US mandatory health coverage

[brianp0803]

If we are in Thailand 330 days a year are we exempt?

Now when I take trips to America I buy round trip originating in Thailand.

Is the 330 daya time outside America or time inside Thailand.

I wasn't sure if holidays (round trip from Thailand to America or other countries) used part of the 330 days.

[Langsuan Man]

If you are referring to the Affordable Care Act (aka, Obama care) your are exempt since you are outside of the US for the majority of the year, and vacations returning to the US, don't count BUT, I sure wouldn't go back to the US without any insurance for any period of time. You would be best off to purchase trip insurance just to be prudent

If you are old enough you would be automatically covered for hospitalization through Medicare but that would not be enough coverage, IMHO

[brianp0803]

If you are referring to the Affordable Care Act (aka, Obama care) your are exempt since you are outside of the US for the majority of the year, and vacations returning to the US, don't count BUT, I sure wouldn't go back to the US without any insurance for any period of time. You would be best off to purchase trip insurance just to be prudent

If you are old enough you would be automatically covered for hospitalization through Medicare but that would not be enough coverage, IMHO

I usually go back for 3 weeks but I heard my Mom's health is declining and may go back twice this year.

I should investigate how to get travel insurance.

Not old enough for medicare.

[ClutchClark]

How does the IRS determine whether we actually live outside the USA?

The US Govt. determines if we officially live outside the USA in one of 2 ways. In the simplest case, to qualify for the ACA Foreign exclusion:

*~ We can be outside of the the USA for at least 330 days in a calendar year to qualify. This is known as the Physical Presence Test to prove that we are NOT residents of the USA for IRS and ACA purposes.

or

*~ We must qualify under IRS requirements to be a bona fide resident (permanent resident) of a foreign country. http://www.irs.gov/pub/irs-pdf/f2555.pdf

Key parts of meeting the IRS requirements for qualifying as a bona fide resident of another country, are covered by IRS Form 2555, Question 13:

13 a. Have you submitted a statement to the authorities of the foreign country where you claim bona fide residence that you are not a resident of that country? See instructions. Yes or No

(13) b. Are you required to pay income tax to the country where you claim bona fide residence? See instructions. Yes or No

If you answered Yes to 13a and No to 13b, you do not qualify as a bona fide resident. Do not complete the rest of this part.

For more details, see: http://www.irs.gov/pub/irs-pdf/p54.pdf and http://www.irs.gov/publications/p54/ch01.html

As we can see, we must be residents of another country to qualify which points to Residente Temporal and Residente Permanentes only qualify for the EXEMPTION if they are out of the USA more than 330 days, in this year or past years.. while VISITORS on 6 month visas who are not required to pay income taxes in Mexico owe for ACA insurance coverage or pay the IRS penalty. for those with TIP cars and Visitors/visitante visas.

http://yucalandia.com/living-in-yucatan-mexico/aca-obamacares-effects-on-american-expats-living-abroad/#330%20day%20physical%20presence%20test

[ClutchClark]

Its not as simple as some may think, after all, we are tslking about the IRS ;-)

The answer to your question would be largely dependent on your "residency filing status" and your AGI. If you had minimal reportable income for tax year 2024, then it might be simpler to be excluded based on that rather than trying to prove "non-residency".

http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision

12. Are US citizens living abroad subject to the individual shared responsibility provision?

Yes. However, U.S. citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period. In addition, U.S. citizens who are bona fide residents of a foreign country (or countries) for an entire taxable year are treated as having minimum essential coverage for that year. In general, these are individuals who qualify for a foreign earned income exclusion under section 911 of the Internal Revenue Code. Individuals may qualify for this rule even if they cannot use the exclusion for all of their foreign earned income because, for example, they are employees of the United States. Individuals that qualify for this rule need take no further action to comply with the individual shared responsibility provision during the months when they qualify. See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for further information on the foreign earned income exclusion.

U.S. citizens who meet neither the physical presence nor residency requirements will need to maintain minimum essential coverage, qualify for an exemption or make a shared responsibility payment for each month of the year. For this purpose, minimum essential coverage includes a group health plan provided by an overseas employer. One exemption that may be particularly relevant to U.S. citizens living abroad for a small part of a year is the exemption for a short coverage gap. This exemption provides that no shared responsibility payment will be due for a once-per-year gap in coverage that lasts less than three months.

