That’s my point. If you’re a US citizen who lives in China, works in China, eats, breathes, and sleeps in China, then you owe US income tax on your worldwide income. Moreover, if you marry a Chinese wife and you choose to file a joint return, then you owe tax on all her money, too.
On the other hand, if you’re a Chinese citizen and you live and work in the US, then you owe zero to China, but you have to file a US income tax return. It’s asanine.
how much you fools getting back this year? Im getting a boatload back cause of mortgage interest deduction. USA USA!!
Supposedly its $0 for basic federal and state, not sure about Schedule A or anything more complicated though. Did nobody else catch the TT tea party super bowl commercial?
someone was telling me you can deduct the cost of tax preparing software
^You can deduct the costs of tax preparation, but it’s subject to the 2%-of-AGI limitation, so it would have to be greater than $500 for me, or greater than $100,000 for Itera.
Its a legal requirement for all US citizens/green card holders to disclose to the IRS foreign bank account with some kind of threshold balance (based on highest balance at any single point in the year). Penalties are steep. Its called FBAR. Are you going to get caught? Dunno. But if you do, it could be very very painful.
The US tax that you owe is reduced in most cases by foreign taxes paid though. Americans working in Canada don’t generally owe anything because taxes are higher here and they get a credit for those taxes paid. But there is still an obligation to file a return. How much for foreign tax you get to claim is a question for Greenie.
^I’ve discussed it before somewhere. Foreign tax credit is not dollar-for-dollar. In fact, it can be as little as pennies-for-dollar.
We have few, if any, clients who earn income from working abroad. All of the foreign tax credit I’ve ever worked with is from foreign tax paid on brokerage accounts.
^ And I don’t work in tax so I really have no idea on credits. I think it depends on treaties and what not. I’m pretty sure Canada and the US view foreign tax paid as 1:1 but I could be wrong. My experience on the issue is on the banking side, working for a global firm with Americans causing me compliance headaches around the world!
Looking online, it seems that willfully failing to disclose a foreign account with a balance of over $10k at any point in the year could result in: - Fine of greater of $100,000 or 50% of the balance - and, 5 Years in jail Accidentally missing an account will cost only $10k.
Fine. I get your point. I’ll pay taxes.
It’s probably the #1 reason to stay in America. If I have to pay taxes anyway, might as well enjoy the benefits.
But here’s a different way of looking at this- if I own property abroad, and I’m paying taxes there, do I have to disclose that to IRS too? Someone above mentioned disclosing it would incur more liabilities. Is this required?
Renouncing your citizenship ends your compliance requirements…
That’s true. If I do ever move back to my home country it’s probably worth considering.
If you own property in Japan, and you’re paying Japanese property tax, and you try to deduct your Japanese property tax, then the US might come in and audit you to make sure you’re actually paying the tax. I doubt that’s any more of an audit risk than a US home, though. (Except a US bank would issue a 1098, so you’d be safe, there.)
If you’re a Japanese citizien living in the US, but also with income in Japan, I don’t think you’d have to declare it to the US. You’re not a US citizen, and it didn’t occur within the US borders, so I think you’d be safe, too.
It’s also extremely expensive.
^ It jumped from $500 to $2500 a few months ago.
I wonder if ever there is a serious reform to simplify the tax code if this requirement on worldwide income will be removed.
I owe a bit this year. I was too aggressive with my exemptions from withholding. Greenie, I didn’t know that foreign residences could qualify for the mortgage interest deduction… Definitely news to me. That said I’m not sure of the investment value/financial benefit of buying property I don’t intend to life in, in a country that is semi deflationary and very well may have surplus property in the future since Japan’s population is so elderly and not really being replaced