Tax Implications of Living Abroad

brandonbaker

brandonbaker

Member
Jan 10, 2011
576
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New York City
I'm a U.S. citizen who has been living overseas for all of 2014. For all of you bros who are in the same situation as me, or anyone who has a good handle on this stuff, are there any differences between paying your federal taxes as compared to when you live in the U.S. year round? Anything quick and easy I should know about? Or is it basically the same shit as living in the U.S.? All of my income is online (electronic product sales, affiliate, etc.)

inb4 hire an accountant

...Speaking of which, can anyone recommend a good accountant who knows his shit regarding online business? I've found most accountants and online resources (ironically) to still be stuck in the stone age.

Thanks.
 


No idea, except you might be a little late to the party. Should have handled this last year, as I think you may have a rough time opening a bank account in another country now. I know there's lots of reports coming out from here at least of banks straight out refusing any new American customers due to the new reporting rules.
 
Kiopa_Matt said:
No idea, except you might be a little late to the party. Should have handled this last year, as I think you may have a rough time opening a bank account in another country now. I know there's lots of reports coming out from here at least of banks straight out refusing any new American customers due to the new reporting rules.
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? Sorry, maybe I wasn't clear. I'm not interested in opening a bank account abroad (and it's quite easy to do so if I wanted to). I wanted to know how my living abroad affects me U.S. federal tax return, if it does at all. I'm in a situation where I don't know what I don't know, so I'm asking if anyone knows what to expect, watch out for, or take advantage of, from a federal tax return perspective.
 
It has been a while since I looked at all of it BUT it use to be that the first 80K earned abroad was not subject to tax. Of course that is the case if it is earned from a company in that country, you are living in Costa Rica and get paid by a costa rican company. If you are an affiliate or money just gets paid to your own corp I think you will be paying taxes as usual. I doubt you will be paying any local taxes (which may reduce your federal taxes). State taxes will be paid to the state you are living in, which even if you do not have a residence will be assumed to be the state you have a license in. You may want to change that to TX (or another state with no state income tax). All that being said this is my opinion and most of what I just said I may have made up.

All the best
 
greenleaves said:
Only applies for employees, and paying yourself as an employee all your company's earnings when your company is just you... well that might not go down so well at the time of an audit... ask a tax attorney.
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That's not right. It's also for self-employed people:

Foreign Earned Income Exclusion

Self-employment income: A qualifying individual may claim the foreign earned income exclusion on foreign earned self-employment income. The excluded amount will reduce the individual’s regular income tax, but will not reduce the individual’s self-employment tax. Also, the foreign housing deduction – instead of a foreign housing exclusion – may be claimed.
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greenleaves said:
Only applies for employees, and paying yourself as an employee all your company's earnings when your company is just you... well that might not go down so well at the time of an audit... ask a tax attorney.
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It applies for self employed but you'd be on the hook for self employment tax of 15%......

As for setting up a corporation and paying yourself as an employee, no idea no comment
 
The following post was about to be a new thread unto itself, but luckily this thread popped up with enough relevance to shoehorn it in here:

Holy fuck this is some incredible shit...

Simon Black in Today's Sovereign Man newsletter said:
The Land of the Free is one of the only countries on the planet that taxes its non-resident citizens on their worldwide income.

For most nationalities, if you don't live in the country of your citizenship, your home government doesn't tax you.

So if you're a French national living in, say, Abu Dhabi, you're subject to income taxes in Abu Dhabi (which happen to be zero). Not France.

But in the Land of the Free, the US government wants its fair share of your labor no matter where in the world you live.

One of the only other countries on the planet where this is true is Eritrea. (In case you have to look that up, it's by Ethiopia on the Red Sea.)

Eritrea's government charges its non-resident citizens a discounted tax rate of just 2%. That's it.

But here's what's amazing: in 2011, the United Nations caught wind of this 2% tax on Eritrean nationals living overseas and found it woefully immoral.

So immoral, in fact, that the UN Security Council passed resolution 2023 that year, condemning the Eritrean government for imposing a tax on non-resident citizens.

The resolution states that: "Eritrea shall cease using extortion, threats of violence, fraud and other illicit means to collect taxes outside of Eritrea from its nationals or other individuals of Eritrean descent."

Incredible. The UN Security Council considered a 2% tax on Eritrean citizens living abroad to be 'extortion'.

Even more incredible? The United States of America VOTED FOR the resolution.

Let that last part sink in.

The US government is establishing IRS field offices around the globe to demand taxation from its non-resident citizens... yet simultaneously condemns Eritrea's government for taxing expats at just 2%.

The Eritrean tax authority's tactics of "extortion, threats of violence," etc. are worth denouncing in the UN. But it's perfectly acceptable for the US government to throw people in jail simply for failing to file an offshore disclosure form.

It's an unbelievable level of arrogance and hypocrisy... all to keep financing a bankrupt government's wish list of more bombs, more drones, and more thugs just a little while longer.
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What's bigger than crony capitalism? I guess crony nationalism.

Just wow.
 
Interestingly enough I had this exact discussion with my accountant 2 days ago, and he basically said the same thing lukep just posted. If you are a US citizen, you pay US taxes, end of story.

Backstory: I've been considering purchasing property in Asia or somewhere like the Bahamas, not for tax purposes but just because I want somewhere to stay in the winter to avoid the outrageous cold that we get here. So of course I figured I might as well ask my accountant if I were to technically "live" at that second property and give up all my property in the US, would I pay taxes to the country that I'm actually living in and avoid paying US taxes? His answer: nope, US citizens pay US taxes even if you reap exactly 0 benefits from those tax dollars, and there's no way around it.

