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Americans Abroad & the Tea Tax

48 posts in this topic

Posted

The United States is the only country in the industrial world which taxes citizens living abroad, based on citizenship rather than residency, on worldwide income of individuals.

 

This is called “Citizenship-based taxation”. Other countries use “Residency-based taxation”.

 

If you are American, and have filed already, you know how complicated, costly, and unfair this can be.

 

The cost of keeping the American passport.

 

Last year I entered the same figures in the tax software as if I were living in America. I would have gotten $10,000 back! Instead, the tilted tax laws and AMT only threaten that I will have to pay.

 

I'm living here for the long run, so why not renounce my citizenship? Now there is an "exit tax" on all assets!

 

New laws require bank account reporting - called FBAR. Some Americans have been denied bank accounts because the banks don't want to have to report the data to America.

 

Can we do anything about it? YES, there is an organization that represents us for the taxation issue and other topics, before the US congress and IRS.

 

Take a look. http://americansabroad.org. They are leading the way for us Americans. Consider supporting.

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Posted

FBAR is not new and this has been covered here - if you had used the search box you would have found it :)

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Posted

PPPHHHHTT I support Commies for Capitalism myself.

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Posted

a lot of this has been covered already here: http://www.toytownge...howtopic=221398

 

But you are certainly right to continue drawing attention to this issue as many US Expats are dismayed and confused about the outcome of the new rules. There are still banks who accept happily US citizens in Germany, though. It just required more research or someone with the know-how...like some of the good IFAs here on TT can offer

 

BTW: if your headline refers to the Boston Tea Party somehow (and the strange movement/party named after it in the US): what always makes me giggle is that the protest during the Boston Tea Party was not, as so many belive, against an increase in tax but rather about a reduction of tariffs for tea thru the East India Company. That destroyed the market for smugglers from Gloucster to Marblehead all the way down to Cape Cod and they organised this uprising... Of course the in- and decrease of taxes and tariffs were arbitrary to say the last and the phrase "not taxation without representation" has still value - but not many people, especially in the US know that the protest in Boston was against cheap tea coming in and destroying the smuggler's business. Well, Boston familie continued to get rich by smuggling and policitally important for centuries to come as the Kennedys proved during prohibition...

 

Cheerio

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Posted

No need to give up your passport. Just stop paying/Filing US tax returns.

 

Failing to File tax returns, and failing to pay any required tax is not grounds for denying a US citizen

a passport. Have a read of the law/rules posted here. I know many people who have not filed US taxes

in decades. Myself included. I have never had any problems getting passports and other consular services

at any time.

 

As long as you have no traceable US Income you'll be fine. If you have savings accounts or other types

of accounts that generate Interest over the min. amount required to file, then File but only declare that

US based inclome. Not what you make Outside the US.

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Posted

The post is to illustrate the topics that American Citizens Abroad is tackling.

 

To take on the US government and IRS, this is a daunting and nobel cause indeed.

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Posted

You're a little late. There was a petition on change.org a few weeks ago about changing this. Not many people signed it for some reason...

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Posted

 

No need to give up your passport. Just stop paying/Filing US tax returns.

 

Failing to File tax returns, and failing to pay any required tax is not grounds for denying a US citizen

a passport.

 

It is grounds, however, for throwing your ass in jail. Which makes the passport sort of moot, doesn't it?

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Posted

If you have US INCOME less than the min. limit you do not have to file. Do you really think the homeless/jobless

with no income are forced to file taxes in the US? I didn't think so. Even if the IRS comes knocking. I have no US Income.

The money I make in Germany is taxed by the Germans, The IRS can't 2x tax me. I also do not make over the limit set

for overseas filing/tax payment. In the end IF I were to file a tax return every column would have a 0.

I would not be required to pay any tax (double taxation) .

 

The worse thing they could get me for is filing a late tax return. Which when I did, they would see that I

don't owe them anything anyway, so not really worth the effort.

 

As for the Jail time, that is only an extreme/last action if YOU OWE TAXES. Not if you don't file. Big Difference.

I suggest you do some more research on the subject.

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Posted

Actually, filing is a requirement for US citizens, residents and even non-resident aliens (like my British step-father who now lives in England). No matter what your income or source. Whether or not you owe anything is irrelevant.

Whether or not your file, or they "catch" you, is something else. I only know of one person who had trouble entering the US for unfiled taxes, and that was a colleague of my step-fathers. Also a non-resident alien.

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Posted

 

 

The worse thing they could get me for is filing a late tax return. Which when I did, they would see that I

don't owe them anything anyway, so not really worth the effort.

