4 ms·

You have to file your taxes every year, but he shouldn't have to pay anything unless he makes over about $100,000 per year.

by swebs 6y ago

a2tech 6y ago
When you hear people complain about paying taxes internationally they can be broken down into two broad camps: 1) People who have received bad tax advice 2) The wealthy
- smnrchrds 6y ago
  3) Normal people having any sort of income other than employment income. In Canada, our retirement system is built upon three pillars, CPP/QPP/OAS (similar to US Social Security), RRSP (similar to US 401k), and TFSA (similar to US Roth IRA, but more inclusive, as every resident can use it regardless of income level). TFSA is arguably more important and a higher priority for retirement savings than RRSP in Canada. However, the US does not recognize TFSA as a retirement scheme. So if you are a dual American-Canadian citizen, the financial advice is not to use TFSA, as a) it won't be tax-sheltered, you will have to pay taxes to the US, and b) the paperwork required is a huge headache. Every country has something that they don't tax and US will. Because that country does not tax the thing, there is no tax credit to offset US taxes payable and you may end up paying a lot. The thing may be a retirement savings (Canada) or capital gains (Switzerland) or a myriad of things other than employment income.
  - a2tech 6y ago
    If you're living internationally wouldn't it fall under this? >If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, and $107,600 for 2020). In addition, you can exclude or deduct certain foreign housing amounts.
    - intellirogue 6y ago
      >may qualify >certain There's a lot of exceptions. It's not a blanket "if you earn less than X you don't pay US taxes".
    - nolite 6y ago
      No it would not. That's only for "earned" (thus employment) income
- dayjah 6y ago
  #1 is a bit of a gotcha; in the case of the USA it holds tax treaties with some countries (maybe blocs like the EU?) and not with others. If you’re earning in a country with a treaty, say the UK, you pay the local tax and any difference is paid to the US if your local tax is less than what you’d pay the fed+state if applicable.
  - 627467 6y ago
    Obviously any country/society can enact any tax rules they see fit, but if I was american living and working and paying tax abroad I would wonder what the tax difference I needed to pay is for. I guess you could argue: military/consular protection. Yet, still feels expensive.
jihadjihad 6y ago
Aren't you still subject to paying U.S. income tax on your earnings? https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad https://www.irs.gov/individuals/international-taxpayers/taxp...
- swebs 6y ago
  >If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, and $107,600 for 2020). In addition, you can exclude or deduct certain foreign housing amounts. https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...
  - texasbigdata 6y ago
    To be clear you pay the delta. So if you make $X00 and in the Bahamas your income tax is $7, but in the USA your tax would have been $100, you remit $93 back to the US government. Even if you didn’t step foot in the US that year and all the income was Bahamas. Roughly. And if you don’t like it, you make a one time payment of (I think) a third of your net worth. Which is not ideal if the only thing you own is a tangible thing like your childhood home, because now you need to sell it. Being an American comes with a ton of benefits, and one of the costs is how mind numbingly expensive it is to leave. Note, the conversation of whether the US should have territorial taxation roars it’s head up every few years. all of the above might change
- deleted 6y ago
  [deleted]
- Schiendelman 6y ago
  Yes, but we have reciprocal tax agreements with many countries. In Germany he’s already paying n dollars in taxes, and that n becomes a tax credit in the US.
unishark 6y ago
and you need to have been earning even more than before leaving plus have a net worth in the millions to be hit by expatriation tax for renouncing.

You have to file your taxes every year, but he shouldn't have to pay anything unless he makes over about $100,000 per year.

by swebs 6y ago

You have to file your taxes every year, but he shouldn't have to pay anything unless he makes over about $100,000 per year.

a2tech 6y ago

When you hear people complain about paying taxes internationally they can be broken down into two broad camps: 1) People who have received bad tax advice 2) The wealthy

smnrchrds 6y ago
3) Normal people having any sort of income other than employment income. In Canada, our retirement system is built upon three pillars, CPP/QPP/OAS (similar to US Social Security), RRSP (similar to US 401k), and TFSA (similar to US Roth IRA, but more inclusive, as every resident can use it regardless of income level). TFSA is arguably more important and a higher priority for retirement savings than RRSP in Canada. However, the US does not recognize TFSA as a retirement scheme. So if you are a dual American-Canadian citizen, the financial advice is not to use TFSA, as a) it won't be tax-sheltered, you will have to pay taxes to the US, and b) the paperwork required is a huge headache. Every country has something that they don't tax and US will. Because that country does not tax the thing, there is no tax credit to offset US taxes payable and you may end up paying a lot. The thing may be a retirement savings (Canada) or capital gains (Switzerland) or a myriad of things other than employment income.
- a2tech 6y ago
  If you're living internationally wouldn't it fall under this? >If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, and $107,600 for 2020). In addition, you can exclude or deduct certain foreign housing amounts.
  - intellirogue 6y ago
    >may qualify >certain There's a lot of exceptions. It's not a blanket "if you earn less than X you don't pay US taxes".
  - nolite 6y ago
    No it would not. That's only for "earned" (thus employment) income
dayjah 6y ago
#1 is a bit of a gotcha; in the case of the USA it holds tax treaties with some countries (maybe blocs like the EU?) and not with others. If you’re earning in a country with a treaty, say the UK, you pay the local tax and any difference is paid to the US if your local tax is less than what you’d pay the fed+state if applicable.
- 627467 6y ago
  Obviously any country/society can enact any tax rules they see fit, but if I was american living and working and paying tax abroad I would wonder what the tax difference I needed to pay is for. I guess you could argue: military/consular protection. Yet, still feels expensive.

jihadjihad 6y ago

Aren't you still subject to paying U.S. income tax on your earnings? https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad https://www.irs.gov/individuals/international-taxpayers/taxp...

swebs 6y ago
>If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, and $107,600 for 2020). In addition, you can exclude or deduct certain foreign housing amounts. https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...
- texasbigdata 6y ago
  To be clear you pay the delta. So if you make $X00 and in the Bahamas your income tax is $7, but in the USA your tax would have been $100, you remit $93 back to the US government. Even if you didn’t step foot in the US that year and all the income was Bahamas. Roughly. And if you don’t like it, you make a one time payment of (I think) a third of your net worth. Which is not ideal if the only thing you own is a tangible thing like your childhood home, because now you need to sell it. Being an American comes with a ton of benefits, and one of the costs is how mind numbingly expensive it is to leave. Note, the conversation of whether the US should have territorial taxation roars it’s head up every few years. all of the above might change
deleted 6y ago
[deleted]
Schiendelman 6y ago
Yes, but we have reciprocal tax agreements with many countries. In Germany he’s already paying n dollars in taxes, and that n becomes a tax credit in the US.

unishark 6y ago

and you need to have been earning even more than before leaving plus have a net worth in the millions to be hit by expatriation tax for renouncing.