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There is a standard expat deduction -- I want to say it's something like $72,000 per year. If you make less than that, you don't have to pay anything. "Quite

by numair 18y ago

There is a standard expat deduction -- I want to say it's something like $72,000 per year. If you make less than that, you don't have to pay anything. "Quite a few expats and international businesspeople" who make more money, and hide it, are constantly getting in trouble -- see, for example, the recent move with the US against UBS. It's becoming harder with every passing day to flout the rules, so it's really a lot better for people to design their lives with the rules in mind. And we're not the only country - there's always Bangladesh!

DanielBMarkham 18y ago
It's becoming harder with every passing day to flout the rules, so it's really a lot better for people to design their lives with the rules in mind. For some reason that reminds me of the phrase "the tighter you squeeze your grip, the more that will slip from your fingers" E-gads! Now I'm quoting Star Wars! But really, countries can make all the rules they want. Getting every other country on the planet to enforce quirky U.S. Tax laws is more of a wet dream than reality. It reminds of Thomas Paine, who was put on trial in absentia by authorities in Great Britain who were also tightening their grip. They charged him with libel. ""If, to expose the fraud and imposition of monarchy . . . to promote universal peace, civilization, and commerce, and to break the chains of political superstition, and raise degraded man to his proper rank; if these things be libellous . . . let the name of libeller be engraved on my tomb"" As far as I'm concerned, you can say the thing about "unpatriotic" tax evasion by rich people choosing to move away. This country was founded on a tax revolt, and trying to tax people for leaving what they feel to be an overly burdensome system is the height of bureaucratic arrogance.
lionhearted 18y ago
Good points Numair - also probably pretty useful to people who don't know the law, deductions, exceptions. I know a lot of it off the top of my head but I think we've built a better thread together. As for me, I've never tried to slough off my taxes because I've wanted to show the income to improve credit and be able to get bank loans and show track record later. I was putting the view out that higher taxes could equal lower yields, which is, like, a doubly bad thing. Certainly, the IRS/INS duo means something. An American renouncing and not paying taxes they know about means you really can't come back, which is ugly. If you don't like living here, there's still some really amazing places here worth coming back to every so often. I really root for our government, partially because I live here right now, and partially because of some latent patriotism going on. If taxes went up and yields went down, I'd really be shaking my head. Anyways, cheers for having the international tax discussion with me, hope everyone can learn a thing or two from it.
- numair 18y ago
  Agreed, and I feel the exact same way. Hopefully some of what has been outlined here will help those who come across this thread and start thinking of strategies to "get out of it." You really can't, and I agree that you really shouldn't try. Love your country enough to openly criticize it, and try to find a way to make it better. We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. Yeah, it's somewhat ridiculous that it costs 45% of your income (and rising) to have a California license plate and a US passport, but there's something enjoyable about the notion of being "too rich to care," which is likely to come into vogue if taxes go up; the highly-taxed wealthy in Sweden and Denmark are examples of what I'm talking about.
  - newt0311 18y ago
    I am not so sure about that. I rather liked Hong Kong when I visited.
  - sho 18y ago
    I got to say, "too rich to care" isn't quite the vibe I'm getting from the yanks I know right now ...
  - jbjohns 18y ago
    With all due respect, I disagree. Life is about you and the people you care about (which could be the whole world, but generally isn't). IMHO, you don't owe anything to some country you happen to be born in. They should be treated exactly like a business (as far as is practical of course): i.e. if you can get a better deal somewhere else, I would take it. (note: "better deal" doesn't just mean lower taxes, there are many issues to consider) >We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. I've spent a few years out of the U.S. and I strongly disagree. The fact is, I disagree with the idea of a "best country in the world". I think which one is best for you depends on what you want.
  - ahoyhere 18y ago
    > We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. Sure, the US is the best country in the world... unless you like democracy, equality, high standard of living, low rate of crime and corruption, universal access to high-quality education and medical care, and civil rights. The list of countries that score above the US on those metrics is very long, including a healthy chunk of the EU, non-EU European nations and Scandinavian states, and major former British colonies (Canada, Australia).
unexpected 18y ago
Well the easy way to do this is to start a foreign corporation (say Dubai) As long as companies are doing business with the foreign corporation (which you are an employee of), you won't have to pay taxes on that amount- you will only pay taxes on the salary that your Dubai corporation pays you. However, if you ever try to move the money to the United States, you're screwed. The moment you transfer the money from Dubai Bank and Trust to Bank of America, you'll owe taxes on it. So, the easy way to avoid paying taxes is to have the foreign corporation, and make everything you purchase overseas a business expense.
- numair 18y ago
  This doesn't work. You still have to report your holdings in the company to the IRS as a CFC, regardless of whether the company generates a profit / pays you income / etc. This, of course, puts a red flag on you, which leads to a higher chance of being audited, which thus would cause the IRS to go over each and every transaction from which you benefited (meaning, if the company bought a car and you used it for personal use; if the company bought a plane ticket which was for a trip for which a portion of time was spent on non-work-related leisure, etc) to see where it can be counted as income for which you are liable. You can, of course, keep a foreign company, file the CFC with the IRS, and keep an accountant on hand to keep the balances separate; there are plenty of people who do this. If done properly, however, it is somewhat of a pain in the ass, and only enjoyable if you're an obsessive-compulsive tax-avoider like John Malone. Remember, life is short, time is money, and money is meaningless once you have enough of it.
  - unexpected 18y ago
    so essentially, your argument is that it DOES work, but it's just a huge pain in the ass. I agree whole-heartedly with that- but the bottom line is it does work- you just have to keep everything separate (which is really not that big of a deal). And the easy to avoid reporting it as a CFC is to not have it be a CFC. If you have a brother/relative from another country, you can each have 50%, and voila! it's not a CFC.
  - newt0311 18y ago
jbjohns 18y ago
It's $80k/year. Anything over that is taxed, but at the higher bracket. That is, if you make $85k, the $5k isn't taxed at the 0-25k (or whatever it is) bracket, but the one that $85k is in. If you would still have to pay after this deduction you can forfeit the $80k deduction and use some other form. I don't know much about the other form, only that it's incredibly complex and changes enough every year that if you live in a foreign country you'll simply have to pay a tax guy to fill it out. I've been making over $100k/year since I left the states (a year after that, actually) and I haven't owed any U.S. taxes yet.
ahoyhere 18y ago
I think it's $85,000 and that's USD, which is, of course, a lot less than it used to be.

