6 ms·

Note that the US is one of only two countries that taxes non-resident citizens. The other example being Eritrea.

tomatocracy 3y ago
True, but eg the UK has quite a tight definition of "residency" (the significant ties test) which catches many people who actually live outside the UK.
- xnorswap 3y ago
  Yes, but it doesn't catch the equivalent of people like me, who are US citizens through birth, but with no other ties to the country. Yet I therefore still have to navigate the nightmare that is their paper based (and "refund/allowance" obsessed) tax system, despite not having resided in the US since the age of 3. For example, it's not enough for me to simply earn less than the "foreign income tax allowance". Instead I need to calculate the tax I would owe on one form, calculate the deduction to that tax on a different form, then write the sum from one form on to the other form (god help if you make an error transcribing that number). The US tax form is full of things like "Add the numbers in 11a through 11g together and deduct this number from the number in 13 and write it down in 15". It feels utterly hostile, as if it's trying to catch the person out, instead of guiding them to the accurate number.
  - rwmj 3y ago
    But on the other hand you have one of the most powerful passports on the planet, so not all bad ...
    - gadders 3y ago
      Agreed. If you get kidnapped as a US citizen, I think you have the highest chance of people with guns falling out of the sky to save you.
      - marfil 3y ago
        Only if you're high profile or very rich. Unfortunately vast majority of Americans like us just get left behind.
  - light_hue_1 3y ago
    Then renounce your citizenship. You're gaining something by not renouncing it. The minimal cost of some trivial paperwork that you could if you wanted to offload to someone for a nominal fee is a really odd complaint. > god help if you make an error transcribing that number Why do people have such fear of taxes? No, it's not God. When you make an error the IRS helps you. They compute your taxes anyway and they send you a letter with your error and the updated number.
    - glenngillen 3y ago
      "The minimal cost of some trivial paperwork" - the US tax filing system is a joke and the paperwork is anything but trivial. Especially given the potential consequences of getting it wrong. > When you make an error the IRS helps you. They compute your taxes anyway and they send you a letter with your error and the updated number. You make this sound so simple. And yet, speaking from experience, it drags out for months and ends up costing 5-figures in penalties. If they can so easily compute the correct number anyway why continue with the whole charade of making us answer a whole bunch of barely decipherable questions?
      - light_hue_1 3y ago
        > If they can so easily compute the correct number anyway why continue with the whole charade of making us answer a whole bunch of barely decipherable questions? You should look up what Intuit and H&R Block lobby for. They spend massive amounts of money to stop the IRS from just sending you a prefilled out form for you to verify. It's called return-free filling. There have been countless bills to introduce this but they always die. The IRS could technically do it easily, but it isn't authorized to by Congress. This is one of those stories that breaks every year or two in major newspapers and people are outraged but it never gets better.
  - tomatocracy 3y ago
    Yes. The US is also relatively unusual in continuing to bestow citizenship automatically on everyone born in the country which also means there are many people who have citizenship without any real ties to the country. It's also unusual in having a tax system where the admin for the average person is a massive pain.
- oakesm9 3y ago
  For those interested, the rules for the UK are set out here and are pretty clear: https://www.gov.uk/tax-foreign-income/residence https://www.gov.uk/tax-foreign-income/residence The summary is that if you have a full time job outside the UK or have spent less than 46 days in the UK (less if you were previously a UK resident) then you are never classed as a resident. If that doesn't apply then working full time in the UK, spending at least half the year in the UK, or only having a home in the UK and using it for more than 30 days will automatically make the a resident. If those don't apply, then there's a test to say if you have "significant ties" . The details for that are in the link and are applied on a sliding scale based on the number of days you spent in the UK. To me, it looks pretty fair. You have a spend most of the year in the UK, have lots of "ties" here (property, family, etc), and not have a job elsewhere to be classed as a UK resident for tax purposes.
  - tomatocracy 3y ago
    In reality the detail is what pushes most people to have to consider significant ties because the full time work test excludes a lot of people and is hard to prove for many others. eg if you are retired, a non working (or part-time working) spouse bringing up children, or make money via something HMRC could consider as not being a "trade" (eg investing your own money) then you don't automatically qualify as non resident. The definition of full time work is explicitly linked to actual hours worked (not contracted), so the admin involved in proving this is painful. For friends who've left the UK for work, the only way to qualify without massive hassle has been to spend less than 16 days a year in the UK for the first 3 tax years (and thereafter less than 46 days).
alephnan 3y ago
Yes, but you wouldn’t be double paying taxes. If the taxes of the country you are residing in is low, then it would be rounded up to US taxes’ rate. There’s also the foreign earned income exclusion which would retain the lower tax rate up to a certain amount (~$105k). If the tax rate of the country you are residing in is higher, then you wouldn’t have to pay Us taxes.
mrits 3y ago
Also only 1 of 2 countries that could go and collect the tax.
refurb 3y ago
True, but you either get a generous allowance tax free or tax credit for any taxes paid in a foreign country. The vast, vast majority pay $0.
ant6n 3y ago
On the other hand, exit taxes based on residency rather than citizenship are common. When you leave Canada, there will be a „deemed disposition“ that means the cra will assume all your assets (except real estate) were sold and immediately bought, so u need to pay taxes on the delta of market and book value. Exiting Germany is similar, except they don’t tax stock of public companies when exiting, and they also allow ppl who only moved to Germany some years (up to seven?) ago to exit unscathed. One would hope that the book value of your assets in the new country matches the exit value when leaving, otherwise you may get double taxed. Most places have tax systems based on residence though.
themaninthedark 3y ago
And Canada: https://travel.gc.ca/travelling/living-abroad/taxation https://travel.gc.ca/travelling/living-abroad/taxation >Canadians who live or work abroad or who travel a lot may still have to pay Canadian and provincial or territorial income taxes. And others if I start looking at their tax code. Americans just like to complain about their taxes.
- throw0101a 3y ago
  Only if you are deemed to have "tax residency". * https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html https://www.canada.ca/en/revenue-agency/services/tax/interna... Further, to prevent double taxation, if you reside in a country that Canada has a tax treaty with, you may be deemed a non-resident of Canada: * https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/tax-treaties.html https://www.canada.ca/en/revenue-agency/services/tax/interna...
  - themaninthedark 3y ago
    Right, so my point that Canada taxes those who are living outside their boarder stands. And the US has tax treaties with other countries as well, so if you pay taxes in say Japan or Canada you do not pay taxes in America as well. Unless you make over 150k a year, then you only pay the marginal difference.
    - rat9988 3y ago
      "Right, so my point that Canada taxes those who are living outside their boarder stands." No it doesn't stand.It's different from the american system. Tax residency is a concept that many countries have, independantly from your citizenship.
    - throw0101a 3y ago
      > Right, so my point that Canada taxes those who are living outside their boarder stands. The US taxes you regardless of (tax) residency. There is no such thing as a non-tax-resident in the US: if you're a citizen, you pay. With Canada, you can be continue to be a citizen but (potentially) not pay. There is "potentially" with the US.
bee_rider 3y ago
It isn’t that surprising that we think we can tax non-residents from the US, but you have to appreciate the chutzpah of Eritrea going for it.
- marfil 3y ago
  Isn't that surprising? What happened to "No taxation without representation"? America turned into what it was founded to oppose.
  - neuronerdgirl 3y ago
    Given its foundation in chattel slavery America has always been what it was founded to oppose.

