why: so the government won’t be able to use your money for whatever the fuck they’re planning for the next 4 years.
as a traveler, none of my money has been funding Israel, for example.
one-step method: you basically fill out one extra tax form called FEIE while you’re doing your taxes, write down the dates you were outside of the country, and then since you aren’t in the country and are not receiving any services from the US, you don’t have to pay income tax up to a certain amount (it’s a little over 125k this year).
But if you earn over the threshold, you’re expected to pay taxes to the US government, no matter where you’re actually living or working, no matter if you’re also paying taxes wherever you currently are. The US is the only country in the world to assert that it has the right to tax its citizens remotely in this manner. It’s not normal.
Double taxation treaties are very common. What I’ve been told by US coworkers makes the US stand out is that you still need to file your taxes with the IRS, even when living abroad. No idea if that’s actually the case.
I have lived outside my native country for a while and only had to file taxes in my country of residence (neither of which is the US), because there’s a DTAA in place between the two.
It’s not the only country. I’ve lived in another country that was just like that. I bet other countries have the same rule to avoid some tax loophole. Or just because they can.
The US has double taxation treaties with over 60 countries. When you pay taxes somewhere else, you deduct all of that tax from your US taxes above the $125k.
Though I definitely agree the IRS shouldn’t need these treaties, because if you’re not living there, why should you even need to file?
Because US law says so lol
Y’all just now learning that laws are written for the benefit of the ruling regime, not the peasants.
There were only “two parties in all States,” Randolph concluded. “The ins and the outs.” The ins construed governmental power broadly for the gain of their own “patronage and wealth,” while the outs tried to limit such power. “But let the outs get in . . . and you will find their Constitutional scruples and arguments vanish like dew before the morning sun.”
It’s Navy SEAL protection money.
They also charge you a crazy exit tax if you want to give up citizenship in order to save on taxes. They always get their pound of flesh.
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Good.
poli scie 101… they have the monopoly on violence
“over the threshold, you’re expected to pay taxes”
sort of, that’s the “up to 125k” limit part of the FEIE(readjusted for inflation every year).
you still don’t pay taxes on the first 125k.
earning more than 125k is not a problem most people have.
The problem most people have is not knowing that the feie exists in the first place and there are legal, straightforward ways to avoid paying income tax while saving money traveling.
“no matter if you’re also paying taxes wherever you currently are…”
this is very iffy and depends on a lot of factors.
again, for most regular people, foreign income tax credits will erase most financial duties to the US.
“The US is the only country in the world…”
nearly.
“It’s not normal.”
nope, it’s definitely weird and it sucks.
but at least there’s the FEIE.
That said, if you’re making over 100k trumps tax cuts will probably be pretty nice for you.
Not if you live in a state with state and local income tax. They capped SALT deductions, so you’re basically paying tax on taxed income.
But if you live overseas you in fact do not live in a state.
Some states still require you to file even if you don’t live there, but have ties, and may tax your income.
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Further, not doing so could impact things like voter registration depending upon the state. The whole system of US voting is a mess since it’s all at the state level.
Well, it is on them to find me and this income.
Yeah, it goes up faster than inflating each year, it seems. 126,400 per person or 253k for married I believe this year, which is a pretty fair bit especially considering you deduct the taxes you locally pay off the top first, afaik
“considering you deduct the taxes you locally pay off the top first”
i understood local taxation to be inclusive to the FEIE, can i see your source?
https://www.investopedia.com/terms/f/foreign-tax-credit.asp
https://www.irs.gov/pub/irs-pdf/f1116.pdf
I thought it was a Form 1116 thing, but I could be wrong for sure. IANAL and haven’t yet done foreign taxes so who knows yet
oh i see. thanks.
yea, the 1116 is for people paying formal taxes to the foreign government directly, usually because you’re living there as a permanent resident or operating a business full-time and significantly, have established your permanent tax home in that other country.
using the 1116, you don’t pay all of the taxes twice, although you still pay some of them twice because the US wants that cash.
the FEIE, form 2555, means that your tax is still in the US and only requires that you’re not in the US for 330 days out of the year to exempt income tax on up to 125k of income earned while outside of the country.
the feie does have a residency test as well, but the physical presence qualification of 330 days each year is simpler and requires much less trouble to set up initially (permanent residency, switching tax homes, work permits and all that) to qualify for, so I only deal with the physical presence test.
