Money and banks

[hellosailor]

Mike, US citizens do not need to file any federal tax forms if our incomes fall below a threshold point. We are still asked to file anyway--even if there is no income--as a courtesy and a way to confirm we are not simply skipping the filing, since failure to file is an offense UNLESS you're below the threshold, and who would know if you were, if you didn't file? (Catch-22, which was invented here in the US as you may know.)

RH, The USN has special legal duties to US citizens, so it is no wonder we get priority treatment from our own "employees", as I suspect most citizens get from their own nations. There also used to be specific advantages to vessel documentation that legally required federal aid and intervention--I know because I had them printed out and filed over 20 years ago, and in the years since seem to have misfiled them and found they no longer exist--or are no longer being discussed. (An incredible number of our federal laws are simply not available on the internet at all, and what is available would be a Soviet dream, history rewritten daily.)

If you ever get bored look for marine topics in the US Code (online) and you may still find some odd things. Like, the penalty for hijacking a vessel may be death--reduced to a $10,000 fine for US citizens. (Don't hold me to that one being exact or current, but I honestly HAVE seen that kind of inequity, on that topic, in the USC.)

And if you are a US documented vessel, carrying inbound mail from overseas, you are allowed to enter the US without stopping for anyone or anything in order to deliver that inbound mail to the USPS for prompt delivery. Yes, in theory you can tell the USN and USCG and DHS all to go wait in line and stick a cork in it, until after you've landed that mail and gotten it to the USPS. (Probably would help to have one huge set of brass ones if you were planning to do that.[g])

[rebel heart]

Late October 2007, a US warship picks up five (us citizens) sailors from a life raft after they ditched their yacht. USS Halyburton Crew Helps Rescue Five Civilian Sailors at Sea

[Ex-Calif]

Originally Posted by hellosailor

We are still asked to file anyway--even if there is no income--as a courtesy and a way to confirm we are not simply skipping the filing, since failure to file is an offense UNLESS you're below the threshold, and who would know if you were, if you didn't file? (Catch-22, which was invented here in the US as you may know.)

I would discourage everyone from taking tax advice from anyone on the internet, including me. Here is the table from the IRS.

Filing Requirements





If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad.
Your income, filing status, and age generally determine whether you must file an income tax return. Generally, you must file a return for 2007 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table.

Filing Status* Amount
Single $8,750
65 or older $10,050
Head of household $11,250
65 or older $12,550
Qualifying widow(er) $14,100
65 or older $15,150
Married filing jointly $17,500
Not living with spouse at end of year $3,400
One spouse 65 or older $18,550
Both spouses 65 or older $19,600
Married filing separately $3,400

*If you are the dependent of another taxpayer, see the instructions for Form 1040 for more information on whether you must file a return.

[Rez]

Magellan, I am just going to add a general point: soon it will be impossible to be anywhere in the world without your home government knowing about it. Not only does paying a bit of tax have health care and security advantages, but it also saves you from being tracked down by some mealy mouthed pen pusher because it is not obvious that you are doing the right (Standard) thing.
Having legal problems away from home is difficult and expensive. I have a friend who suddenly had her passport "held" in a wee foreign country because her home nation had got mixed up. Cost about 50,000 US before it was over. And six months.
They didn't jail her, but made her stay in a hotel - at her own expense of course - would not let her near her boat. By the time they turned her loose her boat was so thoroughly looted she could not sail it.
I ran into her as she was hitch hiking the Pacific toward home. She was in her forties and had some clothes and her passport left. She'd had a sweet 34' boat, too. Nice person. Teaching college now. Good sense of humor. "I'm a sadder but wiser girl," she laughed.
But it took something out of her. She lives inland now.
Does not roam outside her country.

[Boracay]

Rez, would you be so good as to name the countries involved?

[FerdinandMagellan]

Certainly the internet isn't a good place to look for tax advice - it just breeds more confusion, although all your comments are definitely food for thought.

Evidently no two tax systems are the same. If I remain tax resident in Spain, for example, I would have to continue paying social security at €250 a month - I'm a freelance/sole trader working as a writer/journalist/translator - that translates into €3000 a year just to be legal and eligible for healthcare (and only in Spain). My wife and I are in our 30s, we can get international health insurance cover for around €1,500 per year. That's a big difference when you're cruising on a €1,000 a month budget.

I do not know how easy it is to leave a tax system, other people I've spoken to haven't had problems but then they've just moved somewhere else in the EU. But then, as far as I understand it, in Spain it is not a crime if the amount of tax owed is less than €120,000 and all they could do is try to seize assets held in Spain of which there would be none to seize. And, if they don't catch up with you in four years, you're home dry. Besides I wouldn't probably be earning that much and what I earn wouldn't pass through a Spanish bank.

I agree that not paying taxes anywhere may seem unethical, but then why should I pay into a system I would no longer be using? Maybe I should start paying into the UK then, if they're the ones going to be doing the rescuing.

[Pelagic]

Originally Posted by Therapy

I wish someone that was stateless would post so we would know.

I think those who have achieved a stateless nirvana would not really wish to discuss it on a public forum

[Rez]

Boracay - No, Thank you. Governments have long memories and long arms.

[Rez]

Pelagic, if you never leave whatever country, never need ID to fly or drive, and have physical access to your money without any accounts being involved, a private vault or safety deposit which is unlisted, you can be stateless.
Communication, particularly computers, are shrinking the stateless envelope. A lawyer and a mail drop can deal with boat registration, but money, keeping it and moving it around, is the real twister.

[FerdinandMagellan]

Are there no unclaimed atolls left?

