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US taxing overseas earnings wtf?

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posted on Mar, 9 2019 @ 07:21 PM
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i met an american today, married a Brit girl, works here, got a total good welcome from everyone when he opened his mouth, but aside from chuckling about Canada still being a colony with a foreign queen on their banknotes we were like wtf is america still taxing his income here?!
only two countries do that, america and eritrea, only way to avoid it is to relinquish citisenship, but he still wants the option to move back to the states.
he is a self confessed redneck from georgia, total cool guy, glad to have him here in the UK, he's getting his shotgun and rifle license when he becomes a citizen




posted on Mar, 9 2019 @ 07:45 PM
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The US is kind of crazy about this. One of my buddies is in a similar position. Trying to get out of the states taxes by moving abroad but doesn't want to give up citizenship. Really got em by the balls on this. I mean an American passport is a powerful thing, but comes with a price.



posted on Mar, 9 2019 @ 07:56 PM
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originally posted by: DoctorX11
The US is kind of crazy about this. One of my buddies is in a similar position. Trying to get out of the states taxes by moving abroad but doesn't want to give up citizenship. Really got em by the balls on this. I mean an American passport is a powerful thing, but comes with a price.


An American passport is pretty meaningless these days. You have 29m illegals in your country getting all the benefits so what is citizenship actually worth?



posted on Mar, 9 2019 @ 07:56 PM
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a reply to: DoctorX11

the guy i met today is lucky, works for my mate, he pays him part cash and part bank transfer, keeps the fed's off his back lol



posted on Mar, 9 2019 @ 07:58 PM
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originally posted by: SerenTheUniverse
a reply to: DoctorX11

the guy i met today is lucky, works for my mate, he pays him part cash and part bank transfer, keeps the fed's off his back lol


Er, perhaps you might want to keep a little quiet about that. You realise that the US govt. knows who you are just from the fact you posted here.



posted on Mar, 9 2019 @ 08:01 PM
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a reply to: UKTruth

Oh no, me and matey are not even facebook friends...american govt would struggle to guess who he was unless they sent a snatch squad and tortured me, save the paranoia x



posted on Mar, 9 2019 @ 08:08 PM
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They have a huge exit tax too, if you do want to leave.



posted on Mar, 9 2019 @ 08:13 PM
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a reply to: UKTruth

Have you traveled much?

If you're from the UK you might not get the gravity of it either, its also a pretty powerful passport that the majority of citizens don't utilize.



posted on Mar, 9 2019 @ 08:17 PM
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originally posted by: DoctorX11
a reply to: UKTruth

Have you traveled much?

If you're from the UK you might not get the gravity of it either, its also a pretty powerful passport that the majority of citizens don't utilize.


Yeah, a lot, including probably more in the US than 99% of Americans.
US citizenship is worthless. You have no border, and half the world hates you because of the endless wars and interference with other countries govt's.
edit on 9/3/2019 by UKTruth because: (no reason given)



posted on Mar, 9 2019 @ 08:33 PM
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a reply to: UKTruth

Once again I am in need of the laughing tears emoji but alas it is not here.


So yeah, great. I'm not a huge fan of the general american agenda either. But power is power.

The US citizenship really comes into play internationally and is not at all necessary internally. We have entrance to more countries than almost any other passport allows, and powerful embassies that make sure they set precedents for protecting citizens abroad. Plus international work opportunities explode with American passports. Don't get me wrong I don't support most of Americas international abuse, but the benefits come regardless of if I asked for them.

Plus, The UK is in pretty much an identical situation. If you don't realize your privilege of passport there are millions out there who would trade.



posted on Mar, 9 2019 @ 08:42 PM
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a reply to: UKTruth

We're small fish, they wouldn't even bat an eye at something like that.



posted on Mar, 9 2019 @ 08:45 PM
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originally posted by: DoctorX11
a reply to: UKTruth

We're small fish, they wouldn't even bat an eye at something like that.


Yeah, just like the NSA isn't recording data from every phone call.



posted on Mar, 9 2019 @ 08:50 PM
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a reply to: UKTruth

Well I hate to be the bearer of bad new, but they actually are though. . . now you know I guess.


Doesn't change anything. The NSA also knows who the guy down the street is selling bud. They use their resources for bigger fish. And their access to information isn't exactly trickle-down, so local enforcement will not have access to any of it for years.



posted on Mar, 9 2019 @ 09:02 PM
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you left this out
americans living overseas with income of 99000 dollars are tax exempt from paying taxes
you pay income taxes in the country you are living in
after the 99000 dollars of income, yes you have pay taxes to both countries
it sucks
I know
I live outside the USA



posted on Mar, 9 2019 @ 09:17 PM
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originally posted by: UKTruth

originally posted by: DoctorX11
a reply to: UKTruth

Have you traveled much?

