Taxes When Living Aboard

[valhalla360]

Originally Posted by cwyckham

This is a very personal and often emotional issue for those of us caught up in this mess. I receive no benefit right now from my US citizenship, but I need to pay a cost. In the future, I may want to move to the US, though, so I need to decide whether to renounce or not based on current pain vs possible future gain.

I'm also concerned that I may have trouble at the border if it shows that I've renounced my citizenship. US border guards can be very arbitrary.

No other country other than Eritrea forces its citizens to make this choice.


I am lucky that I don't actually have to pay any taxes to the US, but that doesn't mean there's no cost.

• I've had to pay an accountant to lead me through the complex tax laws.
• I can't have a Tax Free Savings Account to invest tax free.
• I can't have a Registered Education Savings Plan for my son. This is the primary vehicle that the Canadian government uses to issue education grants (luckily my wife isn't American, so we can put it in her name and get around that one).
• If I buy a house as a primary residence I need to be careful to meet the (different) rules for primary residence of the two countries to avoid paying capital gains.
• If I buy a house that isn't a primary residence and sell it a few years later for the same as what I bought it for, I could be on the hook for thousands of dollars in US taxes if the exchange rate moved the wrong way in those years.
• If I have non-sheltered mutual funds in a Canadian bank I need to be very careful that they don't fall under US "foreign trust" rules, but nobody really fully understands those rules.
• Every year I need to list the maximum amount in every account that I have, including my joint accounts and send it to the US government (this one is an annoyance and takes time, but also really irks me from a privacy standpoint).
• In some countries (luckily not in mine) US citizens can't get bank accounts because the resulting reporting the bank has to do to the US government is too onerous.

Anyways, you get the idea. The real kicker is that the US government gets little to nothing out of putting all of this onto their citizens abroad. Mostly we get enough foreign tax credits that we don't have to pay but have the worry hanging over our heads that we'll inadvertently screw something up and be out thousands in taxes or fines or even thrown in jail for screwing something up.

If you don't want to live in the USA or Etirea, don't. From your description, you have that option. If you don't like the tax rules, vote for someone who will fix them to your liking. As a US citizen you have that right. Otherwise, what Etirea does is irrelevant.

This is like saying most of the world drives on the righthand side of the road so I should be able to do it in the UK because only a handful of other countries do it. It doesn't matter, those are the rules, follow them.

You claim that you recieve no benefit but that is false on the face of it or you wouldn't be struggling with the issue. If there was no benefit, it would be an easy choice to simply walk away. You know that it gives you options and protections that other people do just about anything to get. It's not a perfect country by any stretch but its a heck of a lot better than many.

The idea that you will be unfairly singled out is just a scare tactic to prove your point not a realistic arguement. Unless you try to cheat the system during the breakup, not a whole lot to worry about.

As to your other points, yep, you want the benefits of citizenship in both countries, you have to follow both sets of rules and there is no obligation for either country to change thier rules because you can't pick a country.

I'm sorry it's a hassle for you but that's what happens when you try to play both sides.

[Island Time O25]

It seems even from "official" State Dept stats that approximately at least 6,000,000 US citizens are living abroad. And that may be a low end estimate which does not include all of the potential US citizens, i.e. children and spouses of US citizens, etc. If many (most?) of those lobbied their congresspeople or at least voiced their opinion in more or less organized way AND voted accordingly it would be a formidable voting block not to be trifled with. Other groups much less numerous in society have succesfully made their voices heard. One of the aims of course should be the abolishment of this idiotic "Eritrea" approach to taxation. And this may find quite a lot of support from most anti-taxation groups to the point that it may actually come to pass.

Just think of the gay marriage issue and where it stood with the general public and the law just 15-20 years ago and where it is today. So abolishing this enslaving tax provisions for ex-pats or just anyone not earning their money inside the US is doable but the lobbying for the abolition has to be much more vociferous that just complaints on this or that forum.

[fishsail]

While we're on a tax subject. how about property tax for live aboards at a marina? I thought I read somewhere that you have to pay additional property tax?
is this correct?

[BandB]

Originally Posted by fishsail

While we're on a tax subject. how about property tax for live aboards at a marina? I thought I read somewhere that you have to pay additional property tax?
is this correct?

Property tax is a state by state issue. In Florida, there is no property tax on a boat. In California, it is quite high plus you do pay an additional amount based on the marina slip. Those are probably the two extremes.

Now while we choose to live in Florida, there are a lot of people who choose to live in California including many with boats. To them the pluses compensate for the tax burden.

[hellosailor]

" If you don't like the tax rules, vote for pay off someone who will fix them to your liking."

Every paragraph in the US tax code was placed there by Congresscritters who got paid off by lobbyists, one way or another, to put it there.