[metisdead]

^^^^ We already have to be worried about a tax year 10 years in the future?

If you had minimal reportable income for tax year 2024

[brianp0803]

I live in Thailand and pay taxes in Thailand.

I don't earn a lot as a teacher here. (Less than $24,000 a year)

Have insurance through the school.

I was not sure when it talked about vacation not counting.

If I spend 36 days on vacation in America does this mean I loose my federal tax exemption.

I still need to pay California tax. They don't care whete I live they will always considered me a resident. (Mom lives there). I have a bank account with mail going to a California address.

Edited October 11, 2014 by brianp0803

[ClutchClark]

I live in Thailand and pay taxes in Thailand.

I don't earn a lot as a teacher here.

Have insurance through the school.

I was not sure when it talked about vacation not counting.

If I spend 36 days on vacation in America does this mean I loose my federal tax exemption.

I still need to pay California tax. They don't care whete I live they will always considered me a resident. (Mom lives there). I have a bank account with mail going to a California address.

If you spend 36 days on vacation in America (are physically present in America for 36 days then:

Subtract 36 from 365 days in a year and the result is 329 days.

329 days is less than the 330 days minimum required by the IRS. (Leap Year may be the exception).

Second approach is based on your reportable income on your Federal & CA State Income Tax forms. Technically, anyone who makes less than $14,856 per year are exempt from Obamacare.

[ClutchClark]

Also consider the penalty for 2014 is quite low if your reportable income and AGI was low:

Calculating the Penalty

For 2014, the tax is the greater of a) 1.0 percent of income (net of specified deductions) or $95 per adult plus $47.50 per child, up to a maximum of $285 per family. However, the penalty is capped at the average cost of a bronze level health plan .

In layman's terms, the penalty is 1% of your "Taxable Income" (Taxable income is adjusted gross income minus allowances for personal exemptions and itemized deductions) or $95, whichever is greater.

So you have 3 options:

1) Claim you were not physically present in the US for 330 days (including proof).

2) Claim exemption based on income less than $14,856 (gross).

3) Pay $95 or 1% of "Taxable Income".

Clear as mud?

[brianp0803]

Proof?

Scan my passport?

Working for Thai company reported income is honor system but with the exclusion there is nothing to loose.

I am slowly converting my IRA to ROTH but I think that doesn't count as income (but pay taxes on it - but Thai income doesn't raise my federal tax bracket)

Penalty of 1% of net income on gross income over $14,856 would usually be more than $95.

I meet the 330 days.

But also have health coverage through my school.

[ClutchClark]

Proof?

Scan my passport?

Working for Thai company reported income is honor system but with the exclusion there is nothing to loose.

I am slowly converting my IRA to ROTH but I think that doesn't count as income (but pay taxes on it - but Thai income doesn't raise my federal tax bracket)

Penalty of 1% of net income on gross income over $14,856 would usually be more than $95.

I meet the 330 days.

But also have health coverage through my school.

Brian, I have provided you all the relevant information and options available to you. At this point you need to research those options and make your own "informed" decision.

Best of luck.

[Suradit69]

How does the IRS determine whether we actually live outside the USA?

The US Govt. determines if we officially live outside the USA in one of 2 ways. In the simplest case, to qualify for the ACA Foreign exclusion:

*~ We can be outside of the the USA for at least 330 days in a calendar year to qualify. This is known as the Physical Presence Test to prove that we are NOT residents of the USA for IRS and ACA purposes.

or

*~ We must qualify under IRS requirements to be a bona fide resident (permanent resident) of a foreign country. http://www.irs.gov/pub/irs-pdf/f2555.pdf

Key parts of meeting the IRS requirements for qualifying as a bona fide resident of another country, are covered by IRS Form 2555, Question 13:

13 a. Have you submitted a statement to the authorities of the foreign country where you claim bona fide residence that you are not a resident of that country? See instructions. Yes or No

(13) b. Are you required to pay income tax to the country where you claim bona fide residence? See instructions. Yes or No

If you answered Yes to 13a and No to 13b, you do not qualify as a bona fide resident. Do not complete the rest of this part.

