If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.
Those parts are never mentioned when people complain about this stuff. Because the only ones paying it are the wealthy ones, and they always removed about taxes.
They pay, because at any moment they can come back as a citizen. If the wealthy do t want to pay for that option, then they can renounce citizenship and pay a one time tax to remove their wealth.
I’m aware there’s no real way to say anything here without sounding like a pretentious snob, but those income limits aren’t exactly spectacularly high.
I work in tech in NYC and my income is around those limits. My boyfriend is from Switzerland and there’s a non-trivial chance that we’ll wind up there long-term. If I was from literally any other country in the world beyond Eritrea, I would file Swiss taxes and that would be that. Instead, I’ll have a direct financial incentive to give up my native citizenship because I’m from one of two countries that makes a claim to any income earned anywhere in the world, even if I don’t step foot in the country that year. This is particularly rough in Switzerland because average salaries there are quite high, and thus so are costs of living, and so surpassing those limits isn’t a particularly uncommon thing.
I know this won’t garner any sympathy at all, but a bad policy only affecting the relatively wealthy doesn’t change the fact that it’s a bad policy. It could even backfire from a financial perspective, since having renounced American citizenship, I’d be less inclined to spend time in the US and contribute to taxes while visiting, and I’d never move back long-term, cutting off a chance of the government getting full income taxes from me ever again, whereas a change of circumstances might have otherwise prompted me to eventually return to the US.
The people this law targets aren’t the ones committing tax avoidance. And the US social safety net isn’t fucked because of a lack money, it’s fucked because it doesn’t even exist in the law.
The exit tax doesn’t do shit to address that. It doesn’t pay for anyone’s healthcare or magically make the poverty cliff go away. It’s a tax on upper income workers. Meanwhile actual rich people get their money through capital gains or loans and don’t pay this shit at all.
Oh but I forgot that since I own a small house in a middle class rural neighborhood and drive a Subaru that I’m “rich” so my opinion doesn’t mean shit apparently.
Arguing that allowing the super wealthy to just take all their stuff and leave wouldn’t hurt the system we have now even more than it already does is one of the most asinine things I think I’ve read on the Internet. Congratulations.
I pay no tax to the US, but I removed about it. I’ve lived abroad since I was 3y.o and realized when I turned 18 that I have to declare to the IRS every year. Let me tell you, it is an absolute pain in the ass when you have to do it yourself, without a US bank account or phone number. Takes me a full working day to declare 0 tax to the IRS when they already know that I owe zero tax because they force any bank I have accounts at to report to them. Half the banks in Sweden simply refuse to have me as a customer because of this, in addition to certain types of income technically being subject to double taxation because of US law.
I can’t even get rid of my US citizenship without paying an absurd exit tax
It’s not just about money. It’s a labor burden and a privacy intrusion. And even if iceblade02 could renounce for free, they then must carry the renounciation cert for the rest of their life and show it to every bank they deal with and hope that no data entry errors trigger data oversharing anyway.
They must renounce to get their human rights back. Because without renouncing, they lose their human right to non-discriminatory treatment on the basis of national origin (article 1 of the Universal Declaration of Human Rights).
But back to money, that annual tax filing accidental Americans must file costs them $300+/year – accountants do not work for free. It’s effectively a tax on the poor.
$120k is “wealthy” now? 120k isn’t even enough to buy a fucking house in most cities in the US. Actual wealthy people aren’t affected by this law because they don’t have regular income.
I’ve seen this on Reddit before: Six figures means you’re rich, because that was true in the 80s, right? Obviously people don’t have a clue that 40 years of inflation has made that middle class.
Also: income is not wealth, and the willful lack of understanding on that point blows my mind. A person who is wealthy can live an upper middle class lifestyle or better without ever having to work again. A person who has respectable income may have minimal wealth, or even mountains of debt (student loans, mortgage, etc). A person who makes 100k could be a few months unemployment away from losing their house or lease, while a person with “wealth” may not have to work at all.
People don’t become filthy rich working full time for six figures. The wealthy (~$20-50m net worth and up IMO) are people who made their money with something other than labor - through investments and things that the government doesn’t really classify as normal income.
Edit: It’s like the saying goes: nobody makes a billion dollars. They take a billion dollars. If you tax the wealthy on income, you collect very little tax, because it’s not classified as income. Meanwhile you’re going to tax an engineer or physician who probably have hefty student loans and work their asses off full time, at the highest marginal rates because we don’t or can’t tax wealth.