If you're from the UK you might not get the gravity of it either, its also a pretty powerful passport that the majority of citizens don't utilize.


Yeah, a lot, including probably more in the US than 99% of Americans.
US citizenship is worthless. You have no border, and half the world hates you because of the endless wars and interference with other countries govt's.




US citizenship is worthless.

Aww , still upset a bunch of farmers kicked the tails of the allegedly most powerful army of its time ?



You have no border

We still have borders. Now , if we could only teach the ignorant Democrats that fact.




and half the world hates you

Do you mean the half that consists of undeveloped countries where folks live in oppression ?

Denying ignorance
Why ?
I have not been able to for a while. Upgrading my 3rd PC to Extreme Gaming capability.



posted on Mar, 9 2019 @ 09:24 PM
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The key word here is "citizen"
Are you taxed for the citizenship you have ?
Bet you are.




posted on Mar, 9 2019 @ 10:00 PM
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a reply to: SerenTheUniverse

No matter where an American is...he/she has to report income and file taxes...unless hiding it in some offshore bank....

Mind you, nobodys gonna chase him down unless they find out about it...but it results in fines, even jailtime if years ltr it's discovered he didn't report it.*

*I toured the world 4 times from 74-2000 in a rock band...got home, and reported every penny, everytime...musicians union and paychecks from promoters made it I'm possible to hide sorta...

Is it right? Probably more unfair than right...
edit on 9-3-2019 by mysterioustranger because: Oops



posted on Mar, 9 2019 @ 11:24 PM
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a reply to: SerenTheUniverse

Good topic. I had read about this years ago and thought; well that is one way to keep us citizens enslaved.

Here is an article explaining how the overseas tax works for US citizens; it is freaking nutcakes:

www.americansabroad.org...

"You're a US citizen or a green card holder and you live somewhere outside the USA (i.e. in a "foreign" country).

You may have US tax filing obligations if you have personal income such as wages, salary, commissions, tips, consultancy fees, pension fund, alimony, US and/or foreign social security, interest, dividends, capital gains, rental property, farm income, royalties, inheritance or payment in kind in the US or abroad.

You may have US tax filing obligations even if you haven't ever lived in the USA or left several years ago and all your income is from "foreign" sources.

You may have US tax filing obligations even if some or all of your income was already taxed at source or is going to be taxed by a foreign country.

You may have US tax filing obligations even if you aren't earning any money but are married to someone who did have income.

Basically, you have to file IRS Form 1040 and relevant schedules for the previous year if your income was above a certain threshold. These thresholds are the same as for US residents. For tax year 2018 (filing in 2019) the thresholds (total yearly income) are:
Under 65 65 or older

You are single (unmarried) $12,000 $13,600

You are married filing jointly $24,000 $26,600 (both over 65)

You are married filing separately $5 $5

You are filing as "Head of household" $18,000 $19,600

You are a widow or widower $24,000 $25,300

Filing the 1040 is generally due each year on April 15th (Monday April 15th in 2019), with an automatic extension to June 15th for Americans resident abroad, but if any taxes are due, interest is calculated starting April 15th up to payment date.



HOW DOES LIVING ABROAD MITIGATE YOUR US TAX?

There are basically two methods by which you can reduce your US tax by a substantial amount. These are the "Foreign Earned Income Exclusion (FEIE)" and the "Foreign Tax Credit." However, neither of these methods excuses you from filing if your income was above the filing threshold.

The Foreign Earned Income Exclusion (FEIE, using IRS Form 2555) allows you to exclude a certain amount of your FOREIGN EARNED income from US tax. For tax year 2018 (filing in 2019) the exclusion amount is $103,900. What this means is that if, for example, you earned $118,000 in 2018, you can subtract $103,900 from that leaving $14,100 as taxable by the US. But beware: this $14,100 is taxable at tax rates applying to $118,000 (the so-called "stacking rule"). The exclusion applies only to foreign earned income. Other income, such as pensions, interest, dividends, capital gains, US-sourced income, etc., cannot be excluded with the FEIE. You are liable for full US tax on this type of income.

Here's a simple example. Suppose you live in France and you earned EURO 100,000 (about $118,000) from your French employer. You are married filing jointly, have two children and you take the standard deduction ($24,000) and child tax credit ($4,000 for two children).

The US tax on this income is calculated as follows:

US tax on $118,000 = $8,559

Subtract US tax on $103,900 (the exclusion) = $5,457

Net US tax payable: $3,102

While this is only an approximate calculation, it gives you an idea of how the system works.