I always find it mad as hell that Americans have to pay tax in the US even if they are living and earning elsewhere
Especially given generally Americans are pretty allergic to reasonable taxation
yeah it is totally banana stacks, and nobody tells anybody else how to get around that, of course.
since nobody knows the sacred knowledge anyway.
some tax guy, not my tax guy, just a random guy who worked in taxes, offhandedly mentioned it to me like it was no big deal one day and I was like whaaaat?
most of the expats I know just don’t pay taxes because they’re dumb, or they’re paying taxes that they don’t need to because nobody told them about the FEIE.
You still need to file every year. An advisor at least here in Germany can do both countries, but you pay a premium for that.
I addressed that in a comment but I did not include that in the body.
fixed.
The FEIE is super simple to fill out.
pretty sure you have to fill out the 2555 as well bro
you also have to pay tax where you are domicile, aka where you live
“…the 2555 as well…”
nope, not “as well”, the 2555 is the single FEIE form I am explaining about in this post.
“you also have to pay tax where you are domicile”
nope, inclusive taxes are usually paid directly to the foreign government.
you can claim a US housing tax exemption for the same reason as the FEIE, but paying taxes on your foreign housing is usually unnecessary.
yeah ok the 2555 is the FEIE you mentioned.
its important to note that if youre within the US for more than that 35 day exemption, you start to pay taxes pro-rata.
I think you agreed with what I said just using different words about paying taxes where you do live- yes, you pay them directly to the government where you are domicle.
“yeah ok the 2555 is the FEIE you mentioned.”
yeah, that’s why i said it, haha.
“if youre within the US for more than that 35 day exemption, you start to pay taxes.”
are you going to rewrite everything I said in the post and comments?
to me?
"you pay them directly to the government where you are domicle. "
you are!
You’re paraphrasing my words back to me.
huh.
curiouser and curiouser.
I heard you need to file every year even if you’ve never lived in the US.
Depends. For example in Finland the filing is done for you every year by the tax authorities and tax is deducted every month from your salary. Once a year you get either money back or need to pay more if your work situation changes during the year. You can also correct them by saying “hey I paid this bus card” etc. and get money back.
In Germany it works about the same, except they charge you quite a lot more every month. Here you do not have to file, but if you do you usually get a lot of money back. Filing is more complex than in Finland, so you might want to have a tax advisor to do it for you.
I read somewhere that Eritrea (the North Korea of Africa) is the only other country that has this policy.
Once again the US is in good company.
However, since you don’t pay taxes on that money, it can impact which kinds of retirement accounts you can use based in the US, if any. Also, trying to invest as a US citizen outside the US can suck because of all the agreements with US banks. Many Japanese platforms, for instance, won’t touch me because of US reporting requirements. I also can’t functionally use the tax-advantaged retirement accounts here because many amount to what are called PFICs by the IRS which requires paperwork and are taxed punitively more than wiping out any advantage the retirement accounts would have.
You’re also going to have a rough time getting a US investment account if you don’t have one already. Then you have to figure out how to have a US phone number because two-factor auth basically requires it for any bank or anything that will touch you.
There are other “fun” things about being a US citizen living abroad.
Do you live abroad? I’m expatting in a few weeks (long planned, not in a pure panic due to Trump) and would love ask a few questions if so!
I can try to answer. I’ve lived in Japan for almost a decade (this is my 10th year).
“However, since you don’t pay taxes on that money, it can impact which kinds of retirement accounts you can use, if any”
The math works out in your favor.
wouldn’t you rather have that money earning interest now rather than receiving a few hundred later on when you probably don’t need it as much?
“Also, trying to invest as a US citizen outside the US can suck because of all the agreements with US banks.”
it can suck, and it can also be awesome.
I see you’re speaking specifically to Japanese banking standards, which I would agree are one of the more difficult countries for a US citizen to interface with.
but that’s a great thing about there being about 200 countries.
Bank somewhere else if you want to.
try Hong Kong or China or Thailand or Portugal or Sweden or you know, a lot of countries.
you don’t have to live in the country you bank in.
Yeah, some is specific to Japan, though there will be similar hurdles anywhere the US has an agreement (and that the target country’s institutions actually follow it, I suppose).
I have a couple of retirement accounts in the US that I contributed to before (I moved overseas in my early 30s) that I basically can’t touch for a number of reasons right now. Just wanted to throw it out there.