 

Please consult a tax professional, but my understanding is that you risk having your deductions disallowed, e.g. Foreign Earned Income credit, foreign tax credit , etc if you don't file.

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Posted

Easy enough.. Simply state you have 0 income..

Again, if filing was mandatory/required and not doing so would lead to jail time and huge fines

then why are there homeless bums on the street in the US? Surly they would be in jail for failing to

file/pay taxes. IRS only wants to go after people they know they can get big $ from. So unless you

have millions sitting in the US, your relatively safe.

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Posted

For a second there, Darkknight, I was going to say that you're absolutely right. It is indeed true that people who earn below a certain specified amount are actually requested *not* to file a return (if you do E-File, it bumps you out :D ). This is true if you're residing in the US. However, I suddenly recall reading a news article the other day about how the US government is doing some bizarre Draconian tax-enforcement measures on its citizens overseas (of course I can't remember now where I read this... and now I'm biting my nails :P ) Anyhow, there've been changes... o.O I think I'd best find out what is going on at the OK Corral :D

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Posted

Ok I being just simple don't quite understand this.

 

If you're a US citizen living in Germany and earning money only in Germany then must you still pay tax in the US or is it only tax payable on what you earn in the US while living in Germany?

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Posted

 

 

I suggest you do some more research on the subject.

 

The research I did involved hiring a US tax attorney who specializes in dealing with American expats in Germany. I don't have to pay US taxes, because the taxes I pay in Germany are deductible.

 

Frankly, I trust the opinion of a tax attorney more than I do the internet.

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Posted

 

No need to give up your passport. Just stop paying/Filing US tax returns.

 

Failing to File tax returns, and failing to pay any required tax is not grounds for denying a US citizen

a passport. Have a read of the law/rules posted here. I know many people who have not filed US taxes

in decades. Myself included. I have never had any problems getting passports and other consular services

at any time.

 

As long as you have no traceable US Income you'll be fine. If you have savings accounts or other types

of accounts that generate Interest over the min. amount required to file, then File but only declare that

US based inclome. Not what you make Outside the US.

 

Actually you need to be very careful with this. Not filing a tax return when required is a criminal action as sucky as it sounds. If you want find yourself needing to renew your passport, you are required to give your social security number. There have been murmurings about not renewing passports if it is found that you have not filed. Also, if you go back to the US after a certain time, any return filed will probably be more likely scrutinized than someone who has been filing. You are required to file year-round income. With the world getting smaller and smaller, don't assume that your income from non-US sources won't eventually be reported. Also, where are you going to deposit your non-US paychecks? In a bank? Right there you are going to have some issues if these banks are reporting to the US.

 

 

Ok I being just simple don't quite understand this.

 

If you're a US citizen living in Germany and earning money only in Germany then must you still pay tax in the US or is it only tax payable on what you earn in the US while living in Germany?

 

With the Foreign Earned Income tax credit or Foreign Earned Income Exclusion credit, you pretty much won't have to pay taxes to both Germany and the US. You just have to file your tax return and claim the credit. The FEIE will allow you to exclude about $95,000 in 2012. Since taxes are higher in Germany than in the US, if you take the foreign tax credit on your earned income in Germany, you also won't have to pay tax to the US. Due to the treaty, you only pay your tax to one country, in this case to your host country.

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Posted

The US is the only country that does this "citizenship-based" taxing.

 

The organization Americans Abroad is engaging high-level officials on these topics right now, at a highly professional level.

 

I recommend taking a look at the website, and support the cause.

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Posted

 

There have been murmurings about not renewing passports if it is found that you have not filed

Murmurings, and not law.. As stated to and linked above. Failing to file/pay taxes is NOT grounds for denying a US citizen a Passport.

Convicted Felons are still able to get passports FFS..

 

 

Also, if you go back to the US after a certain time, any return filed will probably be more likely scrutinized than someone who has been filing.

Highly doubtful. The IRS only audit like 2% of all returns. If asked why you havent filed, tellem you fell on hard times in Europe, and were homeless and had no way of getting back to the US till now. Or come up with your own sob story.

 

 

You are required to file year-round income.

Again, what about all the homeless bums on the streets of the US. If they really enforced this as often as everybody thinks, then all of these people would be in Jail. But they arn't.

 

 

With the world getting smaller and smaller, don't assume that your income from non-US sources won't eventually be reported.

Also, where are you going to deposit your non-US paychecks? In a bank? Right there you are going to have some issues if these banks are reporting to the US.

This is just fear Mongering. EU Privacy/banking laws prevent such things. The current laws would need to be rewritten first and we all know how long that takes.

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