8 ms·

I am also a US citizen abroad and I don't understand your annoyance. This is exactly why Foreign Earned Income Exclusion exists. For anyone not aware you don't

by jimhi 7y ago

I am also a US citizen abroad and I don't understand your annoyance. This is exactly why Foreign Earned Income Exclusion exists. For anyone not aware you don't pay taxes on 100k if you are out of the USA 330 days out of the year. 200k if you are married. Do you qualify? Then you are exempt from such a ridiculous amount that it is hard to argue this. Or maybe you visit the USA too much to qualify? In which case you do have enough ties that I think tax makes sense.

Svip 7y ago
It's still a lot of paperwork to file, just to get told you don't have to pay anything. And that's paperwork in addition to the paperwork you have to file in the country where you are earning your money. Though, I am curious, since my wife is a US citizen, and we are living in my home country; does the 200k if married limit count, if your spouse is a foreign citizen (like say, me)?
jjcm 7y ago
Just because I have a discount on my taxes (which is fair considering I don't use roads, public utilities, law enforcement services, emergency services, medicaid, or qualify for contributions towards my social security points) doesn't mean I don't deserve representation for the amount I pay over that discount.
greatpatton 7y ago
By the way 100k may seems a lot, but not in Switzerland where the median salary is at 80k$ per year. It means that if you are in a senior position you will make easily more than 100k... For that simple reason I personally know at least 3 ex US citizen that all renounced their citizenship (often painfully because of the paperwork involved).
jwr 7y ago
I do understand the annoyance. The $100k exclusion, as others have mentioned, is not a "ridiculous amount", it's all relative to where you live and how much you earn. You might also think it is "ridiculous" because you only earn money from a paycheck (e.g. you are an employee). For the self-employed things look very different: your revenue might easily be $200k, while your actual income is half that. Your foreign business pays taxes on income, but claiming the same deductions in the US might be difficult or impossible, so you might end up paying taxes on your $200k of revenue. More importantly, though, the amount of paperwork that the US requires (FATCA and FBAR reporting) is ridiculous. And preparing your US taxes if you are an expat is a minefield, there is no way you can do it yourself. You need help from experienced tax accountants. All in all, it is a significant burden.
- mnky9800n 7y ago
  I will probably give up my USA citizenship at some point because of this.
  - eatbitseveryday 7y ago
    I suggest not admitting this publicly.
    - jwr 7y ago
      I'm curious: why?
      - eatbitseveryday 7y ago
        My concern originates with this statement [1]: > If the Department of Homeland Security determines that the renunciation is motivated by tax avoidance purposes, the individual will be found inadmissible to the United States under Section 212(a)(10)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(E)), as amended. [1] https://travel.state.gov/content/travel/en/legal/travel-legal-considerations/us-citizenship/Renunciation-US-Nationality-Abroad.html https://travel.state.gov/content/travel/en/legal/travel-lega...
anothermouse 7y ago
I'm married to a US citizen. My children have inherited US citizenship via this route. We have to spend thousands preparing tax returns reporting no income each year for three people (the children have bank accounts). If you buy a house, things are going to be complicated. If you have a workplace pension from your job, you're probably screwed. State pensions have screwed people too. If you invest in stocks, or mutual funds, you'll pay more in tax preparation than you'll make. If you set up your own company and are not paid as an employee but as the owner, you will be screwed. Rent out a property, screwed. Fail to declare every account that you're a signatory on? Prepare to pay up to 125% of the contents. If you're children are beneficiaries of a trust set up by their non-american grand-parents? Totally screwed. Almost every American expat I've spoken to has had a shock when they find they totally didn't understand their commitments. The only ones who didn't were employees of big banks/hedge funds whose employers paid a big 4 accountant to take care of everything.
tallanvor 7y ago
It's much more complicated than just having a foreign income exclusion and being out of the country. If your income is above $100k, you also have to fill out the AMT worksheet, which may result in you needing to calculate everything to deduct the foreign taxes you've paid. If you have US stocks and sell them, you have to worry about paying capital gains taxes to the US (they consider this US income, regardless of if you received the stocks as part of your employment), and you generally have to pay taxes to the country you're living in for that as well. If you're lucky you might be able to deduct the US taxes or expected taxes, otherwise you might not be able to do so or might not be able to do so until the next year. You also have to report your overseas accounts every year. When I first moved overseas, yes, it was pretty simple to just fill out my 1040 and my form 2555. Last year I needed those plus the 1040 Schedule B and form 1116. Next year things will get even more complicated since this year I bought an apartment, so there's a mixture of rent deduction and mortgage deductions, plus a significant capital gains tax burden due to selling stocks for my down-payment on the apartment.
mikl 7y ago
I am a Dane living abroad. I don’t have to do any paperwork and jump through hoops for the Danish government. That the U.S. government makes demands of people living outside its borders is preposterous.

