80k Tax exemption

[Bacchus9]

Thanks the advice Moore, although I don't believe I'll take it all.

I have now read Pub 54 which is much more explanatory than a previous IRS doc which made it appear that the foreign tax home was something that required proof. Pub 54 seems to say "look in your pants and if you see that you're in them and you're located in a foreign country you have a foreign tax home". I'll certainly be putting it in front of my tax accountant on Monday, that he might fry in his own oil.

I'm not inclined to go into my circumstances further in a public forum. But I'll maintain the montributo as I'm still here without a DNI. While I'm waiting for one and active here I would prefer to be in a position of having paid something should it ever become an issue than to appear to of never considered it. The tax amount prescribed is peanuts.

I'm well aware of the white and black nature of transactions here and do have associates in small business paying taxes taking advantage to be on the black where possible.

This is not an attempt to end the conversation but is how I look at it.

[Moore]

Bacchus9,

Some of this is useful data but why on earth would you willfully register as a self-employed taxpayer / sole-proprietor (monotributista) in Argentina and, worse yet, volunteer to pay taxes? I have a CUIL issued by the AFIP which is simply 20 – My DNI# - 3 which is more or less a social security number that is required to work legally as an employee. But employers are fully responsible for withholding and paying employees' social taxes, income taxes, etc. Most probably don't since over 50% of the nation's economy is/was "in black" (off the books) IIRC. The majority of people don't pay taxes in Arg.

If you have not yet registered as monotributista then I advise you not to. If you have, then I suggest you try to cancel your registration immediately. You simply don't need it and are just asking for problems from tax authorities. Off the record, my advice to most expats/immigrants here is to pay the 0.5% asset tax on any owned real estate (apparently the only verifiable individual tax and tax base that gets any real respect in Argentina) and ignore the rest of the taxes like most natives do. If you're opening a business in Argentina with an office, local employees, and other verifiable local cost bases then my advice is different but that's not the case for most.

The information you posted about obtaining the CDI is useful for many since it is required for certain transactions/procedures for foreigners that don't have a DNI.

However, fire your US accountant and RTFF. How many times must we clearly state on this thread that the only requirement for obtaining the 83k foreign earned income exclusion is your physical presence in a foreign country for >330 full days per year. That's it, nothing more. It's real easy. For the 10th time, it doesn't matter where the income is earned or paid and it surely doesn't matter if you're paying taxes to a foreign country, registered or not, or if you have a "foreign tax home". That is all irrelevant and I have no idea how your accountant would come up with such a ludicrous idea which could potentially cause a costly/endless nightmare for you since you are now apparently registered as a paying monotributista in a very dodgy system that may decide to extort money from you every year. Jesus that was some horribly stupid advice from your clueless accountant. There are many simple ways to evidence that you did or did not reside in a foreign country for the required period in the unlikely event that the IRS doubted your claim.

Again, the foreign earned income exclusion is very simple, crystal clear, and has been posted numerous times on this thread. The actual regulation can be verified instantly in the IRS website (Pub 54) which has also been posted previously/recently.

[El Perro]

Bacchus9,

Thanks alot for the post. God knows how time and trouble you saved me. You looked like Matt Snell going through the line there.

[Bacchus9]

First let me state that I don't pretend to be qualified to speak in general about the, now, $82,500 income exclusion. But I have just become an expert at volunteering to pay taxes in Argentina so my accountant would file for the exclusion which to him meant proving that Argentina was my tax home and essentially that I was registered and paying taxes here. The trade off, paying a nominal tax and getting the huge exclusion didn't take a lot of contemplating to comply with his requirement - as "by the books" as it seemed to be.

You can register to pay taxes here with only a passport and two bills with your name. To start the process requires that you obtain a CDI at the AFIP office your address is registered in. Getting the CDI requires providing original copies of two documents with your name on them, e. G. Phone and Fibertel. Once you have the CDI you can register as a Monitributo (a category for small tax payers) There is a Monotributo form (#183) plus again the passport, a copy of the passport, the originals of two bills or bank account plus a copy with your name and address and the completed Monotributo form in duplicate. You'll also need a keyword and password so that you can complete the process online using your CDI number. You must create a keyword and password online at the AFIP website, then download the form for enrolling your keyword / password from the AFIP website. Fill it out, take it to AFIP where they'll enter you in the computer and your keyword / password will work.

**Get CDI, set up keyword password, get Monitributo established, then.

The last step is getting Adhesion, which means getting yourself classified in a tax category and a tax rate. Once you've completed all of the above you enter the AFIP website, use your keyword / password, elect Monitributo, fill out the forms online with various bits of information, select an Obra Social (which appears to be the union of the type of work you do) and when all entered you'll receive a verification with a tax bill. The website has collected all your information and determined your tax payment which can then be paid online or in person at designated locations. You start paying after you get the rest of your new keyword for making payments in the mail within 5 weeks.