At that point I even asked what would happen if I just gave up my US citizenship, but kept an office in the US and a couple credit cards for when I visit. He said if you're making any significant amount of money and not paying taxes on it but it's obvious that you are staying in the US for any noticeable amount of time, then the IRS will still come after you regardless.
 
o hai guyz said:
Interestingly enough I had this exact discussion with my accountant 2 days ago, and he basically said the same thing lukep just posted. If you are a US citizen, you pay US taxes, end of story.

Backstory: I've been considering purchasing property in Asia or somewhere like the Bahamas, not for tax purposes but just because I want somewhere to stay in the winter to avoid the outrageous cold that we get here. So of course I figured I might as well ask my accountant if I were to technically "live" at that second property and give up all my property in the US, would I pay taxes to the country that I'm actually living in and avoid paying US taxes? His answer: nope, US citizens pay US taxes even if you reap exactly 0 benefits from those tax dollars, and there's no way around it.

At that point I even asked what would happen if I just gave up my US citizenship, but kept an office in the US and a couple credit cards for when I visit. He said if you're making any significant amount of money and not paying taxes on it but it's obvious that you are staying in the US for any noticeable amount of time, then the IRS will still come after you regardless.
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The only way to avoid US tax slavery is to renounce your citizenship. One alternative is to renounce your citizenship and then become an illegal alien in the US. The border is porous, so there's really no problem with entering illegally. If you're particularly pale, just apply some skin bronzer. Once in the US, you can enjoy a host of benefits:

1. Free medical care.
2. Driving drunk w/o repercussions. Just run from your car after the accident and yell something in Spanish.
3. No worldwide tax on your income.
4. No need to pay income tax.

The list goes on.
 
charlesmartel said:
The only way to avoid US tax slavery is to renounce your citizenship. One alternative is to renounce your citizenship and then become an illegal alien in the US. The border is porous, so there's really no problem with entering illegally. If you're particularly pale, just apply some skin bronzer. Once in the US, you can enjoy a host of benefits:

1. Free medical care.
2. Driving drunk w/o repercussions. Just run from your car after the accident and yell something in Spanish.
3. No worldwide tax on your income.
4. No need to pay income tax.

The list goes on.
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WDUOc.gif
 
charlesmartel said:
The only way to avoid US tax slavery is to renounce your citizenship. One alternative is to renounce your citizenship and then become an illegal alien in the US. The border is porous, so there's really no problem with entering illegally. If you're particularly pale, just apply some skin bronzer. Once in the US, you can enjoy a host of benefits:

1. Free medical care.
2. Driving drunk w/o repercussions. Just run from your car after the accident and yell something in Spanish.
3. No worldwide tax on your income.
4. No need to pay income tax.

The list goes on.
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Way too risky to enter illegally.

I think the best solution is to give up US citizenship + acquire citizenship in a country that allows you to stay up to 6 months/year in the US as a tourist. (Canada is one of them, but I'm sure there are many more)

+ you don't need to have credit cards + bank accounts in the US. Just get them in Hong Kong, Singapore, Seychelles, Belize or anywhere that doesn't tax foreign companies.
 
avatar33 said:
Way too risky to enter illegally.

I think the best solution is to give up US citizenship + acquire citizenship in a country that allows you to stay up to 6 months/year in the US as a tourist. (Canada is one of them, but I'm sure there are many more)

+ you don't need to have credit cards + bank accounts in the US. Just get them in Hong Kong, Singapore, Seychelles, Belize or anywhere that doesn't tax foreign companies.
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How do they "allow" you to stay up to 6 months/year in the US? Are you not free to travel wherever you want? If you travel too much, you lose your Canadian citizenship?

This does sound like a smart idea but I wouldn't put it past the US to say if you stay here for more than a couple months per year then you technically live here and have to pay US taxes. I actually like living in the US, I just don't like being forced to take out a lighter and burn 40% of my money every April (and let's not forget the 15% self-employment penalty!) so would like to be able to stay here as much as possible while avoiding those taxes.
 
o hai guyz said:
How do they "allow" you to stay up to 6 months/year in the US? Are you not free to travel wherever you want? If you travel too much, you lose your Canadian citizenship?

This does sound like a smart idea but I wouldn't put it past the US to say if you stay here for more than a couple months per year then you technically live here and have to pay US taxes. I actually like living in the US, I just don't like being forced to take out a lighter and burn 40% of my money every April (and let's not forget the 15% self-employment penalty!) so would like to be able to stay here as much as possible while avoiding those taxes.
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I know a bunch of people (they are referred to as the Canadian snowbirds in the US) that have a house down in Florida and spend half of the year in Canada and the other half in the US. They are taxed in Canada. And no you can't lose CA citizenship.
 
If I am giving up US citizenship, I doubt that I give up it up just to take Canadian.

I am not putting down Canada, I am just saying I would more than likely choose another country while doing my research.
 
lukep said:
The following post was about to be a new thread unto itself, but luckily this thread popped up with enough relevance to shoehorn it in here:

Holy fuck this is some incredible shit...



What's bigger than crony capitalism? I guess crony nationalism.

Just wow.
Click to expand...


Link to proof of this plz. Not saying I don't believe, I'd just like to read the whole story.
 
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