Ny Times Sez "tax Leads Americans Abroad To Renounce U.s."

[fxm88]

...

Historically, small numbers of Americans have turned in their passports every year for political and economic reasons, with the numbers reaching a high of about 2,000 during the Vietnam War in the early 1970s.

But after Congress sharply raised taxes this year for many Americans living abroad, some international tax lawyers say they detect rising demand from citizens to renounce ties with the United States, the only developed country that taxes it citizens while they live overseas. Americans abroad are also taxed in the countries where they live.

“The administrative costs of being an American and living outside the U.S. have gone up dramatically,” said Marnin Michaels, a tax lawyer with Baker & McKenzie in Zurich.

So far this year, the Internal Revenue Service has tallied 509 Americans who have given up their citizenship, said Anthony Burke, an I.R.S. spokesman in Washington. He said complete figures were still being calculated.

...

Source: http://www.nytimes.com/2006/12/18/world/18...agewanted=print

[sabaijai]

the United States, the only developed country that taxes it citizens while they live overseas.

Denmark taxes its citizens residing abroad, and with no foreign-earned income exclusion (first $80K of income earned abroad is incom tax-free for Americans) as in America. I believe Norway and Sweden also tax their citizens abroad.

[Phil Conners]

the United States, the only developed country that taxes it citizens while they live overseas.

Denmark taxes its citizens residing abroad, and with no foreign-earned income exclusion (first $80K of income earned abroad is incom tax-free for Americans) as in America. I believe Norway and Sweden also tax their citizens abroad.

What a load of bull. Denmark does not tax it's citizens residing abroad unless they have property in Denmark, in which case they are liable for taxes on the property alone. Where on earth do you get that stuff from?

[jumnien]

I still pay an exhorbitant amount of US income tax even though I live in Thailand. However, I do save 10% tax every year that California charges now that I am no longer a state resident of any state.

[britmaveric]

Well the govt must be paid.

[dave111223]

The foreign earned income credit doesn't do much if you're self-employed. They still hit you with like 15% tax on your net income "Self-Employment Tax" (no credits appliable to that).

Edited April 18, 2007 by dave111223

[shochu]

The largest american employer - the government.

They're lucky - they get to pay using their funny money - need more - start up the printing press!

[PeaceBlondie]

The foreign earned income credit doesn't do much if you're self-employed. They still hit you with like 15% tax on your net income "Self-Employment Tax" (no credits appliable to that).

That's true, and it is a burden. However, it's also apples to oranges. The income tax goes to pay federal expenses, but the payments to SE Tax go to old age, survivor, and disability insurance, plus the Medicare tax. Hopefully, if you're born before 1969 or so, you'll get those funds back.

There are some credits. The gross income from self-employment is first reduced by all allowable expenses, then is reduced 7.65%, and then the amount you pay for the SE Tax is a 50% credit against any income tax you pay. For most successful businessmen who pay income tax, it nets out to less than 14%. Unless they've gone and changed the rules once again!

[sabaijai]

The foreign earned income credit doesn't do much if you're self-employed. They still hit you with like 15% tax on your net income "Self-Employment Tax" (no credits appliable to that).

It does a lot if you're self-employed and making an AGI of, say, US$80,000/year. Making another country your tax home will remove you from virtually all income tax. You have to pay the 15% either way but are exempt from paying 25% (rough estimate) on that $80K, a savings of $20K. I know of several Americans who saved about US$30K/year in income tax by leaving the USA and taking advantage of the foreign-earned income exclusion.

What a load of bull. Denmark does not tax it's citizens residing abroad unless they have property in Denmark, in which case they are liable for taxes on the property alone. Where on earth do you get that stuff from?

I have a close friend who is a Danish citizen and has been living in Mexico and SE Asia for the last 15 years or so. She tells me she has to pay Danish income tax every year, despite the fact that all of her income is earned abroad. She didn't mention owning property there, but even if she did it still clearly differentiates Danish income tax from US income tax on the issue of working abroad, doesn't it?

So where do you get your information?

[Phil Conners]

What a load of bull. Denmark does not tax it's citizens residing abroad unless they have property in Denmark, in which case they are liable for taxes on the property alone. Where on earth do you get that stuff from?

I have a close friend who is a Danish citizen and has been living in Mexico and SE Asia for the last 15 years or so. She tells me she has to pay Danish income tax every year, despite the fact that all of her income is earned abroad. She didn't mention owning property there, but even if she did it still clearly differentiates Danish income tax from US income tax on the issue of working abroad, doesn't it?

So where do you get your information?

