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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) T

by 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.

by 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.