True, but eg the UK has quite a tight definition of "residency" (the significant ties test) which catches many people who actually live outside the UK.

xnorswap 3y ago
Yes, but it doesn't catch the equivalent of people like me, who are US citizens through birth, but with no other ties to the country. Yet I therefore still have to navigate the nightmare that is their paper based (and "refund/allowance" obsessed) tax system, despite not having resided in the US since the age of 3. For example, it's not enough for me to simply earn less than the "foreign income tax allowance". Instead I need to calculate the tax I would owe on one form, calculate the deduction to that tax on a different form, then write the sum from one form on to the other form (god help if you make an error transcribing that number). The US tax form is full of things like "Add the numbers in 11a through 11g together and deduct this number from the number in 13 and write it down in 15". It feels utterly hostile, as if it's trying to catch the person out, instead of guiding them to the accurate number.
- rwmj 3y ago
  But on the other hand you have one of the most powerful passports on the planet, so not all bad ...
  - gadders 3y ago
    Agreed. If you get kidnapped as a US citizen, I think you have the highest chance of people with guns falling out of the sky to save you.
    - marfil 3y ago
      Only if you're high profile or very rich. Unfortunately vast majority of Americans like us just get left behind.
- light_hue_1 3y ago
  Then renounce your citizenship. You're gaining something by not renouncing it. The minimal cost of some trivial paperwork that you could if you wanted to offload to someone for a nominal fee is a really odd complaint. > god help if you make an error transcribing that number Why do people have such fear of taxes? No, it's not God. When you make an error the IRS helps you. They compute your taxes anyway and they send you a letter with your error and the updated number.
  - glenngillen 3y ago
    "The minimal cost of some trivial paperwork" - the US tax filing system is a joke and the paperwork is anything but trivial. Especially given the potential consequences of getting it wrong. > When you make an error the IRS helps you. They compute your taxes anyway and they send you a letter with your error and the updated number. You make this sound so simple. And yet, speaking from experience, it drags out for months and ends up costing 5-figures in penalties. If they can so easily compute the correct number anyway why continue with the whole charade of making us answer a whole bunch of barely decipherable questions?
    - light_hue_1 3y ago
      > If they can so easily compute the correct number anyway why continue with the whole charade of making us answer a whole bunch of barely decipherable questions? You should look up what Intuit and H&R Block lobby for. They spend massive amounts of money to stop the IRS from just sending you a prefilled out form for you to verify. It's called return-free filling. There have been countless bills to introduce this but they always die. The IRS could technically do it easily, but it isn't authorized to by Congress. This is one of those stories that breaks every year or two in major newspapers and people are outraged but it never gets better.
- tomatocracy 3y ago
  Yes. The US is also relatively unusual in continuing to bestow citizenship automatically on everyone born in the country which also means there are many people who have citizenship without any real ties to the country. It's also unusual in having a tax system where the admin for the average person is a massive pain.
oakesm9 3y ago
For those interested, the rules for the UK are set out here and are pretty clear: https://www.gov.uk/tax-foreign-income/residence https://www.gov.uk/tax-foreign-income/residence The summary is that if you have a full time job outside the UK or have spent less than 46 days in the UK (less if you were previously a UK resident) then you are never classed as a resident. If that doesn't apply then working full time in the UK, spending at least half the year in the UK, or only having a home in the UK and using it for more than 30 days will automatically make the a resident. If those don't apply, then there's a test to say if you have "significant ties" . The details for that are in the link and are applied on a sliding scale based on the number of days you spent in the UK. To me, it looks pretty fair. You have a spend most of the year in the UK, have lots of "ties" here (property, family, etc), and not have a job elsewhere to be classed as a UK resident for tax purposes.
- tomatocracy 3y ago
  In reality the detail is what pushes most people to have to consider significant ties because the full time work test excludes a lot of people and is hard to prove for many others. eg if you are retired, a non working (or part-time working) spouse bringing up children, or make money via something HMRC could consider as not being a "trade" (eg investing your own money) then you don't automatically qualify as non resident. The definition of full time work is explicitly linked to actual hours worked (not contracted), so the admin involved in proving this is painful. For friends who've left the UK for work, the only way to qualify without massive hassle has been to spend less than 16 days a year in the UK for the first 3 tax years (and thereafter less than 46 days).

