I came across this incredible summary while researching another issue. It’s enough to make anyone want to avoid the U.S. entirely. Please note that this was written in 2007. Therefore, it should be read to identify “issues” and NOT as a final statement on the law as applied to those “issues”. As you know, times change and the law changes. Nevertheless, you will be horrified by the sheer number of rules/regulations and the complexity thereof.
— U.S. Citizen Abroad (@USCitizenAbroad) March 24, 2014
— US Taxation Abroad (@TaxationAbroad) March 21, 2014
The article includes:
Globalization is luring Canadians every year to work, travel or retire in low- or tax-free countries with the mistaken belief that they can shed their tax obligations at home.
But experts in the field say the only way to legally free yourself of Canadian income tax is to completely sever ties with the country and become a permanent resident elsewhere.
— US Taxation Abroad (@TaxationAbroad) January 21, 2014
Of particular interest in this seminar are:
1. Discussion of the 3.8% Obamacare investment tax – likely not creditable
2. Punishment for using “married filing separately” category. The lower thresholds virtually guarantee “double taxation”
Income taxation and international mobility http://t.co/8duAV72aGM
— US Taxation Abroad (@TaxationAbroad) January 7, 2014
Here is an interesting book, partly available online (Note you can actually read the book online):
Income Taxation and International Mobility
Taxpayer Advocate Service (TAS) – The Decline And Fall of A Once Great Department Inside The IRS https://t.co/RJTQ6eGIgF – Trying times!
— US Taxation Abroad (@TaxationAbroad) December 11, 2013
The lesson learned here is that now more than ever YOU need to be educated about YOUR tax obligations and if (more likely when) YOU get scrutinized YOU will have to learn to navigate the disturbingly troubled operational patterns of the IRS’ Examination (audit), Appeal, and/or Collection functions either on YOUR OWN or with the trusted advice of a friend or relative that may have had similar experiences.
The Reality of U.S. Citizenship Abroad
Nobody denied that the unintended targets of Congressional legislation aimed at those who supposedly “owe allegiance” to the USA, now assisted by craven foreign governments anxious lest their financial services entities lose access to the US market, are mostly unlikely to do anything at all. But the whole idea of universal self-assessment of taxation is to keep the taxpayer in an anxious condition, to make him overpay if possible, but at least not to underpay. Those now faced with an unprecedented, even retroactive, enforcement campaign and who must, if they wish to become compliant and avoid penalty or even prosecution (should they be identified in the future), sacrifice much of their wealth, even become insolvent.
Comment at the Isaac Brock Society blog – July 29, 2013
— US Taxation Abroad (@TaxationAbroad) August 1, 2013
— US Taxation Abroad (@TaxationAbroad) October 9, 2013
Of course it’s always more complicated if you are self employed.
— US Taxation Abroad (@TaxationAbroad) October 9, 2013
The above tweets reference two nice blog posts by U.S. tax lawyer Virginia La Torre Jeker J.D.
There is a general presumption that U.S. citizens must pay U.S. Social Security, Medicare and Self-Employment taxes. The presumption is rebutted if one resides in a country that has a “Totalization Agreement” with the U.S. Since 1984 Canada has had such an agreement.
I recommend both of her posts to you.
As she notes:
… old age catches up with everyone, and a savings plan for retirement should be put into place. Here, the expatriate must be very careful since it is quite easy to be led down a path of investing in offshore products that yield little more than terrible US tax consequences. Make sure you understand the US tax implications of any offshore product before you sign on the dotted line.
Some U.S. citizens abroad, depending on your employment history in the U.S., may have accumulated enough credits to be eligible for U.S. Social Security.
At some point this is something that needs to be considered.
— US Taxation Abroad (@TaxationAbroad) October 3, 2013
The post is aimed primarily at those who are NOT “U.S. persons” (citizens and green card holders”. I have noticed that a number of “free real estate seminars” directed toward getting Canadians to:
“Buy U.S. Real Estate”
All U.S. investments create tax and compliance problems. Tax and compliance problems cost money, take time, cause anxiety and reduce your quality of life. This is what the promoters don’t tell you. To get a flavor of the kinds of problems, U.S. investments WILL cause read the following articles referenced in these tweets.
— US Taxation Abroad (@TaxationAbroad) August 12, 2013
Finally a good article from the Wall Street Journal telling it like it really is. Some highlights:
That was then:
“When I became an immigration lawyer 30 years ago, people really were excited about going to America. Now, more than half of my clients are people thinking of other alternatives rather than people seeking to immigrate to America,” said Eugene Chow, the principal of Chow King & Associates.
This is now:
Mr. Chow says the new regulations have altered the entire premise of his business. “My mentor, who is in his early 80s, said to me, ‘You became an immigration lawyer to fulfill the American dream, and now you are helping people leave.