U. S. Taxes on Worldwide Income

[Daddy Rulz]

Does anyone know of many examples of people who gave up their US citizenships and then changed their minds?

Lee Harvey Oswald tried to really hard but the Consulate wouldn't let him. It's a really bizarre story (Not tin foil tophat conspiracy theory bizarre, just run of the mill bizarre) http://www.archives.gov/research/jfk...pendix-13.html#soviet Starting at the bottom of page 692 and continuing on page 693.

He walked into the embassy and tried to renounce his citizenship and they told him "Come back Monday you can do it then." I wonder if they had a sign;

"Disenfranchisements processed Mon.-Thur ONLY."

[Tres3]

The second method is the bona fide residence test. I have never researched what the IRS means by brief trips to the US, but I suspect there are more days allowed than under the physical presence test.

When I was a legal resident of Costa Rica, the test was residency, not travel. One could travel, as I did, to the USA quite often; however, I imagine that if you over do it, the taxman will come after you. One warning is that many countries require paying their taxes as a condition of residency. Foreign country taxes are often more onerous than USA taxes.

Tres3.

[Dccpa]

Were you planning on renouncing US Citizenship? You may need to think again, if you ever want to set foot in the USA. That's if this amendment to the immigration bill is passed, and if you exceed certain threshholds for income or net worth:

http://www.reed.senate.gov/news/rele...ntering-the-us

And if you already expatriated and renounced and this becomes law? Well, you may be screwed.

I wouldn't worry about that bill because even if it became law, it wouldn't apply to most of us anyway. And if things get very bad in America, they would welcome your money if you wanted to come back. That is if you want to come back. Does anyone know of many examples of people who gave up their US citizenships and then changed their minds? Personally, I would rather arrange things to legally avoid most US taxation and keep my citizenship.

[Dccpa]

However, if you are a US citizen and you are physically out of the country for 330 complete days in any 365 day period, you can exclude income earned Up to the amount of $95, 100 in 2012 from income taxation (but not from OASDI as Fred points out). This number is indexed for inflation. This is true whether you are self-employed or an employee. This saved me about $80, 000 over the time I lived in Argentina and another $5 or $10k when I was in the UK and Spain. And if you have no taxable income, then create some in an amount equal to what you can wipe out with the personal exemption and the standard deduction ($10, 000 combined for 2013) by converting your IRA to a Roth IRA. That means that money will never get taxed. I made out even better than this because my job was not covered under Social Security so all I had to pay was the 1. 45% Medicare tax. I would have maybe 3 or 4 more years to work if it were not for that tax provision.

Anyone deciding to become a legal resident of Argentina (I never did that even though I was there for most of seven years) needs to think very carefully about the tax ramifications of doing so. I was working over the internet so was never on the Argie radar but they are definitely looking to increase their tax enforcement substantially.

Here is a link to a good article on this issue.

http://taxes.about.com/od/taxhelp/a/ForeignIncome.htm

There are two ways to qualify and Dickhead is referring to the physical presence test. The second method is the bona fide residence test. I have never researched what the IRS means by brief trips to the US, but I suspect there are more days allowed than under the physical presence test.

[Tiny12]

Were you planning on renouncing US Citizenship? You may need to think again, if you ever want to set foot in the USA. That's if this amendment to the immigration bill is passed, and if you exceed certain threshholds for income or net worth:

http://www.reed.senate.gov/news/rele...ntering-the-us

And if you already expatriated and renounced and this becomes law? Well, you may be screwed.

[Dickhead]

However, if you are a US citizen and you are physically out of the country for 330 complete days in any 365 day period, you can exclude income earned Up to the amount of $95, 100 in 2012 from income taxation (but not from OASDI as Fred points out). This number is indexed for inflation. This is true whether you are self-employed or an employee. This saved me about $80, 000 over the time I lived in Argentina and another $5 or $10k when I was in the UK and Spain. And if you have no taxable income, then create some in an amount equal to what you can wipe out with the personal exemption and the standard deduction ($10, 000 combined for 2013) by converting your IRA to a Roth IRA. That means that money will never get taxed. I made out even better than this because my job was not covered under Social Security so all I had to pay was the 1. 45% Medicare tax. I would have maybe 3 or 4 more years to work if it were not for that tax provision.

Anyone deciding to become a legal resident of Argentina (I never did that even though I was there for most of seven years) needs to think very carefully about the tax ramifications of doing so. I was working over the internet so was never on the Argie radar but they are definitely looking to increase their tax enforcement substantially.

[Silver Star]

I don't follow the political thread much any more, but I'm glad I saw this post. Kudos B Shirt.

I haven't watched CNBC in years and haven't missed it. I stick all my money in a cookie jar, and I don't have to endure that pedophile on Friday mornings with his USA flag lapel pin.

I'm an American citizen who has a small business here in Argentina, and I am absolutely required to file a return and pay 15.3% self employment tax on net income. This is in addition to paying Argentine national and City Taxes.

[Morgando69]

So does Argentina if you are a resident. Well it tries to tax it.

Not the correct forum for this question, but the US taxes its citizens on worldwide income.

[Dccpa]

For those of you who reside in Argentina, do you still pay taxes to Uncle Sam? If so, is it because you maintain your bank account in the states?