For more details, see: http://www.irs.gov/pub/irs-pdf/p54.pdf and http://www.irs.gov/publications/p54/ch01.html

As we can see, we must be residents of another country to qualify which points to Residente Temporal and Residente Permanentes only qualify for the EXEMPTION if they are out of the USA more than 330 days, in this year or past years.. while VISITORS on 6 month visas who are not required to pay income taxes in Mexico owe for ACA insurance coverage or pay the IRS penalty. for those with TIP cars and Visitors/visitante visas.

http://yucalandia.com/living-in-yucatan-mexico/aca-obamacares-effects-on-american-expats-living-abroad/#330%20day%20physical%20presence%20test

"Key parts of meeting the IRS requirements for qualifying as a bona fide resident of another country, are covered by IRS Form 2555, Question 13:"

Only of use if you are earning (earning as defined by the IRS) income for work outside the US. There would be no income or housing exclusion for someone simply living outside the US, as would be the case for most unemployed & retired persons. For us, the Social Security folks check once a year to make sure where we are and that we haven't expired ... and I believe they mention that they share the information with the IRS and whoever.

I guess if you die soon after making the annual report, the SS will continue to be paid into your bank account for at least another year. I think banks used to be required to cooperate with a claw-back of extra payments made ... as opposed to payments made to prop up badly run banks that are too big to fail.

[TerryLH]

"I still need to pay California tax. They don't care whete I live they will always considered me a resident. (Mom lives there). I have a bank account with mail going to a California address."

If you don't live in California you don't have to file or pay tax there. You pay in the state you actually live in. If you don't live in the country - none of the states, no state filing is due.

This applies to retirement benefits and SS, even if they are deposited in an account in California.

This is from personal experience.

But, I don't use a CA address for mailing.

[BKKSnowBird]

"I still need to pay California tax. They don't care whete I live they will always considered me a resident. (Mom lives there). I have a bank account with mail going to a California address."

If you don't live in California you don't have to file or pay tax there. You pay in the state you actually live in. If you don't live in the country - none of the states, no state filing is due.

This applies to retirement benefits and SS, even if they are deposited in an account in California.

This is from personal experience.

But, I don't use a CA address for mailing.

Many states like CA will consider you a resident for tax purposes until you establish residency in a new state.

[TerryLH]

"Many states like CA will consider you a resident for tax purposes until you establish residency in a new state."

That's not true in my case.

The CA Franchise Tax Board sent me a letter saying they have info I have a Ca earned pension going into my Ca bank, but no record of a tax form.

I responded that I no longer live in the US, so am not required to file with them.

Next year, same thing.

I responded that I still live overseas, and that I'll let them know if I return to Ca.

I haven't heard anything from them in the last 18 years, and continue to have money deposited in Ca.

[brianp0803]

I would think pension income from from working in a California company is taxable.

Are you paying taxes on social security benefits?

By your logic, I should not have to pay taxes on my tax deferred IRA contributions sine I no longer live in America.

I would see pension as deferred income from working in California .The company is reporting it to the IRS as a taxable event.

it looks like California thinks the same way.

Income earned while living and working outside the US is not reported to the government and less than a certain amount is not taxed by the federal government.

California still feels entitled to tax on this money but they have no record of it from many jobs in Thailand. Up to the tax payer.

They may not pursue you.

That is different from not paying taxes due.

Edited November 22, 2014 by brianp0803

[brianp0803]

I would think taxes are due in the state the income was earned.

If I put money in an IRA or 401K from California income and move to another state or country then I need to pay California tax on the IRA money when taken.

pension earned from working in California incurs California tax independent of state or country currently residing.

[TerryLH]

If you don't live in the USA now, you still have to file federal income tax forms for pensions and SS, but you do not have to file in any state.

[brianp0803]

If you don't live in the USA now, you still have to file federal income tax forms for pensions and SS, but you do not have to file in any state.

So all the tax deferred money I put into my IRA, i don't need to pay State tax on that money when I take it out?

Why would I have to file federal income tax forms for money received from social security but not state tax forms for a pension from working in a state?

The letter you got twice implies the FTB believes you owe taxes.

My Mom in California was the executor of my aunt's estate in Utah. California tried to collect taxes. They asked for proof that non of her estate ever came money earned from a California company.

What documentation shows you don't owe taxes to California on a pension from working in California?

depends on the amount, they may not bother to pursue. Different from not owning

I think any debts are settled on your estate before going to heirs.

[BKKSnowBird]

It does not matter where you earned it. It matters where you live.

Many tax experts say if you have significant income and plan to live abroad , it is best to establish residence in a state with no income tax before moving.

CA and VA are very agressive going after people who live abroad.

[brianp0803]

Usually you earn and pay taxes in the same place.