by numair 18y ago

DanielBMarkham 18y ago

It's becoming harder with every passing day to flout the rules, so it's really a lot better for people to design their lives with the rules in mind. For some reason that reminds me of the phrase "the tighter you squeeze your grip, the more that will slip from your fingers" E-gads! Now I'm quoting Star Wars! But really, countries can make all the rules they want. Getting every other country on the planet to enforce quirky U.S. Tax laws is more of a wet dream than reality. It reminds of Thomas Paine, who was put on trial in absentia by authorities in Great Britain who were also tightening their grip. They charged him with libel. ""If, to expose the fraud and imposition of monarchy . . . to promote universal peace, civilization, and commerce, and to break the chains of political superstition, and raise degraded man to his proper rank; if these things be libellous . . . let the name of libeller be engraved on my tomb"" As far as I'm concerned, you can say the thing about "unpatriotic" tax evasion by rich people choosing to move away. This country was founded on a tax revolt, and trying to tax people for leaving what they feel to be an overly burdensome system is the height of bureaucratic arrogance.

lionhearted 18y ago

Good points Numair - also probably pretty useful to people who don't know the law, deductions, exceptions. I know a lot of it off the top of my head but I think we've built a better thread together. As for me, I've never tried to slough off my taxes because I've wanted to show the income to improve credit and be able to get bank loans and show track record later. I was putting the view out that higher taxes could equal lower yields, which is, like, a doubly bad thing. Certainly, the IRS/INS duo means something. An American renouncing and not paying taxes they know about means you really can't come back, which is ugly. If you don't like living here, there's still some really amazing places here worth coming back to every so often. I really root for our government, partially because I live here right now, and partially because of some latent patriotism going on. If taxes went up and yields went down, I'd really be shaking my head. Anyways, cheers for having the international tax discussion with me, hope everyone can learn a thing or two from it.