The other method for reducing your US tax bill is the foreign tax credit, using IRS Form 1116. If your income was taxed by a foreign country, you can subtract that tax from your US tax, in most cases substantially reducing your US tax bill. But be careful: you cannot claim a foreign tax credit for foreign taxes on income excluded on Form 2555. In other words, you can only claim a foreign tax credit for foreign taxes on the same income that the US is taxing. The fraction of your foreign taxes that can be taken as a tax credit is determined by the ratio of excluded income to total income. Here's an example, using the same figures as above.

French taxes on EURO 100,000 ($118,000) are EURO 12,302 = $14,516

Fraction for excluded income ($103,900/$118,000) = 0.881

Fraction of foreign taxes that can be taken as credit = 0.119

Net French tax that can be taken as credit (0.119 x $14,516) = $1,727

This French tax can be subtracted from your US tax ($3,102) leaving $1,375 which should be paid to the IRS.

In this particular example, you would actually be better off by just using the foreign tax credit alone and not even claiming the FEIE. If you do this you wouldn't have to pay anything in US taxes (French tax $14,516 is greater than US tax $8,559). In addition, the foreign tax credit can be applied (in some cases) against tax on unearned income as well.

So you see that by judiciously combining the FEIE with the foreign tax credit or by applying only the foreign tax credit you can substantially reduce or even get your US tax bill down to zero. Again, this is only an approximate calculation to serve as an example of how the system works. Reminder: you MUST file your US tax forms even if your calculated tax bill is zero when applying the FEIE and/or the foreign tax credit.

To summarize: If your foreign earned income was less than $103,900 use the FEIE to reduce your US tax on this income to zero. However, if your foreign income was more than $103,900 explore the possibility of using your foreign taxes as credit against any US tax which may be due.

Be aware that if you have been claiming the FEIE in previous years using Form 2555 and you decide this year to use only the foreign tax credit you cannot go back to the FEIE for the next six years unless you receive permission from the IRS.

In some cases, you can exclude qualified housing expenses from your taxable income. This exclusion can be calculated using Part VI on Form 2555.

There are many other aspects to be considered when figuring your US taxes. Among these are the "Alternative Minimum Tax" (AMT), handling of unearned (passive) income such as interest and capital gains; the foreign housing exclusion if you rent your lodging; earnings of a non-US spouse; business expenses; the possibility of itemizing deductions instead of applying the standard deduction; state taxes in certain US states where you formerly resided; etc., etc., but they go beyond the simple explanation that this article is intended to be. Self-employment taxes (for Social Security and Medicare) can apply if your net annual earnings exceed $400 and you live in a country which doesn't have a social security "totalization" agreement with the US. If you need to consider any of these elements, you would be well advised to consult an international tax expert, a list of which is provided here."



posted on Mar, 9 2019 @ 11:53 PM
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If you live overseas and have a bank account in your adopted country the IRS wants the account number so they can tax you on any interest earned.. Several overseas banks do not want an American deposit holder because they to are supposed to report the account..

One of the worse/stupid stories (there really are several) was an American woman who married a Canadian man who made a good sum of money.. The IRS wanted him to pay US taxes because he was married to the woman..

Another story was a guy during WW2 that had an account in an Italian account that made interest for over 60 years. When he died the family found the account information and after checking it was a good sum of money that had accrued.. They thought "WoW !" Well after the IRS got finished with them they ended up owing money due to all the penalties for not reporting and paying taxes on the account for all those years ....

Most people do not know just how screwed up the government is and how they will come after you like a pack of dogs if one dog ever gets a sniff ... My recommendation is do not think you will get away with cheating the IRS..

Another member commented on how valuable a US or UK passport is... True, however the bit about protecting US or UK citizens is slightly overblown. You break a law in your host country... You have broke their laws and the Embassies can do almost nothing other than call you next of kin... Unless.. there is a big international story and the host country is losing face.. Then maybe the Embassy will claim they secured your release or some such thing.. Look at the Expats serving time (life sentences in some cases for possession of pot) in various countries.. Best thing to do is stay law abiding where ever you find yourself.



posted on Mar, 10 2019 @ 07:36 AM
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originally posted by: SerenTheUniverse
a reply to: DoctorX11

the guy i met today is lucky, works for my mate, he pays him part cash and part bank transfer, keeps the fed's off his back lol


death and taxes my dear corn....seren.

they already know you share broadband with next door, ip, reverse dns, packet sniffer et al.....

the tools available may have already zeroed in on your location and it's only a matter of time before someone
decides to initiate investigations, tracking and phone correlations to your buddy. cheating hmrc or the irs has serious repercussions
for any visiting overseas individual and you may have just shot your buddy in the foot by mentioning the cash (undeclared income) word.

i jest you not, the authorities will spent far more taxpayers money prosecuting offenders than what they may eventually recoup. it's the principle of law and the crown will not be made a fool of.

just stop with the bragging lest you wish private arrangements assumed outside the scope of the authorities scrutiny
to tear you and others a new one.

take care fakedirt.




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