These posts are always so funny to me, because it implies you were completely happy with what the US has been funding for at least a year but now you want to talk about tax avoidance?
“These posts are always…”
show me.
I haven’t seen any other posts about the FEIE(except for mine earlier this year).
“…it implies you were completely happy…”
not at all, in fact, the post body specifically contradicts your implication.
your “implication” is drawn entirely from your own flawed assumptions and unnecessary ignorance.
“…now you want to talk about tax avoidance?”
I’ve been talking about the feie for years, so in the future you might want to check yourself since you just wrecked yourself.
You have to admit, he really destroyed that strawman version of you though.
set his own shoelace on fire and then tied it to the scarecrow to set it ablaze.
what a coup de gras!
It might be interesting to crosspost this to !politicaldiscussion@lemmy.world
Also, I know you mean good, but this isn’t relevant to probably a high number of Lemmy users who are not US citizens
No, as labeled, this is a US specific tax procedure that people who don’t pay US taxes won’t be able to take advantage of.
but lucky for them, most of them don’t have to!
most countries outside of the US have a similar procedure included in their far more citizen friendly tax codes.
the us is way behind other countries on…well a bunch of stuff, but with taxes specifically, you don’t usually have to declare that you’re not in the country if you don’t pay taxes, you just don’t pay the relevantaxes and the government only bothers you if you’re a big old liar.
I’m sorry, I’m not sure I get your comment. If this is a US specific procedure, then wasn’t my point that is isn’t relevant to non US citizens Lemmy users correct?
correct, yes.
I was trying to tactfully point out your comment’s redundancy, given the specific post title and body explanation of US tax code relevancy.
it’s sort of like I made a post about male seahorses giving birth, and you pointed out that male zebras do not give birth.
correct, for sure.
Just trying to avoid this community turning into !nostupidquestions@lemmy.world where all the questions are about the US elections
in that case, you want to retrain your target parameters.
they’re a bit wide.
They’re currently set on “USA specific posts in a general community”.
By the way, it’s always curious to me that there is no large instance managed from the USA.
LW and feddit.nl are Dutch
Lemm.ee is Estonian
Feddit.org and discuss.tchncs.de are German
SJW and lemmy.ca are Canadian
Lemmy.blahaj.zone, aussie.zone and Reddthat are Australian
There is Midwest.social but it’s quite small.
Any idea of the potential reasons?
“They’re currently set on “USA specific posts in a general community”.”
you might be drawing attention to the thing you’re trying to avoid.
“Any idea of the potential reasons?”
No idea, although I was wondering the same thing.
there are so many non-english communities that I regularly search for lemmy demographics out of curiosity, but I can’t even find ballparks on users categorized by nationality.
Unless you renounce US citizenship of course. I understand it’s a bit extreme, but it is a solution
do you mean “another option to avoid paying taxes is renouncing your citizenship?”
in which case, yeah, extreme and still an option.
but the FEIE is way simpler and you can keep the few perks US citizenship still affords its rabble.
Which isn’t free btw.
I’m seriously tempted to sell all my stuff and just become a nomad.
Sounds pretty dreamy all in all.
it’s pretty great.
and it’s just about as easy as you have described.
If you have any questions, I am happy to answer.
I’ve been doing this a long time and I’ve helped other people start traveling.
I guess my only question is, if I sell everything and liquidate all of my assets I would probably have like 30 grand, maybe more maybe less.
How long is that going to last me while I’m wandering, and what options are there to keep money rolling in?
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tldr: "30 grand will last you at least 5 years of very comfortable living if you’re at all trying to budget wisely.
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the easiest and most immediately profitable is English teacher, but remote work is vast and covers every field, so it really depends on what you’re interested in.
1 full)
totally depends on your habits and proclivities, but I lived on less than $300 a month for about a year. a lot of hostels in Asia and Europe have monthly discounts and they’re already like $7 a day. in Asia they can be $2 a day for a bunk bed in a room.
private rooms are 10 to 15 bucks a day, but if you’re going to do that then just go to a hotel and pay for the month, which you can easily get for $200 to $300 a month all utilities included.
I’ve been doing this a while, so right now I’m living in India paying $300 a month for a private two-bedroom two bathroom full kitchen, living room and dining room house plus rooftop terrace parking garage, the whole package, all utilities included plus free unlimited Wi-Fi.
about $0.90 will get you at one entree of chili goby, 2 to 4 rotis and a side of dal or curry.
kabobs are about $0.20 here, potstickers are up to $0.10 each.
anyway, you can live extremely cheaply in the beginning and then figure out what you want and go from there.