Not the correct forum for this question, but the US taxes its citizens on worldwide income.

[Tres3]

For those of you who reside in Argentina, do you still pay taxes to Uncle Sam? If so, is it because you maintain your bank account in the states?

It does not matter whether or not you reside in a foreign country if you are a USA Citizen. Unless the IRC specifically exempts you, every USA Citizen is required by law to file a return. Whether or not you pay tax to Uncle Sam, depends on a number of factors; however, you still must file a return.

Tres3

[Chicago Guy]

Romney never said that he didn't care about the 47% that are the net benificaries of the taxes that the rest of us have to pay.

The reality is that the 47% don't care about Romney (or the rest of us taxpayers either, for that matter.)

For those of you who reside in Argentina, do you still pay taxes to Uncle Sam? If so, is it because you maintain your bank account in the states?

[Wild Walleye]

Westy:

Good points that reinforce the primary interest of the US Govt when it comes to citizens' foreign assets and income: they want to be able to collect every dime of taxable income you earn as well as other taxes (estate tax, etc) that you may some day owe. In order to collect, they need to know at whom they should be looking.

Dogboy's initial post on the subject was driven by some written reaction to the enactment of "H. R. 2847, the Hiring Incentives to Restore Employment (HIRE) Act" on March 18, 2010 by President-for-life Obama. While I am confused (not really) about why would something aimed at domestic policy with a title including "Hiring Incentives," would include a number of international tax provisions, never the less they are there.

The existing $10k transaction threshold is derivative of efforts, clothed in anti-drug garb, geared towards identifying and stopping money laundering. Whilst those purposes were part of the design, the byproduct that it helps the IRS identify citizens that might have unreported foreign income was not coincident. Additionally, the IRS wants to find citizens with fungible assets in excess of $50k, anywhere offshore, that may not be snared by the $10k transaction net, and then look to see what else they might have offshore or might have earned offshore.

At the same time, while a direct investment in foreign real estate isn't a taxable event, income earned on such an investment is taxable as are transfers of property whether financial or non-financial in nature.

[Westy]

The May 2010 International Living magazine has an article that refers specifically to "foreign real estate" and the IRS, written by an economist with Casey Research. As the author puts it:

A direct investment in foreign real estate is free of any special U. S. Tax or reporting rules. It's just like buying a farm in Kansas. It would also present added difficulties for a lawsuit creditor looking for ways to collect. And it is unlikely that any regime of foreign exchange controls would touch existing foreign real estate investments.

Foreign real estate can also pay you a psychological divident. Knowing you have a place to go provides a sense of security.

Money in financial accounts does have to be reported if you have an aggregate total of US $10,000 or more in deposit offshore. That would include bank accounts, certificates of deposit, annuities, brokerage accounts, mutual funds and whatever else of the same sort. Physical assets, though, whether real estate or a stash of Krugerrands, are exempt from reporting requirements.

I read the other day in some expat site that for the 2010 tax year the USA will tax foreign "assets" of over $50,000. The "assets" weren't defined and maybe this is a work in process, something floated by somebody, or one hopes, complete bullshit. My guess is that there is probably some truth in it given the US's history of chasing their expat community all over hell and back for as much money as possible. The IRS has reportedly stepped up their monitoring of expats with foreign bank accounts over the past year, and some aspects of the Patriot Act make it easier for expats to be fucked with for no good reason, other than the IRS getting their hands on more dinero.

I wouldn't give much of a shit about this (just more of the same) but I've been thinking about buying a place here in BsAs. My guess is that real estate would be the "asset" most likely to be taxed by Unkie Sam.

Does anybody have some insights into this? Maybe the boring asshole who spent over 200 large on some hooker has some info about it.

Cheers,

Dogg

[Wild Walleye]

Seems as though you have it down.

I have done business in a few far-off places and have investigated some different approaches to receiving the income as well as owning interests in foreign companies. That said, I am no expert and rely on real pros when setting up new ventures or dealing with foreign income.

Income, in whatever form it comes in, is almost always going to be taxable in the eyes of the IRS. However, there are various, legal means through which one can delay or lessen the impact of the tax bite. Generally, the goal is to legally delay the date upon which the tax becomes due as opposed to eliminating the tax obligation entirely (although that would be nice) The longer you hold onto the cash, the longer you can invest it and make more money off of it. With certain trust structures, you can delay the tax indefinitely.

[El Perro]

Is not so much for a blanket tax on said assets, as it is a red flag for finding people who have been harboring taxable income abroad

Seems as though you have it down. Here is the response from my accountant:

"Thanks for the link. This is referring to "financial assets" and as stated the internal revenue service is still vague on its definition. It is my understanding that this is related to the foreign bank account reporting requirements, as opposed to tangible assets such as real estate. With the foreign bank account reporting requirements there is currently a $10k threshold but this definition does not include accounts such as mutual funds (has always been vague and even more so with the recent scrutiny that has been placed on these filings) held in a foreign country which is what this "financial asset" definition is set to include. This would not be a tax on the value of this asset rather a reporting requirement so that big brother can know what is going on everywhere at all times. I will keep you up to date as I hear anything further, but you are correct the IRS is ever changing and you never know what to expect."