Otherwise the whole tax code could be boiled down to:
"How much did you make last year from all sources? OK, now move the decimal point over one column and send us the check."

And all we'd have to argue about, was whether that was enough money to run the government, or the rate needed adjusting.

That's strictly a financial comment, not a political one.

[jmschmidt]

If this is true the law has changed.

[BandB]

Originally Posted by jmschmidt

If this is true the law has changed.

Might help if you said what "this" is or referred to the post.

[jmschmidt]

There two kinds of property, real property (land and improvements thereon) and personal property is everything else you own. There are two kinds of personal property, tangible and intangible. Tangible personal property can be big-ticket items like cars, boats and airplanes or small-ticket items right down to your underwear. Intangible personal property are stocks, bonds, five dollar bills and a deed to property (but not the property itself). Intangible personal property gives you rights to something of value (by a burger with the $5) but have virtually no value themselves. Most states have eliminated their personal property taxes in recent years but since they are all broke, look for it to make a comeback. All states or counties have real property taxes which do not apply to tangible personal property like boats.

[BandB]

Originally Posted by jmschmidt

There two kinds of property, real property (land and improvements thereon) and personal property is everything else you own. There are two kinds of personal property, tangible and intangible. Tangible personal property can be big-ticket items like cars, boats and airplanes or small-ticket items right down to your underwear. Intangible personal property are stocks, bonds, five dollar bills and a deed to property (but not the property itself). Intangible personal property gives you rights to something of value (by a burger with the $5) but have virtually no value themselves. Most states have eliminated their personal property taxes in recent years but since they are all broke, look for it to make a comeback. All states or counties have real property taxes which do not apply to tangible personal property like boats.

I really don't know what you're arguing about or claiming isn't true. The discussion is property tax on boats and it varies by state. Florida has none. California has very high. Everyone else in between. We're not discussing real property nor underwear. We're not discussing automobiles even. Boats are the issue.

Now you said, if "This" is true, the law has changed. You never said what "this" was or which post you're responding to. So, I guessed my post but it would really help if you let us know what "this" that you're arguing about it.

[Crosis]

JUst a side note. There are only two nations on earth that demand taxes from citizens that are not living in that nation. The USA is one and the other is a dictatorship. Says a lot about the USA's tax laws.

[valhalla360]

Originally Posted by Crosis

JUst a side note. There are only two nations on earth that demand taxes from citizens that are not living in that nation. The USA is one and the other is a dictatorship. Says a lot about the USA's tax laws.

First, I believe you have misquoted. Most nations demand taxes of thier citizens even if they live outside the country. What taxes and when they are applicable vary. I suspect you are thinking of ordinary income earned outside the country and that isnt' even entirely true depending on how much is earned and how much time is spent outside the country.

Second, so any law that coincides with a nation run by a dictator, is intrinsically evil or bad? The Code of Hammurabi was instituted by a dictator and that is often considered the root of our legal system. Most of our system is based on European roots instituted by various dictators (from the Roman Emperors thru the various monachies).

I'm not saying it's right or wrong but if you are going to knock a law, please share a rational reason rather than simply attempting guilt by association.

[sailorchic34]

California personal property taxes are very roughly 1% of the actual value of the property. It varies by county due to extra bonds/fees passed in each county. I've not found it excessive yet, but then I live on a modest boat.

Florida does not have property tax, but the yearly registration sticker cost something like $80, if I remember correctly. In California, that registration fee is $10 a year.

[hellosailor]

Crosis your conclusions about the US and some unnamed dictatorship sound like you are discussing whether an elephant or an alligator is more dangerous, and your sole criteria is the sharp teeth. Not a valid way to compare the two, I'd suggest.


Remember that in the first US nation, only 20% of the population was supposed to vote and control the nation. Now, it has become an idiocracy, and if our tax laws are unfair...yes, turn around and blame your neighbors. Especially the ones who picked up and left before they had a chance to either vote to make new laws, or arrange their affairs with a knowledge of the existing ones.


Fair? Maybe, maybe not. But in every nation, the folks who aren't running things get the short end of the stick. Pick up and leave, and you've just handed over control to someone else. And guess what they're going to do?


The situation is unfair. That's life. So either change the laws, change the government, or go rogue and off the books. There really are choices.

[jmschmidt]

I'm not arguing about anything, just trying to inform. If you don't care don't reading.

[jmschmidt]

I believe there are are four countries that tax their citizens on all their world-wide income from every source. The US and the Philippines (because the Philippine IRS was set up by the US IRS after World War II). I'm not sure about the other two and I'm thinking Australia has some form of this but not as egregious and the US. The statement that most countries do this in not accurate for obvious reasons. There are some 200 countries in the world and very few of them have the enforcement capability to make it stick.