by jimhi 7y ago

Svip 7y ago

It's still a lot of paperwork to file, just to get told you don't have to pay anything. And that's paperwork in addition to the paperwork you have to file in the country where you are earning your money. Though, I am curious, since my wife is a US citizen, and we are living in my home country; does the 200k if married limit count, if your spouse is a foreign citizen (like say, me)?

jjcm 7y ago

Just because I have a discount on my taxes (which is fair considering I don't use roads, public utilities, law enforcement services, emergency services, medicaid, or qualify for contributions towards my social security points) doesn't mean I don't deserve representation for the amount I pay over that discount.

greatpatton 7y ago

By the way 100k may seems a lot, but not in Switzerland where the median salary is at 80k$ per year. It means that if you are in a senior position you will make easily more than 100k... For that simple reason I personally know at least 3 ex US citizen that all renounced their citizenship (often painfully because of the paperwork involved).

jwr 7y ago

I do understand the annoyance. The $100k exclusion, as others have mentioned, is not a "ridiculous amount", it's all relative to where you live and how much you earn. You might also think it is "ridiculous" because you only earn money from a paycheck (e.g. you are an employee). For the self-employed things look very different: your revenue might easily be $200k, while your actual income is half that. Your foreign business pays taxes on income, but claiming the same deductions in the US might be difficult or impossible, so you might end up paying taxes on your $200k of revenue. More importantly, though, the amount of paperwork that the US requires (FATCA and FBAR reporting) is ridiculous. And preparing your US taxes if you are an expat is a minefield, there is no way you can do it yourself. You need help from experienced tax accountants. All in all, it is a significant burden.

mnky9800n 7y ago
I will probably give up my USA citizenship at some point because of this.
- eatbitseveryday 7y ago
  I suggest not admitting this publicly.
  - jwr 7y ago
    I'm curious: why?
    - eatbitseveryday 7y ago
      My concern originates with this statement [1]: > If the Department of Homeland Security determines that the renunciation is motivated by tax avoidance purposes, the individual will be found inadmissible to the United States under Section 212(a)(10)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(E)), as amended. [1] https://travel.state.gov/content/travel/en/legal/travel-legal-considerations/us-citizenship/Renunciation-US-Nationality-Abroad.html https://travel.state.gov/content/travel/en/legal/travel-lega...

anothermouse 7y ago

I'm married to a US citizen. My children have inherited US citizenship via this route. We have to spend thousands preparing tax returns reporting no income each year for three people (the children have bank accounts). If you buy a house, things are going to be complicated. If you have a workplace pension from your job, you're probably screwed. State pensions have screwed people too. If you invest in stocks, or mutual funds, you'll pay more in tax preparation than you'll make. If you set up your own company and are not paid as an employee but as the owner, you will be screwed. Rent out a property, screwed. Fail to declare every account that you're a signatory on? Prepare to pay up to 125% of the contents. If you're children are beneficiaries of a trust set up by their non-american grand-parents? Totally screwed. Almost every American expat I've spoken to has had a shock when they find they totally didn't understand their commitments. The only ones who didn't were employees of big banks/hedge funds whose employers paid a big 4 accountant to take care of everything.

tallanvor 7y ago

It's much more complicated than just having a foreign income exclusion and being out of the country. If your income is above $100k, you also have to fill out the AMT worksheet, which may result in you needing to calculate everything to deduct the foreign taxes you've paid. If you have US stocks and sell them, you have to worry about paying capital gains taxes to the US (they consider this US income, regardless of if you received the stocks as part of your employment), and you generally have to pay taxes to the country you're living in for that as well. If you're lucky you might be able to deduct the US taxes or expected taxes, otherwise you might not be able to do so or might not be able to do so until the next year. You also have to report your overseas accounts every year. When I first moved overseas, yes, it was pretty simple to just fill out my 1040 and my form 2555. Last year I needed those plus the 1040 Schedule B and form 1116. Next year things will get even more complicated since this year I bought an apartment, so there's a mixture of rent deduction and mortgage deductions, plus a significant capital gains tax burden due to selling stocks for my down-payment on the apartment.

mikl 7y ago

I am a Dane living abroad. I don’t have to do any paperwork and jump through hoops for the Danish government. That the U.S. government makes demands of people living outside its borders is preposterous.