4 ms·

> Emigrate from the US and you'll still be expected to pay US taxes on foreign income. That's because you still have U.S. citizenship. You can give that up an

> Emigrate from the US and you'll still be expected to pay US taxes on foreign income. That's because you still have U.S. citizenship. You can give that up and not be taxed, as I understand it. Also, it looks like there are provisions to give you exclusions on your foreign income,if you have any.[1] That seems sane to me, if you live their the whole year and that location is your tax base, then you can exclude all the income from their in your U.S. taxes. But living elsewhere won't protect you from U.S. taxes if you still have the benefit of U.S. citizenship and make a lot of money from the U.S. California considering a wealth exit tax seems a bit different on first glance, but I could see it making sense if it's somewhat similar in use. If you make your money from California and continue to after moving from there to elsewhere, that money being eligible to be taxed by California because otherwise it's extracting the benefit of California's laws and markets without paying into the system that provides them. 1: https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...

ljf 6y ago
As a Brit, I can work wherever I can find work (and legally work) around the world, earn a fortune and not pay any tax in the UK, /and/ keep my citizenship. I only would pay tax to the UK on income I earn here (which in itself leads to all kinds of strange and dodgy scenarios in terms of people avoiding paying taxes here)
- alpha_squared 6y ago
  This is ultimately political and comes down to perspective and opinion. As a citizen, you benefit from many things of your home country regardless of whether or not you reside there. Such as, for example, your home country's ability to exert pressure on the government of where you reside when you're unjustly arrested/detained. There's also access to the consulate of your home country and all services you have access to from the resident country. All of that stuff is funded somehow and it can seem unfair that only those who live within the home country's borders fund those things while those who reside elsewhere get to take advantage of it all without paying anything into it. For Americans, for better or worse, its very large stick (the military) affords its citizens all sorts of benefits while traveling/living abroad.
  - FooHentai 6y ago
    There’s also the behaviour it incentivises - if you’ve moved abroad and intend to stay there long term, secure citizenship there and renounce your American citizenship to avoid double taxation. The USA isn’t exactly hurting for new citizens and it’s probably desirable to have expats incentivised to deliberately relinquish their passports. Mind you I’m looking at this from the perspective of here in New Zealand, where there’s regular media stories about Australia deporting NZ citizens who moved over there as kids and ended up criminals. There’s no incentives to relinquish an NZ passport so Australia can revoke their citizenship, deport, and they become NZs problem.
    - Johnny555 6y ago
      if you’ve moved abroad and intend to stay there long term, secure citizenship there and renounce your American citizenship to avoid double taxation That should be "intend to stay there forever", since renouncing your USA citizenship is typically permanent, once you renounce citizenship, it's difficult or impossible to regain it.
  - kalleboo 6y ago
    > For Americans, for better or worse, its very large stick (the military) affords its citizens all sorts of benefits while traveling/living abroad This is mostly a myth. There are lots of examples of cases where people from less RAWR MILITARY countries (like... Sweden) got pulled out of risky situations before the Americans did. In some cases Americans simply have not gotten rescued at all and left to fend for themselves! And the US doesn't perform that service for free... if you get rescued they charge you tens of thousands. Being able to be negotiated out of detainment has more to do with politics and trade, and the US has a lot of political enemies. The countries where the US military is a factor are countries you're not likely to want to move to and make a living in anyway. Being able to travel to countries is also weaker as a US citizen, since many countries apply reciprocity, and the US often has stricter immigration controls. Being American living abroad is mostly a demerit. You can't open bank accounts due to FATCA, you have to pay expensive specialized accountants due to foreign taxation, and in many cases people just don't like you due to your government. I can't think of any situations where being American is a pro over being an EU citizen.
shard 6y ago
> it looks like there are provisions to give you exclusions on your foreign income,if you have any The foreign income exclusion is not that high, especially if you are a mid career tech worker ($107,600 for 2020), and you will be double taxed on amounts above the exclusion. But at least you can skip California state taxes if you count as a nonresident.
- kbenson 6y ago
  I guess that's the decision to make. Do you pay extra to keep your U.S. citizenship active, or do you renounce citizenship to pay less? I'm sure different people will have different ideas of what that's worth, but it's available as a choice. People that opt not to renounce citizenship have obviously decided it's worth it to not do so, whether that be keeping future options open, or because they know they plan to return. $100k is a lot of money, even if in many locations its less than a mid-career tech worker salary, so I'm not sure I have any objections to this.
  - shard 6y ago
    There is a sense of dissatisfaction when one has to pay the extra tax, while one's coworkers, who are from countries other than the US, do not.
- throwawayprc99 6y ago
  California taxes worldwide income, and you are still considered a CA resident if you were living there before you left the country.
  - shard 6y ago
    I'm not a tax professional, but below is the relevant section from the California Franchise Tax Board's Guideline for Determining Resident Status, which can grant nonresident status depending on the particulars of one's employment: Safe Harbor Safe harbor is available for certain individuals leaving California under employment-related contracts. The safe harbor provides that an individual domiciled in California who is outside California under an employment-related contract for an uninterrupted period of at least 546 consecutive days will be considered a nonresident unless any of the following is met: • The individual has intangible income exceeding $200,000 in any taxable year during which the employment-related contract is in effect. • The principal purpose of the absence from California is to avoid personal income tax. The spouse/RDP of the individual covered by this safe harbor rule will also be considered a nonresident while accompanying the individual outside California for at least 546 consecutive days. Return visits to California that do not exceed a total of 45 days during any taxable year covered by the employment contract are considered temporary.
gcanyon 6y ago
Expat here, that's not how it works. You have two options when you live/work in another country: Exclude up to about $100k of your foreign income from US taxes -- after that you still pay US taxes, and at the rate you would have paid if you were paying from the first dollar, meaning if you make $130K, you don't pay US taxes as if you made $30K, you pay the difference between the taxes on $130K and the taxes on $100K. Deduct whatever you pay in foreign taxes from your US taxes, dollar for dollar. The US is almost the only country that does this. All of my co-workers from Israel, Ukraine, India, and many other places pay generally no taxes in their home countries.

