US Citizens get a raw deal...

[Gary and Alla 3,694]

Actually Gary, the UK tax bracket for a decent income in the UK is about 20%.

I don't think its difficult to understand that a person who is used to paying taxes based on residency, might find something amiss if it were required not for residency but for citizenship. If you work and live in a foreign country (and I'm not talking about military #######), why is the IRS entitled to any money you make there?

Gene

First you have to remember I do not think the IRS is "entitled" to ANY money I make, ANYwhere. what they get from me is confiscated against my will and against my best efforts to avoid paying (avoidance is legal...evasion is not) by threat of imprisonment by men that have guns. I can usually find a way in our convoluted and corrupted tax code to avoid paying anywhere close to 20% of my gross earnings. People think we "tax the rich" we don't. For every tax we place on the rich, we put in place many more tax loopholes, shelters etc., which are bought and paid for by their lobbyists on K street in DC. Most of the so-called increases on the rich are simply smoke and mirrors. As mentioned in this forum, one only needs to establish one's business offshore and shelter your money. New Jersey has lost over $81 billion in wealth since Corzine was governor. The same happens at the federal level. Apply punitive taxes and the money runs away, they find a way to avoid it, yet still use it.

a 10% flat tax would result in far more taxes being paid by the rich, and far more revenue for the government, even if it was the ONLY tax in existance, IF we eliminated all these silly tax shelters and simply tax every dollar earned in the USA by 10%, and I say this knowing my effective tax rate would increase. Alla is trying to understand the taxes this year and is about ready to shoot herself in the eye! Anyone with half a brain knows this, it is obvious, so why don't we do this? Because politicians make millions for complicating it, lawyers make millions to lobby politicians, accountants make BILLIONS processing taxes because the typical American will pay H&R Block $40 to do a 1040 EZ form, which basically amounts to applying the mailing label, attaching your w-2 and signing it. The IRS will do your 1040 EZ for free and do it better than H&R Block. Taxes are an industry, not a revenue producer as they should be.

I agree, in principal, with you that they are not entitled to any of the money I made overseas...and guess what? They didn't get any. You read one part of the tax law and say "that's ridiculous" but when you read the other part you find out...it is even crazier than you thought!!!! But it is not a raw deal for me. What WOULD have been a raw deal would have been paying Ukraine's punitive tax rate or Canada's ponderous rate...instead of -0-.

Out of like 22,000 pages of tax code...you choose this one to pint out the ridiculousness?

[Trumplestiltskin 5,791]

I think I'd be more inclined to debate with you if you could leave your ego out of the equation. Its quite odious imo - nothing wrong with a little humility.

Anyway as you can't drop the egomaniac #######, I am less interested in what you are saying because I am, frankly, rather offended by the way you express yourself.

[Mr. Big Dog 10,747]

A 10% flat tax would result in far more taxes being paid by the rich, and far more revenue for the government, even if it was the ONLY tax in existence, IF we eliminated all these silly tax shelters and simply tax every dollar earned in the USA by 10%, and I say this knowing my effective tax rate would increase.

Now we're talking. I like this idea. A lot.

[BluesTraveler 0]

You are required by law to file a US tax return every year, whether you are resident in the US or not.

This is so so so so WRONG! No where, absolutely no where does it say you are required to file an income tax return. You only need to pay your tax burden in a timely manner. It may seem like I am splitting hairs but I am not.

If you have fulfilled your tax burden you do not need to file any paperwork with anybody. The tax return is used to determine your tax burden. If you have no income; if you over paid your tax burden, or have no tax burden; then you don't need to file any paperwork.

The reason tax attorney's highly recommend you file the paperwork, is you can get a tax refund, and limit the IRS's ability to audit prior tax years. Once you file, the clock starts running on the amount of time that the IRS has to audit the paperwork. Additionally it is the tax payers responsibility to adequately prove they have paid their tax burden.

For tax year 2009 $91,400 is exempt.

HOWEVER

If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. You do not both need to meet the same test. Together, you and your spouse can exclude as much as $182,800.

For the most part foreign taxes paid can be deducted. There are limitations. See IRS publication 54

Now the question about why should you have to pay taxes if you are a US Citizen living overseas?

Think about it...you are still entitled to use the services of the US Embassy / Consulate in the country. You could return to the USA at any moment. You previously used services in the US. etc...etc...

The question about why income earned from US banks is not part of the exempt income, because it is an issue of nexus. The US bank is physically located inside the US, therefore the income was earned in the US.

[elmcitymaven 9,712]

Together, you and your spouse can exclude as much as $182,800.