alephnan 3y ago

Yes, but you wouldn’t be double paying taxes. If the taxes of the country you are residing in is low, then it would be rounded up to US taxes’ rate. There’s also the foreign earned income exclusion which would retain the lower tax rate up to a certain amount (~$105k). If the tax rate of the country you are residing in is higher, then you wouldn’t have to pay Us taxes.

mrits 3y ago

Also only 1 of 2 countries that could go and collect the tax.

refurb 3y ago

True, but you either get a generous allowance tax free or tax credit for any taxes paid in a foreign country. The vast, vast majority pay $0.

ant6n 3y ago

On the other hand, exit taxes based on residency rather than citizenship are common. When you leave Canada, there will be a „deemed disposition“ that means the cra will assume all your assets (except real estate) were sold and immediately bought, so u need to pay taxes on the delta of market and book value. Exiting Germany is similar, except they don’t tax stock of public companies when exiting, and they also allow ppl who only moved to Germany some years (up to seven?) ago to exit unscathed. One would hope that the book value of your assets in the new country matches the exit value when leaving, otherwise you may get double taxed. Most places have tax systems based on residence though.

themaninthedark 3y ago

And Canada: https://travel.gc.ca/travelling/living-abroad/taxation https://travel.gc.ca/travelling/living-abroad/taxation >Canadians who live or work abroad or who travel a lot may still have to pay Canadian and provincial or territorial income taxes. And others if I start looking at their tax code. Americans just like to complain about their taxes.

throw0101a 3y ago
Only if you are deemed to have "tax residency". * https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html https://www.canada.ca/en/revenue-agency/services/tax/interna... Further, to prevent double taxation, if you reside in a country that Canada has a tax treaty with, you may be deemed a non-resident of Canada: * https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/tax-treaties.html https://www.canada.ca/en/revenue-agency/services/tax/interna...
- themaninthedark 3y ago
  Right, so my point that Canada taxes those who are living outside their boarder stands. And the US has tax treaties with other countries as well, so if you pay taxes in say Japan or Canada you do not pay taxes in America as well. Unless you make over 150k a year, then you only pay the marginal difference.
  - rat9988 3y ago
    "Right, so my point that Canada taxes those who are living outside their boarder stands." No it doesn't stand.It's different from the american system. Tax residency is a concept that many countries have, independantly from your citizenship.
  - throw0101a 3y ago
    > Right, so my point that Canada taxes those who are living outside their boarder stands. The US taxes you regardless of (tax) residency. There is no such thing as a non-tax-resident in the US: if you're a citizen, you pay. With Canada, you can be continue to be a citizen but (potentially) not pay. There is "potentially" with the US.

bee_rider 3y ago

It isn’t that surprising that we think we can tax non-residents from the US, but you have to appreciate the chutzpah of Eritrea going for it.

marfil 3y ago
Isn't that surprising? What happened to "No taxation without representation"? America turned into what it was founded to oppose.
- neuronerdgirl 3y ago
  Given its foundation in chattel slavery America has always been what it was founded to oppose.