I think it would be strange if I deducted IRA contributions from income on my California tax return and then was living in another state or country when I started to use this tax deferred money I would pay taxes on this money earned in California to another state.

The federal government gives me a large deduction on income earned while living overseas but taxes IRA withdrawals as earned income. I can't tell the government i no longer live in America and don't no longer need to pay tax on my tax deferred income.

Do you know the government web page with this information or just your opinion?

[BKKSnowBird]

If you live in Arizona, you will pay tax to Az even on a pention from another state. Move to NV and only pay federal. No state income tax in NV.

[brianp0803]

Then if living abroad there is no need to file California taxes on social security benefits or IRA withdrawals?

[BKKSnowBird]

Like i said before

CA will consider you a resident for tax purposes even if you live abroad. I know many people who had problems with CA.

[gk10002000]

I plan to live outside the USA very soon as I wait for my social security and mediare to kick in. Obamacare is going to be too expensive for me in its current form. I will gladly take out some health insurance in another country and just pay the fine for not having Obamacare. Actually, because much of my retirement income is tax free (muni bonds, muni funds etc.) Roth IRA distributions, etc, there is a chance my obamacare care costs will be low, albeit worthless because they won't cover me overseas

[brianp0803]

I plan to live outside the USA very soon as I wait for my social security and mediare to kick in. Obamacare is going to be too expensive for me in its current form. I will gladly take out some health insurance in another country and just pay the fine for not having Obamacare. Actually, because much of my retirement income is tax free (muni bonds, muni funds etc.) Roth IRA distributions, etc, there is a chance my obamacare care costs will be low, albeit worthless because they won't cover me overseas

A user at the beginning of this thread said if we are outside the US for 330 days in a year we are exempt from the Obama care requirement.

Every year I am in Thailand with my low salary I am converting about $40,000 a year from regular IRA to ROTH and stay in the lowest tax bracket.

By the time I retire I plan to have most of my money already taxed. Then only need to pay tax on my pension and social security.

I am hoping social security is still available when I reach retirement age.

[BKKSnowBird]

I plan to live outside the USA very soon as I wait for my social security and mediare to kick in. Obamacare is going to be too expensive for me in its current form. I will gladly take out some health insurance in another country and just pay the fine for not having Obamacare. Actually, because much of my retirement income is tax free (muni bonds, muni funds etc.) Roth IRA distributions, etc, there is a chance my obamacare care costs will be low, albeit worthless because they won't cover me overseas

A user at the beginning of this thread said if we are outside the US for 330 days in a year we are exempt from the Obama care requirement.

Every year I am in Thailand with my low salary I am converting about $40,000 a year from regular IRA to ROTH and stay in the lowest tax bracket.

By the time I retire I plan to have most of my money already taxed. Then only need to pay tax on my pension and social security.

I am hoping social security is still available when I reach retirement age.

How long have you been in Thailand? I dont think SS is going anywhere but if been in Thailand a long time. Dont expect much. Every year you dont pay fica will reduce what you get. Edited November 24, 2014 by BKKSnowBird

[brianp0803]

FICA takes the average of your highest 30 years of earnings.

I worked 26 years as an engineer under FICA before moving to Thailand.

Usually people's last year's working are their highest salary years.

I maxed out social security for many years, but I will have 4 years with low salary.

Edited November 24, 2014 by brianp0803

[BKKSnowBird]

That is 35 years. So you will get SS but maybe a bit lower than you expect.

If your teacher gig pays no fica, you get a $0 averaged in for that year.

Edited November 24, 2014 by BKKSnowBird

[scoutman360]

Like i said before

CA will consider you a resident for tax purposes even if you live abroad. I know many people who had problems with CA.

California "tries" to consider you a resident, and they will assume you still are until you provide proof you are not, AND proof you do not plan to return. They rely on a fine print that says if you are planning on returning to California, then you are still considered a resident. Therefore, the burden of proof falls on you to show you don't have plans to return. This doesn't mean you can't return, it just means you didn't have intent. This could include an open ended employment contract, foreign bank accounts, purchased foreign property, etc. My recent Thailand employer wanted a contract term of 12 months, to be renewed annually, and I rejected the offer. They changed to say "continuous employment". Things like this are important for any former resident of California.

It is important to break all ties with California. Close your CA bank accounts, always use a foreign mailing address, sell your cars, etc. That will strengthen your case.