##Very important. The AFIP civil service workers and the AFIP website give you the impression that you can complete the Monotributo Adhesion aspect from any computer, but in fact after trying with 4 different browsers on my own computer and going to Locutorios I discovered that only designated Locutorios are "open" to completing the Monotributo Adhesion form. Everything else is blocked or disfunctional. The Telefonica Locutorios are not blocked and you can complete the process and print out your tax formula there.

You can generate your first AFIP keyword / password from any computer it seems. After that find a Telefonica Locutorio to complete the Monotributo.

[Moore]

"that figure rises to $82,400 for this year -- but income above that level is now typically subject to higher effective tax rates than before."

It doesn't explain how or why this is true.

I don't get it either. Possibly you have to remove the exclusion for calculating your tax bracket(s). The WSJ columnist wrote it almost as good as I would have if I didn't know what I was talking about. As JFK said - words can always be explained away, numbers can't.

[Dickhead]

I don't subscribe so why don't you be a nice guy and tell us why?

[Dickhead]

"that figure rises to $82,400 for this year -- but income above that level is now typically subject to higher effective tax rates than before."

?

It doesn't explain how or why this is true.

[El Perro]

Hunt, ask and you will receive:

Thanks Ba Luvr.

[BA Luvr]

Hunt, ask and you will receive:

[Dickhead]

Unlike the standard deduction and the personal exemption, the foreign earned income exemption is not indexed for inflation and needs an actual change in law to move it. The Social Security base was pegged at a rate exceeding inflation under a bill passed during the Clinton administration in '93 or '94 or so; it's inflation plus some factor I can't recall. Maybe inflation plus 100 basis points, or something like that.

Since I work for a state government, and it has a separate retirement program, I don't have to pay the 6.2% Old Age, Survivors' and Disability Insurance (OASDI) component of Social Security. I only have to pay the 1.45% Medicare portion. That's the only US tax I pay.

[Hunt99]

Changes afoot in the subject thanks to the new tax bill. Exemption goes to 82K, but taxation of income of expats to get greater. If somebody has access to the online version of Wall Street Journal, why not post it here. It's in today's print edition.

[Moore]

MAG,

The exclusion hasnt moved much. I think when I started using it about 5 years ago it was maybe 74k, but Id heard that it has been in the 60s-70s for decades. Compare that the ceiling for 1.45% Medicare taxes - I think I remember not so long ago it was in the 60s and is now approaching 100k.

IIRC, foreign employees in Arg must demonstrate that they are covered by a foreign social security system in order to avoid local ss taxes, but the exemption only lasts for 2 years. Didnt you answer your own question about avoiding US ss tax - apparently you did?

If I were not a US citizen I would like to have a green card. People die for them.

[MiddleAgeGuy]

What ever happened to inflation for the $80k. Seems like it has been stuck there for a long time. I think it was $60 or 70k about 35 years ago.

Regarding social security, I had worked and lived in the US for a couple years and avoided paying the social security and medi by evidencing I was paying a similar type plan in another country. Saved me thousands each year and I was dreading the immanent green card which would have forced me into the US system. Left with a week to spare on that one.

I know that in ARG you have to pay their equiv. If you work in the system so, does the US give you a holiday on social sec and medi if you can prove you are paying it elsewhere?

MAG

[Moore]

"Emailed my accountant in Miami today with some questions about the 80k tax exemption. She is not an expert in international tax questions, and expressed some concern that I might not be eligible given that while I am IN BA, I am working for companies in the US."

That is absolutely pathetic and you need a new accountant.

For once I fully agree with Dickhead. I'm not sure what's more pathetic - her not knowing about this simple rule or her being too lazy to take 5 minutes to get off her fat American Warhog ass (actually no need to leave her desk) and look it up on the internet. Both very pathetic, but probably the latter is worse. And she is based in international/expat hub Miami, Jesus.

I hope you're not paying her more than minimum wage. Actually 70% of minimum wage and one blowjob/week.

[Moore]

"If you are employed, you can send a simple letter to your US employer and have them stop witholding income tax from your paycheck until you hit the annual 80k exclusion"

True, but not until the year after you leave the country (the second year you are eligible for the exclusion), because the rule says something like "you had zero taxable income last year and expect zero taxable income this year." I'll go check the W4 and see exactly how it's worded.

I had the witholding adjusted just a few months after moving to BA. But what do I know, that was my bean counter's call. He signed the returns.