If you have 30 grand and no experience traveling, you can rent private condos or houses in a couple dozen countries off tge top of my head for less than 500 USD a month, all utilities included.
in the cheaper countries, you can spend $20 a day eating out at the fancier restaurants or go to the mom and pop shops or cook yourself and spend $1-3 a day on simpler meals.
If you want to pamper yourself and live in more expensive countries, you can double all those prices, but the more you travel the better you’ll get at traveling and finding good prices.
30 grand will last you at least 5 years if you’re at all watching your money,.
annually, you only need a couple thousand to live indoors and eat as much as you want, several thousand to to live privately end comfortably and enjoy entertainment everyday, and a few thousand after that to splurge most of the year.
2 full)
important consideration is that you only need to make five grand a year for all of your expenses well traveling in the more affordable countries (of which there are dozens), anything after that is play money.
If you have zero skills or certifications, English teaching is the easiest and quickest way to make money. you’re instantly making $12 to $20 an hour repeating primary colors and fundamental vocabulary to smart well-behaved children for 45 minutes at a time.
you can get a tefl certification for 40 bucks on Groupon, that lasts for a lifetime and increases your pay up to $20 even without experience.
or you can just fly over to China and you’ll get a job that week starting at an absolute minimum of $12 if you fuck up the interview and dress like a homeless person.
Last I checked, Saudi Arabia (and some provinces in China) was paying $6,000 US a month for English teachers.
that’s the easiest, but there are plenty of other jobs you can do.
there are too many jobs to list, you can write articles if you’re good at writing, you can get free it certifications and work as an SEO optimizer, you can literally pick berries and work seasonally in some countries.
I knew a Spanish couple who are just trying to choose a country and they just moved to whichever place had berry picking work that year, worked a couple days a week.
If I know your interests, talents or proficiencies I can suggest more specific jobs in that field, but again, you only need to make five grand a year to live very comfortably, and you only need a couple grand to live in a dorm and eat good food everyday.
If you have those savings you’re talking about, you have a minimum of 5 years to figure out a way to make $5,000 bucks a year to maintain your standard of living, although you’ll probably save money the longer you travel.
I’m definitely a jack of all trades, but I have a bachelor’s in IT and like 10 years of work experience.
I feel like the competition is pretty high for people in that category though, but I could probably handle a couple hours a week of berry picking and English teaching.
yup yup.
any bullshit part-time job in IT will more than fund your lifestyle indefinitely.
get a job you like? even better. and you have 5 years to find that job that can pay you 10% of the US salary and you’ll still save $1,000 a month without trying.
and you can always try out other jobs just for fun since you don’t have the unrelenting financial pressure of the US ripping dollar bills out of your account everyday
oh!
I’ve got a great one.
are you tall?
China still hires tall foreigners to wear suits to walk around buildings and pretend they’re advisors.
so you dress up in a doctor’s coat and pose with a hospital administrator for a photo op, maybe give a prewritten speech at a textile conference, they’ll pay you to do that, more money and work. the taller you are hahaha.
anyway, you’re all set.
find any job that pays you $1 to $2,000 a month, sell all your shit and fly to whatever country.
shoot and you’re at the end of this year too, so if you leave before the end of January next year, and stay out the rest of the year, you’ll be able to use the feie for your 2025 taxes.
go ahead and show me any other questions if you think of them
Yeah I’m 6’1 but I’m native American so I don’t think I will fit into their thing cuz they tend to prefer white guys
prefer, yes, but especially for the walking around job they’ll take anybody tall.
their prejudices are real flexible in that regard.
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Does project 2025 get rid of the IRS? If so, how would this be enforced?
No, this is a legal and very straightforward IRS procedure corresponding to physical presence in the United States.
it’s called the feie, Foreign earned income exclusion act.
you basically fill out one extra tax form called FEIE while you’re doing your taxes, write down the dates you were outside of the country, and then since you aren’t in the country and are not receiving any services from the US, you don’t have to pay income tax up to a certain amount (it’s a little over 125k this year).
that’s it.
https://getyarn.io/yarn-clip/a421c712-bdee-42c4-9a0b-5e5c30a05c58
Sorry for the link but it’s the first one I found to the Python sketch.
No apologies necessary, thanks for the clip.
