Is overseas taxation on the way out for US persons?

[ChiangMaiLightning2143]

 

The new tax bill has created a burden/loophole intended for big companies like Apple

that individuals will have no feasible way to comply with. Looks like the law may be revisited 

in upcoming legislation before the house. Not having to file a return would be nice for some but I have I have never considered

tax law a burden as tax equalization treaties prevent double taxation.

 

 

http://www.internationalinvestment.net/products/tax/american-expat-groups-turn-heat-us-lawmakers-tax/

 

 

[Crash999]

There’s credit for tax paid overseas and a fixed gross deduction. But for people working in places like Singapore or HK at higher level jobs they get slammed by the requirement to pay both local and US taxes as the rates there are lower than the US. And no company is going to pay an American more than a Brit or someone else just because they have to pay extra US taxes. 

[Srikcir]

22 minutes ago, Crash999 said:

And no company is going to pay an American more than a Brit or someone else just because they have to pay extra US taxes. 

Isn't the Section 965 transition tax applied to American ownership of an overseas company and, thus, NOT applied to overseas salary? 

From cited link in Post #1:

• The transition tax is defines as  “a tax on the un-taxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States”.
• It requires American citizens who own as little as 10% of an overseas business

Certainly if the American is a shareholder in a foreign company and beneficiary of pass-through profits (ie., dividends, partnership interests), the tax will apply to the individual's pass-through income and it would seem that the foreign income exclusion would not apply. But such law appears to have no connection with that same individual earning a salary from said foreign company. Perhaps that should be definitized in the proposed law/regulation.

 

[DrPhibes]

Had a real hoot this last tax season trying to comply with the transition tax notices that clients were getting from companies they were invested in.  There literally was no form and the instructions were at best sketchy on how to comply (and the penalties for non-compliance) were draconian.  This and other disconnects (that the IRS is trying to work out before filing season next year) are what you get when you pass the largest overhaul of the US tax system behind closed doors, last minute, handwritten illegible laws written in the margins, without first seeing if all the gears mesh.  It is August and some of the biggest aspects of the law changes for 2018 and forward are just now coming out as complex to follow IRS regulations.  The last time a major overhaul was done, the laws were constructed in full view and over time before implementation to avoid this kind of crap.

Edited August 16, 2018 by DrPhibes
grammer

[Thaidream]

The most ridiculous tax law I have ever read.  The US tax code is over 75,000 pages of pure gobbledygook- the average  American cannot understand it or comply with it.  Most Americans have to purchase a computer guide to even file their taxes or get an accountant.  The politicians who actually write the law are as worthless as the IRS who tries to carry out the provisions of the law.

 

Try calling the IRS itself to get a straight answer on how to apply certain aspects of  the tax law and get several different answers - chose one- then get audited  and have to pay again . The  new tax law which Trump insists can be done on a postcard size piece of paper is a sham- there are  many attachments that need to be filled out to comply.

 

This isn't fair or equitable taxation- it's madness.

[milwaukeeboy]

Taxation is theft.

 

[Srikcir]

3 hours ago, Thaidream said:

Try calling the IRS itself to get a straight answer on how to apply certain aspects of  the tax law and get several different answers

To be fair the IRS does not give tax advice.

You may get different answers for the same question but that doesn't mean any answers were incorrect - only that quite possibly each Taxpayer Service Representative gets different information from the same caller. If a caller asks "What should I do if ...", the TSR should decline to answer. That would be giving advice.

[smotherb]

7 hours ago, Crash999 said:

There’s credit for tax paid overseas and a fixed gross deduction. But for people working in places like Singapore or HK at higher level jobs they get slammed by the requirement to pay both local and US taxes as the rates there are lower than the US. And no company is going to pay an American more than a Brit or someone else just because they have to pay extra US taxes. 

Well, they may not pay Americans more because of taxes, but I'd wager the average American gets paid more than the average Brit--UK salaries are only 75% of US salaries for service personnel and only 60% of US salaries for management https://www.msn.com/en-gb/money/personalfinance/the-30-countries-with-the-highest-paid-workers-in-the-world/ss-BBH1WzI#image=23

[davidst01]

9 hours ago, Thaidream said:

The most ridiculous tax law I have ever read.  The US tax code is over 75,000 pages of pure gobbledygook- the average  American cannot understand it or comply with it.  Most Americans have to purchase a computer guide to even file their taxes or get an accountant.  The politicians who actually write the law are as worthless as the IRS who tries to carry out the provisions of the law.

 

Try calling the IRS itself to get a straight answer on how to apply certain aspects of  the tax law and get several different answers - chose one- then get audited  and have to pay again . The  new tax law which Trump insists can be done on a postcard size piece of paper is a sham- there are  many attachments that need to be filled out to comply.

 

This isn't fair or equitable taxation- it's madness.

thank god Im not american

[RocketDog]

Oh, if only the OP was correct.

No tax will ever or anywhere be revoked.

The entire world is swimming in fiat currency and debt, with public debt to GDP ratios being significantly greater than 1. In Japan's case, greater than 2!

 

As has always been the case for thousands of years, governments will fleece their citizenry to pay those debts when the wheels finally fall off this parody of a global economy. And to be clear, it wiil not be and never has been the poor or the rich who will pay the bills.

Batten down the hatches Mates, a storm she is acomin'.

 

[ChiangMaiLightning2143]

The Japanese are in a hole they can't get out of without mass immigration, and that won't be allowed.