numair 18y ago
Agreed, and I feel the exact same way. Hopefully some of what has been outlined here will help those who come across this thread and start thinking of strategies to "get out of it." You really can't, and I agree that you really shouldn't try. Love your country enough to openly criticize it, and try to find a way to make it better. We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. Yeah, it's somewhat ridiculous that it costs 45% of your income (and rising) to have a California license plate and a US passport, but there's something enjoyable about the notion of being "too rich to care," which is likely to come into vogue if taxes go up; the highly-taxed wealthy in Sweden and Denmark are examples of what I'm talking about.
- newt0311 18y ago
  I am not so sure about that. I rather liked Hong Kong when I visited.
- sho 18y ago
  I got to say, "too rich to care" isn't quite the vibe I'm getting from the yanks I know right now ...
- jbjohns 18y ago
  With all due respect, I disagree. Life is about you and the people you care about (which could be the whole world, but generally isn't). IMHO, you don't owe anything to some country you happen to be born in. They should be treated exactly like a business (as far as is practical of course): i.e. if you can get a better deal somewhere else, I would take it. (note: "better deal" doesn't just mean lower taxes, there are many issues to consider) >We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. I've spent a few years out of the U.S. and I strongly disagree. The fact is, I disagree with the idea of a "best country in the world". I think which one is best for you depends on what you want.
- ahoyhere 18y ago
  > We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. Sure, the US is the best country in the world... unless you like democracy, equality, high standard of living, low rate of crime and corruption, universal access to high-quality education and medical care, and civil rights. The list of countries that score above the US on those metrics is very long, including a healthy chunk of the EU, non-EU European nations and Scandinavian states, and major former British colonies (Canada, Australia).

unexpected 18y ago

Well the easy way to do this is to start a foreign corporation (say Dubai) As long as companies are doing business with the foreign corporation (which you are an employee of), you won't have to pay taxes on that amount- you will only pay taxes on the salary that your Dubai corporation pays you. However, if you ever try to move the money to the United States, you're screwed. The moment you transfer the money from Dubai Bank and Trust to Bank of America, you'll owe taxes on it. So, the easy way to avoid paying taxes is to have the foreign corporation, and make everything you purchase overseas a business expense.

numair 18y ago
This doesn't work. You still have to report your holdings in the company to the IRS as a CFC, regardless of whether the company generates a profit / pays you income / etc. This, of course, puts a red flag on you, which leads to a higher chance of being audited, which thus would cause the IRS to go over each and every transaction from which you benefited (meaning, if the company bought a car and you used it for personal use; if the company bought a plane ticket which was for a trip for which a portion of time was spent on non-work-related leisure, etc) to see where it can be counted as income for which you are liable. You can, of course, keep a foreign company, file the CFC with the IRS, and keep an accountant on hand to keep the balances separate; there are plenty of people who do this. If done properly, however, it is somewhat of a pain in the ass, and only enjoyable if you're an obsessive-compulsive tax-avoider like John Malone. Remember, life is short, time is money, and money is meaningless once you have enough of it.
- unexpected 18y ago
  so essentially, your argument is that it DOES work, but it's just a huge pain in the ass. I agree whole-heartedly with that- but the bottom line is it does work- you just have to keep everything separate (which is really not that big of a deal). And the easy to avoid reporting it as a CFC is to not have it be a CFC. If you have a brother/relative from another country, you can each have 50%, and voila! it's not a CFC.
- newt0311 18y ago

jbjohns 18y ago

It's $80k/year. Anything over that is taxed, but at the higher bracket. That is, if you make $85k, the $5k isn't taxed at the 0-25k (or whatever it is) bracket, but the one that $85k is in. If you would still have to pay after this deduction you can forfeit the $80k deduction and use some other form. I don't know much about the other form, only that it's incredibly complex and changes enough every year that if you live in a foreign country you'll simply have to pay a tax guy to fill it out. I've been making over $100k/year since I left the states (a year after that, actually) and I haven't owed any U.S. taxes yet.

ahoyhere 18y ago

I think it's $85,000 and that's USD, which is, of course, a lot less than it used to be.