Taxation of USC residing abroad

sarrebal said:
What happened with the "No taxation without representation" thing?
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Right now you pay taxes as a GC holder and can't vote. The "No taxation without representation" principle went out the door after the US wrestled their independence from Britain. It used to be that only white male landowners could vote, even though other people had to pay taxes.
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?
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If you are jailed as a foreign government or captured by foreign thugs, the US military or diplomats are expected to help you, provided they know about your situation and it's not the result of your own criminal actions.
 
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I know Arizona laws changed recently. They use to be ok with non-immigrants being licensed, but last year they changed it.

Personally you have worked hard to be where you are at, immigration, family and career, why start over with 2 out of 3? Why not keep 3 out of 3?

:)
 
cregan said:
Personally you have worked hard to be where you are at, immigration, family and career, why start over with 2 out of 3? Why not keep 3 out of 3?

:)
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Are tens of '000 of dollars good enough reasons for a 10-yr deferral on your citizenship?
 
Not really. I'm proud that I will have my citizenship. It's a great opportunity. Us as CPA are fortunate enough to do our own tax planning throughout the year. Hey we are our best clients, lol
 
Please consult with someone who is familier with international tax law...if tax is the only thing driving your decision.
If you surrender your Green Card, you will still be paying taxes on your income received in the US, as well as income from investment in the US, and your spouse's worldwide income.
 
Jackolantern said:
I think you are overestimating the amount you will earn overseas, and underestimating the taxes you'll pay to the other countries you might live in.
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I'm pretty good at budgeting (it is my job).
If I go to London, the amount of tax due would be limited.
If I go to Moscow (as I might well do, since my wife is russian), I would have to pay close to $30k in Federal tax, since the tax rate there is only 13%.
 
sarrebal said:
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).
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How would an expatriate be subject to state tax, if he is not resident in a state?

US. Russia (which does have a treaty with the US to "avoid" double taxation) has a flat income tax rate of 13%.
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If it's a flat 13% tax without deductions, it can be significantly higher than the US in a lot of income bands.

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).
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You don't hit the 28% rate MFJ until you exceed $131,000 of taxable income. When you count the FEIE, you need to have about $220,000 of taxable income to even start getting taxed at this rate; below it you'll be in the lower (10, 15 and 25%) brackets. Don't forget that the FEIE includes a housing allowance, IIRC.

So assuming you make $300,000 and have $30,000 of US deductions (wife, kids, etc) you'll have a taxable income of $182,400. Taxes owed are $39,816. Assuming a Russian flat tax of 13% on income, and you have $39,000 in taxes. You extra liability is $816. Big deal.
 
Real Canadian,

Your non-excluded income is in the tax bracket it would be before the deduction, so it's 28% and up.
 
Jackolantern said:
You think you can earn over US$100K in Moscow?
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It's not like we pack our bags and we go to Moscow looking for jobs.
I would be transfered by a huge italian multinational company.
It is pretty common with multinational companies and the salaries and benefits are pretty good, especially for expats.
 
TheRealCanadian said:
How would an expatriate be subject to state tax, if he is not resident in a state?



If it's a flat 13% tax without deductions, it can be significantly higher than the US in a lot of income bands.



You don't hit the 28% rate MFJ until you exceed $131,000 of taxable income. When you count the FEIE, you need to have about $220,000 of taxable income to even start getting taxed at this rate; below it you'll be in the lower (10, 15 and 25%) brackets. Don't forget that the FEIE includes a housing allowance, IIRC.

So assuming you make $300,000 and have $30,000 of US deductions (wife, kids, etc) you'll have a taxable income of $182,400. Taxes owed are $39,816. Assuming a Russian flat tax of 13% on income, and you have $39,000 in taxes. You extra liability is $816. Big deal.
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Assuming no deductions (I will have small deductions since we don't have kids yet), the US federal tax liability on the salary you mentioned would be $33,812.
On top of that you count the $39,000 paid to the Russian Government and you tax rate goes to over 24% from 13%. It is (almost) double taxation, despite the tax treaty between the US and Russia.
And it's on cash and non-cash income (such as housing and tuition paid by the employer), so if you calculate that only on cash income, it would be much higher.
 
TheRealCanadian said:
How would an expatriate be subject to state tax, if he is not resident in a state?
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Oh, very easy.
You own a condo, move out of the country, rent your condo out.
Not only you are taxed on the rent income (as it should be and it sounds right), you're taxed on your whole income, as you have ties to the State.

Also, forgetting to cancel any bill on your name would make you a resident of the State.
It varies from State to State. California is very well known to be the nastiest in this.
 
sarrebal said:
Assuming no deductions (I will have small deductions since we don't have kids yet), the US federal tax liability on the salary you mentioned would be $33,812. On top of that you count the $39,000 paid to the Russian Government and you tax rate goes to over 24% from 13%. It is (almost) double taxation, despite the tax treaty between the US and Russia.
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How would you pay twice? You claim a foreign tax credit against the $39,000. Even if you can't claim a foreign tax credit against the excluded income, that's only $11,000. You still have another $22,000 in foreign tax credits.

Oh, very easy. You own a condo, move out of the country, rent your condo out. Not only you are taxed on the rent income (as it should be and it sounds right), you're taxed on your whole income, as you have ties to the State.
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The mere act of owning rental property in a state should not make your worldwide income subject to state income taxes. Which states do you claim do this?
 
TheRealCanadian said:
How would you pay twice? You claim a foreign tax credit against the $39,000. Even if you can't claim a foreign tax credit against the excluded income, that's only $11,000. You still have another $22,000 in foreign tax credits.
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Because the liability would be just shy of $60k, since your first dollar not excluded is taxed at the bracket it would be taxed normally (i.e.: if your FEIE+HE is 100k, then the first non-excluded dollar is taxed as if it was the 100,001st dollar, not the 1st).
This calculation assumes no deduction, but if everything is paid by the employer and you have no kids, there's really little you could (legally) deduct.
 
It seems like you have made up your mind, and just want someone else to support you on this. Not sure why you think a job making more than $100,000 is going to be available in the crumbling Russian economy, but good luck to you in whatever you decide to do.
 
Mr Vertigo said:
It seems like you have made up your mind, and just want someone else to support you on this. Not sure why you think a job making more than $100,000 is going to be available in the crumbling Russian economy, but good luck to you in whatever you decide to do.
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I just asked whether it was possible to re-obtain a GC after having surrendered it.
Then the discussion, which is interesting, evolved.
And the offer is not to work for a russian company but for an extremely well known EUR 7B italian food company which offers great expat jobs.
 
Remember the company can cut your job at any time. Unless your skills are so world class that you can get another megabuck job overseas quickly, a layoff would make you illegal in that country (unless your specific citizenship would enable you to stay legally), without a job, and without a way to move back to the US until you spend the time and money to redo the green card process.
 
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