Taxation of USC residing abroad

S

sarrebal

Registered Users (C)
I am supposed (and eligible) to apply for naturalization this summer.
However, I'm receving offers to be an expat in other countries, where taxation is even lower.
Obviously, if I go as a USC, I will pay a huge amount of tax to the US.

Should I not become a USC and decide to move abroad with my wife (who is a USC), how would it work?

I guess I would have to surrender my green card (no problem with that), would I be still taxable (having had a green card before and being married to a USC).

Also, should we come back to the US one day, would they give me another green card through marriage, no question asked?

Thanks!
 
If you give up your GC, you longer are a LPR and therefore aren't subject to US income tax on your world income.

No offense, but if you are looking at US citizenship strictly from a financial and ease of travel point of view, perhaps you need to reevaluate your thinking.
 
Bobsmyth said:
If you give up your GC, you longer are a LPR and therefore aren't subject to US income tax on your world income.

No offense, but if you are looking at US citizenship strictly from a financial and ease of travel point of view, perhaps you need to reevaluate your thinking.
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I don't look at it strictly for that, but double taxation is something I'm not looking forward to.
In that case, why not postponing for a few years?

Would I have any problem in re-obtaining a GC thru my wife later on?
 
Double taxation happens only if you make more than a certain amount (I think it's more than $85,000, but I'm not sure). Many countries - and especially European countries - have agreements with the US abolishing double taxation.
 
Mr Vertigo said:
Double taxation happens only if you make more than a certain amount (I think it's more than $85,000, but I'm not sure). Many countries - and especially European countries - have agreements with the US abolishing double taxation.
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You have to include in taxation the amount beyond the 87k (which is taxed by the host country), the housing allowance, the tuition reimbursement for your kids' school and other fringe benefits. On top of that, I might end up either in HK (which does not have any bilateral tax treaty), UK or Russia, where taxation is considerably lower (maybe not in the UK). Also, other countries, especially European ones have a lot of indirect taxes (VAT, excise) which would not be part of the tax credit.
I told my potential employer that I'd be available at the end of the year once I became a USC, but I'm rethinking the whole thing...
 
Before you postpone anything, go get a good CPA. Yes, as a resident alien and citizen you are taxed on your worldwide income, however when filing your returns you are entitled for foreign tax credits or earned income exclusion depending on your situation. This is to prevent that double taxation effect. If you build a financial relationship with a trustable CPA you will be able to plan accordingly. Go to a Certified Public Accoutant and get their opinion.
 
Well, the US has a treaty with the UK regarding double taxation. Not sure about HK, and definitely not with Russia.
 
See IRS tax form 2555 and publications 54 and 514. Once you take advantage of the available treaties, credits, and exemptions, you're unlikely to have double taxation unless you make a truckload of money.
 
As Jack mentioned, it is highly unlikely that you pay additional taxes.

Reporting your income doesn't mean it will also be taxed by US standards as (hey, they do think at times) know that cost of living can be different.

Also, it is a myth that in the US you pay a lot of taxes, unless your accountant doesn't have a clue.

i.e. In the EU you have direct deductions from your paycheck that you won't have in the US, however, the system of writing them off is almost the same (if you are creative).

I also happen to agree that if your main driver is from a financial point of view, you probably need to re-think your ideals.
 
Guys,

There is a substantial amount of federal tax (and state tax, in some case) that an expat has to pay if he/she makes a typical expat salary (and benefits). Some countries do not tax benefits (housing allowance, tuition reimbursement for your kids, car, etc). That would be taxed by the US. Russia (which does have a treaty with the US to "avoid" double taxation) has a flat income tax rate of 13%.
So everything somebody makes over 87,600 plus a ridiculous housing allowance (prior to 2006 all housing costs - which are usually paid by the employer - could be deducted) including all benefits is taxed at the tax rate that doesn't include the 87.6k deduction (28% that is and of course 35 and 33% kick in later).
If you are an expat in some low-tax countries like Russia and HK you have a very small foreign tax credit. If you're an expat in Europe you have a bigger credit but let's not forget Europe's many indirect taxes (VAT, etc) which are not deductible.
No matter where I go, I know I will have a substantial tax bill due to the US.
I know that.
I want to become a US citizen but at this point it would make much more sense to wait.

My question was: if I give up my green card and move with my wife abroad (my wife obviously will file her tax return as married filing separately, lol), would I be able to obtain another green card when we decide to move back to the US with no problem?
 
sarrebal said:
My question was: if I give up my green card and move with my wife abroad (my wife obviously will file her tax return as married filing separately, lol), would I be able to obtain another green card when we decide to move back to the US with no problem?
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Your US citizen wife can sponsor you for another green card, but I wouldn't say "no problem". You'll have to redo the entire green card process, and you never know what the backlogs and costs and complexities of the process will be like several years into the future when you want to return. Then you'll have to wait another 3 years to get citizenship.
 
I assume it would involve the same steps as any USC sponsoring their spouse. In other words, the previous loss of LPR status has no effect on how you obtain future LPR status.
 
Also, at that point it will be very likely that I will have some USC children...
Anyways, I do want to become a US citizen, but the way US citizens living abroad are (fiscally) punished is absurd.
What happened with the "No taxation without representation" thing?
 
Hu?

If you are taxed by IRS as citizen then you can vote.
But I happen to agree that the roughtly 16 years before that, I paid taxes and had no representation.

But alas, as soon as you work somewhere for more than 180 days, you have to pay your taxes there.
 
MartinAub said:
Hu?

If you are taxed by IRS as citizen then you can vote.
But I happen to agree that the roughtly 16 years before that, I paid taxes and had no representation.

But alas, as soon as you work somewhere for more than 180 days, you have to pay your taxes there.
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Besides the right to vote (which is a right and not a service provided by the Govt), in what possible way US citizens use their Govt services? They pay administrative fees everytime they ask anything to the embassy/consulate and they don't use US public schools, roads, health, etc etc.
 
Depending on the State you live in you will lose your CPA License. Isn't that enough, lol?

In Arizona we have to be at least a Permanent Resident or Citizen to have your license. That was a difficult exam and I'm just gaining my health back from Yr 2007 testing ;)
 
cregan said:
Depending on the State you live in you will lose your CPA License. Isn't that enough, lol?

In Arizona we have to be at least a Permanent Resident or Citizen to have your license. That was a difficult exam and I'm just gaining my health back from Yr 2007 testing ;)
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In New York is different, I got my CPA license when I was on H1B... :D
 
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