she's never worked or lived in order to renounce an unwanted citizenship. She must get a social security number, file six years of previous taxes to a foreign country, and only then can she seek renouncing of her US citizenship. In case you were unaware, simply renouncing also costs several thousand dollars. https://nos.nl/nieuwsuur/artikel/2044332-amerikaanse-belastingdienst-maakt-jacht-op-nederlanders.html https://nos.nl/nieuwsuur/artikel/2044332-amerikaanse-belasti... http://www.dutchnews.nl/news/archives/2015/06/us-tax-service-targets-dutch-nationals-who-happen-to-be-american/ http://www.dutchnews.nl/news/archives/2015/06/us-tax-service... So yeah, just give it up! Piece of cake! /s
- valuearb 9y ago
  You aren’t allowed to give up your US citizenship without paying at least 10 more years of US taxes. Even if your citizenship was inherited and you haven’t lived in the s since you were a toddler.
- maehwasu 9y ago
  It's quite difficult and time-consuming to acquire an alternate passport, absent family ties or similar. The US has very strong lock-in with regard to taxes, and they don't hesitate to exploit it.

deleted 9y ago

[deleted]

nhaehnle 9y ago
That would indeed be fair. I think what many people here may be forgetting is that this doesn't result in double taxation in practice, because you can deduct the taxes paid in your country of residence from the taxes due in your country of citizenship. The only possible downside is the implied bureaucracy. Not all countries are good at minimizing that.

hackerguy99 9y ago

When it hits the fan, and you want to come back to the US for safety, unmolested, you'll be able to. Should that be free?

auxym 9y ago
It is in Canada, Europe...
- svennek 9y ago
  But don't forget that those are third-rate (more like fourth-rate) countries, almost undeveloped brutes... <sarcasm/> (as an EU-citizen)
  - pawelkomarnicki 9y ago
    We don't even pay for our health bills in Germany when leaving a doctor's office ;-)
    - chrisper 9y ago
      Hold on! You have to pay 10 euros or so every year or no? I remember there was an outcry many years ago!
      - teamhappy 9y ago
        We got rid of that some time ago.
    - ionised 9y ago
      How barbaric!
    - hackerguy99 9y ago
      >"We don't even pay for our health bills in Germany when leaving a doctor's office ;-)" It's impossible to get a family doctor in the majority of my country. But the system is free, so who cares, right?

bmomb 9y ago

But as an US citizen you still use some US benefits like the army and international protection, right? (I'm not from USA or currently living abroad but i think that is "fair")

onan_barbarian 9y ago
This is incredibly stupid. A US citizen abroad gets very little additional protection from the "army and international protection" that the other citizens of the country in which they are generally resident get; i.e. a US citizen in Germany or Japan gets a lot and a US citizen resident in, say, China or Indonesia gets nothing. This is one of the dumbest arguments I have ever heard for this kind of wacky double taxation and I wonder at the persistence of its appearance.
- charlesdm 9y ago
  How else would you sell global taxation to people? People try and find all sorts of reasons why they're paying taxes to their home country when living abroad, while others aren't.
- yardie 9y ago
  This and "US healthcare subsidizes cheap healthcare for the rest of the world" are 2 of the stupidest, jingoistic statements that people make for paying too much for so little.
- cr1895 9y ago
  And you've got to pay for all your citizen services anyway (renewing passports, etc).
yardie 9y ago
Tell that to the US citizens and NGO workers in Yemen. You think the US military or State department did anything for them? [0] British, Dutch, and German citizens were evacuated by their governments. [0] https://travel.state.gov/content/travel/en/YemenCrisis.html https://travel.state.gov/content/travel/en/YemenCrisis.html
9y ago

tomatocracy 9y ago

The US is the only major country in the world that has such a ridiculous and distorting rule for corporate taxation as the repatriation rules. This single rule drives a very large portion of the global tax avoidance industry. It drives economic behaviour which results in misallocation of resources via situations like companies borrowing onshore US against their overseas cash horde and using the proceeds to return to shareholders. They should abolish this silly rule and go with what everyone else does: either tax US corporates on global earnings and allow deductions for foreign taxes paid, or tax territorial earnings only.

briandear 9y ago
Eritrea has an expat tax as well. FATCA and CBT are a poison to overseas Americans.

brynx97 9y ago

You can apply for the foreign earned income tax exemption. I work abroad, and I reclaimed all my US taxes for my income earned abroad.

tallanvor 9y ago
But you still have to file. No other western nation requires their citizens to file if they are living and working overseas for the full year.
tjbiddle 9y ago
While I agree, and have done the same in the past - You still have to file, and it's only the first $100k that is exempt.

tareqak 9y ago

I actually have a hypothesis that US citizens are actually less likely to even consider going abroad to work because of this filing requirement. There are many other reasons too (the US is a large market in its own right and has been for many years now), but it'd be interesting to compare and contrast the local population count of other developed countries with their expatriate population count. A follow on hypothesis would be that a country having a larger percentage expatriate population compared to another all other things equal would have more global outlook e.g. the local population is more favorable towards immigration and free trade, and has a more accurate knowledge of the details behind world events.