[David_Old_Jersey]

Originally Posted by FerdinandMagellan

Certainly the internet isn't a good place to look for tax advice - it just breeds more confusion, although all your comments are definitely food for thought.

Whilst I would not disagree with the broad sentiment, but I would say that the internet is a good place to get an understanding of the issues and questions to ask someone competent, about your own circumstances - which always differ, even if only slightly, from others......IMO no point also paying someone to educate you from ground zero.

Evidently no two tax systems are the same.

Yup. The "fun" ($$$/£££) often comes when you are earning and moving between countries, even if only trying to ensure you pay tax the once - the time to take tax advice is always BEFORE making the move.

If I remain tax resident in Spain, for example, I would have to continue paying social security at €250 a month - I'm a freelance/sole trader working as a writer/journalist/translator - that translates into €3000 a year just to be legal and eligible for healthcare (and only in Spain). My wife and I are in our 30s, we can get international health insurance cover for around €1,500 per year. That's a big difference when you're cruising on a €1,000 a month budget.

That is your call. For the sums involved (and on the assumption that the Spanish Healthcare system is broadly the equivalent of the UK NHS) I would choose to pay the EUR250 a month, unless I could rejoin the system quickly and get full benefits. But everyone's judgement is different.

I do not know how easy it is to leave a tax system, other people I've spoken to haven't had problems but then they've just moved somewhere else in the EU.

IME their is usually no problem moving between equivalent Tax systems in "real" countries and within the EU they do have reciprocal double tax agreements (and with countries outside the EU) which broadly speaking ensures that folk do not get taxed twice. But also it means they can exchange information on and about tax payers. and non tax payers

The problems arise when you mix the following up a bit too much:-

a) a move to somewhere that involves not paying much (or any!) tax
b) are known to have sh#t loads of money
c) want to still earn money within the country you are leaving and;
d) want to still live in the country you are leaving!

In your case b) and d) are not applicable. and given the nature of your employment c) is "doable"......and a) on it's own is not a crime.

But then, as far as I understand it, in Spain it is not a crime if the amount of tax owed is less than €120,000 and all they could do is try to seize assets held in Spain of which there would be none to seize. And, if they don't catch up with you in four years, you're home dry.

That seems very generous! - if I was relying on it I would get this in writing from a competent Tax Advisor.

Besides I wouldn't probably be earning that much and what I earn wouldn't pass through a Spanish bank.

That comes under C) "Doable". Without knowing Spanish Tax Law (Que?!) I will not speculate on how aggresive you would need to be with your tax planning.......it may well be that as a non Spanish National as soon as you are no longer resident and are not earning income in or from Spain then you are no longer liable to declare income, let alone pay tax on it. Certainly would be conveniant if it was the case and by no means impossible - not all Tax systems are like the US where basically if you have a US passport it is hard to shake off the US tax man. Legally. I have no problem with this approach cos' as far as I am concerned it's their country and their citizens can set their own rules. But not everywhere has the same approach.

I agree that not paying taxes anywhere may seem unethical, but then why should I pay into a system I would no longer be using? Maybe I should start paying into the UK then, if they're the ones going to be doing the rescuing.

The UK coming to help? mmmm.......they are not quite in the same league as the US of A I am afraid. That "gunboat in the morning" has long since be sold off. Plan A if encountering Pirates off Somalia etc is to get on the Radio to seek help by stating I am an American vessel, with American Citizens on board......including Oprah Winfrey and Elvis Plan B is declare that I am British and explain to the Pirates that my Embassy will write "a stiff letter" to the Times of London. If I am lucky

Just Registering the Boat in the UK will not automatically make you UK Resident and liable to pay tax (It does not me!), nor would having an "address" in the UK - however for belt and braces I would keep your evidence that you were living elsewhere (Bills and Visa's etc) if you think that after your travels you may one day end up in the UK. Being on a budget I would guess address wise you would be using the address of a relative or freind - IMO this is preferably to a PO box No, as it sounds (and is!) a real address - not to say you cannot get a non PO box accomadation address.

One thing however that does occur to me is that if yoru boat is presently registered in Spain is that by going to a UK Flag, if you return to Spain to live whether this would cause you problems - I seem to recall the odd post (here or elsewhere?) from Brits living aboard in Spain seeking to avoid some sorts of boat related taxes for foreigners / foreign boats. I Forget exactly what they were banging on about! And also on the VAT front maybe worth getting whatever you can get as evidence of VAT paid (if anything is issued in Spain?) whilst she is registered in Spain and you are their - perhaps not something so easy to get once the boat is Foreign (UK) Registered / you are no longer a "local"??.......at least keeps your options open for selling (easily) or living onboard back in the EU.

E & OE

[FerdinandMagellan]

Plan A if encountering Pirates off Somalia etc is to get on the Radio to seek help by stating I am an American vessel, with American Citizens on board......including Oprah Winfrey and Elvis Plan B is declare that I am British and explain to the Pirates that my Embassy will write "a stiff letter" to the Times of London. If I am lucky

...brilliant, kind of what I expected, at least my wife has US citizenship (she's a dual national). Maybe she can pull off an Oprah impersonation...

Thanks Dave for the advice. Very much appreciated. Personally, I think I'll run the risk. If we come back to Europe it probably wouldn't be Spain and, even if we did, re-entering the system is relatively straightforward, and certainly not worth paying €3,000 a year for while we're not there.

Don't have a boat yet, but we're looking to buy in the UK - they seem cheaper than in Spain - so flagging it there isn't really a problem.

Cheers