I don't know your friends situation so can't comment on that. Maybe she works for the Danish government or some other special rule. The general rule is that Danish citizens, unless they continue to have income from, or have property in, Denmark, only have to declare taxes up to 3 years after having declared Danish non-resident status. Also, they are not necessarily liable for Danish taxes for those 3 years, it depends on other factors such as whether taxes are paid elsewhere.

[Firefan]

Phil is right. Could be work for Danish government or could be that she owns a home in Denmark and have not rented it out on a minimum 3 year contract which the government demands as proof that one have given up residency/homebase in Denmark.

That said; Denmark is probably one of the most heavily taxed countries in the world with income tax starting at around 55% and up, 25% VAT, $2 for 1 Liter(not gallon!) of gasoline Etc. Auch!

Cheers!

[Ricardo]

Well the govt must be paid.

Why so ?

I disagree with many of the things they spend our money on, and don't recall ever being asked, for my views !

Also they have the nerve to tell me, because I dare to live somewhere which isn't in the EC or part of the Commonwealth, that the state-pension I have paid for will, when I eventually start to receive it, be frozen with no increases for inflation. (I'm a Brit)

[Khun Bob]

So live in the UK for 90 days or so a year and then you can remain resident and get all the benefits you have with that... Plus if you earn less then the tax free allowance then little or no tax to pay... but be careful about your selection of offshore bank accounts...

Well the govt must be paid.

Why so ?

I disagree with many of the things they spend our money on, and don't recall ever being asked, for my views !

Also they have the nerve to tell me, because I dare to live somewhere which isn't in the EC or part of the Commonwealth, that the state-pension I have paid for will, when I eventually start to receive it, be frozen with no increases for inflation. (I'm a Brit)

[BasketCase]

I still pay an exhorbitant amount of US income tax even though I live in Thailand. However, I do save 10% tax every year that California charges now that I am no longer a state resident of any state.

I hope you were EXTREMELY carefull to cut ALL ties with CA ... no CA drivers license, no CA bank accounts, not magazine subscriptions in your name delivered to a CA address, no storage lockers in CA, etc.

CA has gotten very aggresive about this. If you maintain any ties, then the state of CA can decide that you INTEND to come back SOMETIME, and can (and has successfully) sued for back state income taxes.

[Naam]

the problem nearly all my [uS] american friends are facing is that most of their assets are in tax deferred accounts in the USA, i.e. they hesitate moving these assets offshore because of the immediate taxes due.

what they don't consider is that over a certain period they are paying a multiple of the immediate taxes due vs. "take it out from the sight of the IRS". in their cases it's not rocket science but simple maths to figure out how to save a bundle on taxes and spend the money on nicer things in life.

edited because of grammar

Edited April 23, 2007 by Dr. Naam

[thaihome]

I still pay an exhorbitant amount of US income tax even though I live in Thailand. However, I do save 10% tax every year that California charges now that I am no longer a state resident of any state.

Do you earn the income overseas? or do you just live in Thailand and receive US income? Do you pay Thai income tax?

I have earned well over 100k for many years working overseas and between foreign income exclusion, housing exclusion and foreign tax credits have never paid more than a couple of thousand in US income tax. Haven’t done 2006 tax yet, waiting to see what the impact of new law will be. Still having large unused foreign tax credits from pervious years, I don’t expect to have to pay much more.

The new laws mostly impact expats working in low income tax counties with high living expenses. Hong Kong is typical, with very high housing, expensive schools and relatively small income tax. A person working in HK can easily have total gross income be double their base salary.

TH

[lannarebirth]

I still pay an exhorbitant amount of US income tax even though I live in Thailand. However, I do save 10% tax every year that California charges now that I am no longer a state resident of any state.

I hope you were EXTREMELY carefull to cut ALL ties with CA ... no CA drivers license, no CA bank accounts, not magazine subscriptions in your name delivered to a CA address, no storage lockers in CA, etc.

CA has gotten very aggresive about this. If you maintain any ties, then the state of CA can decide that you INTEND to come back SOMETIME, and can (and has successfully) sued for back state income taxes.

The California Franchise Tax Board is the most agressive tax agancy anywhere. Have nothing to do with California residency if you can help it, as they'll be cold calling you for funds sooner or later. Hey, speaking of which, got a letter from the IRS today saying I owe trhem $156k for tax year 2005. Fukcers. It's bullshit of course, but now I've got to waste two weeks and $1,000 to straighten them out. They should have a rule for every bogus demand they make, once shot down, they should refund you a matching amount that they demanded.