This is of course only true if both spouses are USCs. During my 12 years in the UK I was never able to exclude any of the income my husband earned because he was a UK citizen.

[Trumplestiltskin 5,791]

You know - the US isn't the only country with consulates and services. It is however, one of the few countries that taxes by citizenship - independent of residency.

[Mr. Big Dog 10,747]

This is of course only true if both spouses are USCs.

A non-resident, non-USC spouse of a USC can elect to be treated as a US resident for tax purposes. I remember that my wife excluded her foreign income on our joint 2003 tax return. That return was filed before she ever set foot into the US, before she ever was a resident, let a lone a USC.

[Ali G. 37]

She's not moving to Australia.

That's right I almost forgot that you apparently know better than I do about what we are doing.

[Ban Hammer 13,643]

That's right I almost forgot that you apparently know better than I do about what we are doing.

you might wanna draw the curtains too

[Ali G. 37]

Gene

First you have to remember I do not think the IRS is "entitled" to ANY money I make, ANYwhere. what they get from me is confiscated against my will and against my best efforts to avoid paying (avoidance is legal...evasion is not) by threat of imprisonment by men that have guns. I can usually find a way in our convoluted and corrupted tax code to avoid paying anywhere close to 20% of my gross earnings. People think we "tax the rich" we don't. For every tax we place on the rich, we put in place many more tax loopholes, shelters etc., which are bought and paid for by their lobbyists on K street in DC. Most of the so-called increases on the rich are simply smoke and mirrors. As mentioned in this forum, one only needs to establish one's business offshore and shelter your money. New Jersey has lost over $81 billion in wealth since Corzine was governor. The same happens at the federal level. Apply punitive taxes and the money runs away, they find a way to avoid it, yet still use it.

a 10% flat tax would result in far more taxes being paid by the rich, and far more revenue for the government, even if it was the ONLY tax in existance, IF we eliminated all these silly tax shelters and simply tax every dollar earned in the USA by 10%, and I say this knowing my effective tax rate would increase. Alla is trying to understand the taxes this year and is about ready to shoot herself in the eye! Anyone with half a brain knows this, it is obvious, so why don't we do this? Because politicians make millions for complicating it, lawyers make millions to lobby politicians, accountants make BILLIONS processing taxes because the typical American will pay H&R Block $40 to do a 1040 EZ form, which basically amounts to applying the mailing label, attaching your w-2 and signing it. The IRS will do your 1040 EZ for free and do it better than H&R Block. Taxes are an industry, not a revenue producer as they should be.

I agree, in principal, with you that they are not entitled to any of the money I made overseas...and guess what? They didn't get any. You read one part of the tax law and say "that's ridiculous" but when you read the other part you find out...it is even crazier than you thought!!!! But it is not a raw deal for me. What WOULD have been a raw deal would have been paying Ukraine's punitive tax rate or Canada's ponderous rate...instead of -0-.

Out of like 22,000 pages of tax code...you choose this one to pint out the ridiculousness?

From what I a gather you scammed the Ukraine, which probably has dodgy accounting practices and zero treaties with the US. This is why most developed countries use the GST/VAT on top of income tax. The rich get out of tax because repubs support it. Lets not pretend it's the dems giving them the tax loopholes.

Have you seen my big fat Greek weeding? Republicans seem to think tax cuts for the rich are the Windex equivalent.

Edited February 20, 2010 by Booyah

[elmcitymaven 9,712]

A non-resident, non-USC spouse of a USC can elect to be treated as a US resident for tax purposes. I remember that my wife excluded her foreign income on our joint 2003 tax return. That return was filed before she ever set foot into the US, before she ever was a resident, let a lone a USC.

Well, that I did not know. Not that I will have use of it in the future, but still, ta muchly.

[Trompe le Monde 1,107]

I am sure you can live like a king in the Ukraine for $91,000. However in the UK, especially with a strong pound, that is not exactly a lot of money.

[Trompe le Monde 1,107]

As mentioned in this forum, one only needs to establish one's business offshore and shelter your money.

This is all fine and well unless you happen to work for someone else

[mawilson 2,133]

Actually Gary, the UK tax bracket for a decent income in the UK is about 20%.

Only if you make less than £34,800 (or about $54,000). Anything above that is taxed at 40%,

and from April 2010 a new rate of income tax of 50% will apply to income over £150,000.

[Trumplestiltskin 5,791]

Only if you make less than £34,800 (or about $54,000). Anything above that is taxed at 40%,

and from April 2010 a new rate of income tax of 50% will apply to income over £150,000.

I think for this year and next the 20% rate is adjusted to £37,400