Since a few years ago global income is taxed, but the threshold is high.

The countryside is 25 percent empty houses, the owners died. Nobody want them and the tax burden.

 

https://www.japantimes.co.jp/community/2016/10/30/how-tos/long-term-foreign-japan-residents-must-declare-overseas-assets-taxed/#.W3Z5OK3wdz8

[mogandave]

There’s credit for tax paid overseas and a fixed gross deduction. But for people working in places like Singapore or HK at higher level jobs they get slammed by the requirement to pay both local and US taxes as the rates there are lower than the US. And no company is going to pay an American more than a Brit or someone else just because they have to pay extra US taxes. 

Many American companies will absolutely gross up your wages to cover the double taxation.

[Crash999]

1 hour ago, mogandave said:

 

Many American companies will absolutely gross up your wages to cover the double taxation.

 

Lucky them! Unfortunately the companies I’ve worked for (including an American one) in HK had no such policy. One could ask for tax relief but it would just be considered part of your compensation package. 

[mogandave]

Lucky them! Unfortunately the companies I’ve worked for (including an American one) in HK had no such policy. One could ask for tax relief but it would just be considered part of your compensation package. 

Well yes, it is considered part of you compensation package because it is part of your compensation package.

Tax equalization is a common component of any competitive package which typically includes the company doing both the Thai and US taxes as well.

[Crash999]

13 hours ago, mogandave said:

 

Well yes, it is considered part of you compensation package because it is part of your compensation package.

Tax equalization is a common component of any competitive package which typically includes the company doing both the Thai and US taxes as well.

 

In my experience tax equalization only applies to expats who are being transferred to HK. If the position is being recruited locally then the budget for the position will be the same, whether the candidate is a Brit or American or other nationality. 

 

If an American pushes for a certain amount to be earmarked for tax equalization then it’s the same as people from other countries asking for more cash. Ultimately it’s the candidate who winds up paying for it. 

[Crash999]

On 8/16/2018 at 4:44 PM, smotherb said:

Well, they may not pay Americans more because of taxes, but I'd wager the average American gets paid more than the average Brit--UK salaries are only 75% of US salaries for service personnel and only 60% of US salaries for management https://www.msn.com/en-gb/money/personalfinance/the-30-countries-with-the-highest-paid-workers-in-the-world/ss-BBH1WzI#image=23

Within the US vs within the UK yes. But when recruiting overseas the hiring company isn’t going to pay more just because the applicant has a US passport. If the budget for the position is capped at a certain amount then that’s what the company will pay regardless of nationality. 

[smotherb]

1 hour ago, Crash999 said:

Within the US vs within the UK yes. But when recruiting overseas the hiring company isn’t going to pay more just because the applicant has a US passport. If the budget for the position is capped at a certain amount then that’s what the company will pay regardless of nationality. 

I doubt it is because of the passport; rather because of the standard wages paid. Brits will work for less because they are used to getting paid less.

[mpyre]

On 8/16/2018 at 12:20 AM, Thaidream said:

The most ridiculous tax law I have ever read.  The US tax code is over 75,000 pages of pure gobbledygook- the average  American cannot understand it or comply with it.  Most Americans have to purchase a computer guide to even file their taxes or get an accountant.  The politicians who actually write the law are as worthless as the IRS who tries to carry out the provisions of the law.

 

Try calling the IRS itself to get a straight answer on how to apply certain aspects of  the tax law and get several different answers - chose one- then get audited  and have to pay again . The  new tax law which Trump insists can be done on a postcard size piece of paper is a sham- there are  many attachments that need to be filled out to comply.

 

This isn't fair or equitable taxation- it's madness.

The US income tax code has been a joke since inception, not only under Trump. As you say, 75,000 pages long, and the entire thing designed to provide cover for  political insiders and beauraucrats to hand out cash to favored groups and industries.

We could easily junk the entire tax code and all current Federal taxes, and adopt a three-bracket system of say 10, 20, and 30% with NO deductions, NO tax-exempt interest, NO depreciation, and enjoy a simple, effective and, most importantly, TRANSPARENT tax system...add in a 10% VAT and the government would take in more and most people would pay less. Billions in tax preparation and compliance costs saved. People overseas no longer pulling their hair out.

But the Tax Goodies handed out by Congess would end...and we can't have that!

The tax system described above is common sense... unfortunately common sense isn't too common in government, anywhere in the world.

[mogandave]

The US income tax code has been a joke since inception, not only under Trump. As you say, 75,000 pages long, and the entire thing designed to provide cover for  political insiders and beauraucrats to hand out cash to favored groups and industries.
We could easily junk the entire tax code and all current Federal taxes, and adopt a three-bracket system of say 10, 20, and 30% with NO deductions, NO tax-exempt interest, NO depreciation, and enjoy a simple, effective and, most importantly, TRANSPARENT tax system...add in a 10% VAT and the government would take in more and most people would pay less. Billions in tax preparation and compliance costs saved. People overseas no longer pulling their hair out.
But the Tax Goodies handed out by Congess would end...and we can't have that!
The tax system described above is common sense... unfortunately common sense isn't too common in government, anywhere in the world.

Are you a US citizen?

Clearly “most” people would not pay less federal tax because almost half pay nothing now.

Adding a 10% VAT would devastate the working poor.

I’m all for tax reform, but selling it claiming most people will pay less is a non-starter.