The actual laws are rather confusing and there are various tests and exceptions to determine what you owe. It depends on how much you make, how much you have, and how much time you spend here. So there is no one answer for everyone, but the basic point I was trying to make is that you can't just walk away and think you are free of the IRS, which is what many people think. From the government website: "P.L. 104-191 contains changes in the taxation of U.S. citizens who renounce or otherwise lose U.S. citizenship. In general, any person who lost U.S. citizenship within 10 years immediately preceding the close of the taxable year, whose principle purpose in losing citizenship was to avoid taxation, will be subject to continued taxation."
The first 80,000 is tax free via the ex-pat exemption. So yes, you actually can walk away (up to a certain amount). Just make sure you move to a country that has a tax treaty with the US to get the exemption.
The limit is now a little more than that, and it also pertains to US citizens living abroad, not people who give up their citizenship. The housing expense limits and income phase outs were recently changed so it is much more costly than it used to be. I was talking about giving up your citizenship for people who actually make money. If you give it up and move to another country you are automatically assumed to have done it specifically to avoid taxes and are subject to paying US taxes for 10 years. As I said there are income and net worth limits, as well as the possibility of gaining exemptions so only a qualified professional could give specific advice.
Right, I know. I was already aware that one cannot give up their citizenship for tax purposes which is why I suggested one becoming an ex-pat. As long as your income is not locally based (should not be an issue for most traders) then one will not have to pay taxes in the country they choose to move to and they are exempt for the first 80k or 100k of their US income. May not seem like a big deal, but another way to look at is, the US Government is actually paying you 40k to 50k a year in cash to get the hell out. Not a bad deal.
It's quite easy to get around the "I left for tax reasons" provision that allows the US gov to seek tax for that 10 year period. I have a couple of freinds here in asia who have just done it. you just need to be creative, and have a good lawyer to help. Another point is to restructure your affairs a few years out, if you can, that way it is harder for them to say you just did it for tax reasons. You Americians are the most screwed by their gov for ex pat living, so much for the good Ol' USA for been the home of capitalisum and the free, what a joke. Anyway good luck to those that escape.
I've heard about this provision, but I can't fathom how it would be that you've become a citizen of another country and earn your income outside the USA... how is it that the US can tax such a person for 10 years?
Not one satisfied customer on this thread SO far ? Never easy being a " has been " The old saying of - be nice to others on the way up because you will meet them again on the way down - springs to mind ! Cheer up guys it's only money !!
because they think they can. It only relates to US sourced income, from what I have read it only applies if they prove that the reason of the change was to evade US tax. there has also been some changes of late, so could have changed.
If you are really bored with a faily easy hum-drum life then don't go West anymore go East !!!!! The amount of money sloshing about for the toughest is truly amazing. It's a whole new world of paying off officialdom, paying off the mafia and grabbbing a share of the pickings !! If you can live that long. A bit like the old West must have been like !! There is little recourse to the law if your neighbour is threatening you unless their orders from ??? says they better do something. If you hate law and order, socialism etc. etc. then Russia is just the place for you if you're tough enough ! So don't moan too much if you're a wimp the alternatives are MUCH worse