ljf 6y ago

As a Brit, I can work wherever I can find work (and legally work) around the world, earn a fortune and not pay any tax in the UK, /and/ keep my citizenship. I only would pay tax to the UK on income I earn here (which in itself leads to all kinds of strange and dodgy scenarios in terms of people avoiding paying taxes here)

alpha_squared 6y ago
This is ultimately political and comes down to perspective and opinion. As a citizen, you benefit from many things of your home country regardless of whether or not you reside there. Such as, for example, your home country's ability to exert pressure on the government of where you reside when you're unjustly arrested/detained. There's also access to the consulate of your home country and all services you have access to from the resident country. All of that stuff is funded somehow and it can seem unfair that only those who live within the home country's borders fund those things while those who reside elsewhere get to take advantage of it all without paying anything into it. For Americans, for better or worse, its very large stick (the military) affords its citizens all sorts of benefits while traveling/living abroad.
- FooHentai 6y ago
  There’s also the behaviour it incentivises - if you’ve moved abroad and intend to stay there long term, secure citizenship there and renounce your American citizenship to avoid double taxation. The USA isn’t exactly hurting for new citizens and it’s probably desirable to have expats incentivised to deliberately relinquish their passports. Mind you I’m looking at this from the perspective of here in New Zealand, where there’s regular media stories about Australia deporting NZ citizens who moved over there as kids and ended up criminals. There’s no incentives to relinquish an NZ passport so Australia can revoke their citizenship, deport, and they become NZs problem.
  - Johnny555 6y ago
    if you’ve moved abroad and intend to stay there long term, secure citizenship there and renounce your American citizenship to avoid double taxation That should be "intend to stay there forever", since renouncing your USA citizenship is typically permanent, once you renounce citizenship, it's difficult or impossible to regain it.
- kalleboo 6y ago
  > For Americans, for better or worse, its very large stick (the military) affords its citizens all sorts of benefits while traveling/living abroad This is mostly a myth. There are lots of examples of cases where people from less RAWR MILITARY countries (like... Sweden) got pulled out of risky situations before the Americans did. In some cases Americans simply have not gotten rescued at all and left to fend for themselves! And the US doesn't perform that service for free... if you get rescued they charge you tens of thousands. Being able to be negotiated out of detainment has more to do with politics and trade, and the US has a lot of political enemies. The countries where the US military is a factor are countries you're not likely to want to move to and make a living in anyway. Being able to travel to countries is also weaker as a US citizen, since many countries apply reciprocity, and the US often has stricter immigration controls. Being American living abroad is mostly a demerit. You can't open bank accounts due to FATCA, you have to pay expensive specialized accountants due to foreign taxation, and in many cases people just don't like you due to your government. I can't think of any situations where being American is a pro over being an EU citizen.

shard 6y ago

> it looks like there are provisions to give you exclusions on your foreign income,if you have any The foreign income exclusion is not that high, especially if you are a mid career tech worker ($107,600 for 2020), and you will be double taxed on amounts above the exclusion. But at least you can skip California state taxes if you count as a nonresident.

kbenson 6y ago
I guess that's the decision to make. Do you pay extra to keep your U.S. citizenship active, or do you renounce citizenship to pay less? I'm sure different people will have different ideas of what that's worth, but it's available as a choice. People that opt not to renounce citizenship have obviously decided it's worth it to not do so, whether that be keeping future options open, or because they know they plan to return. $100k is a lot of money, even if in many locations its less than a mid-career tech worker salary, so I'm not sure I have any objections to this.
- shard 6y ago
  There is a sense of dissatisfaction when one has to pay the extra tax, while one's coworkers, who are from countries other than the US, do not.
throwawayprc99 6y ago
California taxes worldwide income, and you are still considered a CA resident if you were living there before you left the country.
- shard 6y ago
  I'm not a tax professional, but below is the relevant section from the California Franchise Tax Board's Guideline for Determining Resident Status, which can grant nonresident status depending on the particulars of one's employment: Safe Harbor Safe harbor is available for certain individuals leaving California under employment-related contracts. The safe harbor provides that an individual domiciled in California who is outside California under an employment-related contract for an uninterrupted period of at least 546 consecutive days will be considered a nonresident unless any of the following is met: • The individual has intangible income exceeding $200,000 in any taxable year during which the employment-related contract is in effect. • The principal purpose of the absence from California is to avoid personal income tax. The spouse/RDP of the individual covered by this safe harbor rule will also be considered a nonresident while accompanying the individual outside California for at least 546 consecutive days. Return visits to California that do not exceed a total of 45 days during any taxable year covered by the employment contract are considered temporary.

gcanyon 6y ago

Expat here, that's not how it works. You have two options when you live/work in another country: Exclude up to about $100k of your foreign income from US taxes -- after that you still pay US taxes, and at the rate you would have paid if you were paying from the first dollar, meaning if you make $130K, you don't pay US taxes as if you made $30K, you pay the difference between the taxes on $130K and the taxes on $100K. Deduct whatever you pay in foreign taxes from your US taxes, dollar for dollar. The US is almost the only country that does this. All of my co-workers from Israel, Ukraine, India, and many other places pay generally no taxes in their home countries.