Edit2: we’ve got minimum wage internet trolls who think an employee software engineer is basically a cigar chomping capitalist because they make over the median wage. The middle class has shrunk and maybe you’re not in it. Get a clue, dumbasses.
120K lands you at 86th percentile [1]. So… relatively, you are sorta well off.
Sure, you can’t buy a house with that income in a big city. But that merely shows how fucked up the real estate bubble is. Just think, the top 86th percentile earning person is no where near enough to even buy a home. Houses are about 1m in my neighborhood. So you need to earn about 250k/yr to realistically afford a home. That lands you at 97th percentile. So just top 3% of the people can actually afford a home on a single person’s salary. That’s how fucked we are.
The median income for a non-family household (i.e. single) is 45k, and family household is 95k (possibly dual income) according to 2023 census [2]. So, you’re doing relatively quite well in comparison.
Who is “wealthy” is a subjective term. So a median person might see someone making 120k as wealthy. But the person earning 120k might see themselves as poor since they can’t even own a home. Historically, the single income middle class could afford homes.
They pay, because at any moment they can come back as a citizen.
But that’s true of pretty much every other country in the world as well. So it still doesn’t explain why the US is the only one that charges tax on foreign-earned income.
So it still doesn’t explain why the US is the only one that charges tax on foreign-earned income.
On the wealthy…
You keep omitting that point, and it’s starting to get old.
But the reason is idealistic.
America was supposed to be the land of immigrants where anyone can immigrate, work hard, and earn wealth.
That system doesn’t work if once you amass your wealth, you fuck off somewhere else and take it all with you. The reasoning is you were able to amass that wealth through America’s social ladder.
If the wealthy (the only ones that pay foreign income tax or exit taxes) don’t want to pay that, they know that being honest will never result in change.
If how I’m saying it doesn’t make sense, use the IRS website I’ve provided numerous times.
You keep calling these people “wealthy” but the income levels you shared don’t even come close to matching that. Also lol at the idea of America being an idealistic place so that’s why people should pay this tax. My fucking ass. America is and always has been rigged for rich people, which should immediately tell you why this law still exists.
How about we actually tax real wealthy people, like millionaires loaning money to themselves, instead of forcing the middle class to pick up the slack yet again?
If how I’m saying it doesn’t make sense, use the IRS website I’ve provided numerous times.
You cannot expect people to use the irs.gov website. That’s not open to the public. It’s exclusive. Try going there over tor - you will get a 403. Indeed it’s shitty that access to legal information is restricted. It should be open to all.
Because you’re American and should pay taxes no matter if you’re in Antarctica or not. If you’re in a different country and not participating in America’s system, then why are you claiming to still be an American citizen? The answer is to renounce at that point. The right winger “taxes against rich are bad” are starting to come out in this thread lol.
You seem unaware of the population of accidental Americans. When a Dutch couple gives birth on US soil before returning to Europe, that child automatically a birthright citizen of the US. They can grow up having never set foot in the US (apart from birth), and for the rest of their life they have a legal obligation to file US tax and declare to the US all their Dutch income & bank accounts even if they are below that $120,000 line. They also get targeted for discrimination along with all other Americans by banks who don’t accept Americans (even if they are also Dutch). They have to pay a US accountant upwards of $300/year for the rest of their life just to file that zero.
It’s also worth noting that an income of $120k goes much further in the US than it does in Europe (where they might be living).
So obviously a lot of accidental Americans have become motivated to renounce. But if they already own a home, you can see the problem. I would not say owning a home makes someone “rich”. They still need to work to eat and to maintain the home.
This is the absolute least important problem with American taxes, there’s a thousand other things we’re trying to fix.
Stop pretending like the bottom of “the top 10% wealthiest Americans” need help. We’ve got fucking children starving and not even getting a free school lunch. Excuse us for not having sympathy for everyone making between 120k and 120 million a year.
I’m just blocking all of you at this point, so do t expect another reply
Well, yeah, but again it’s only for the wealthy
https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion
Those parts are never mentioned when people complain about this stuff. Because the only ones paying it are the wealthy ones, and they always removed about taxes.
They pay, because at any moment they can come back as a citizen. If the wealthy do t want to pay for that option, then they can renounce citizenship and pay a one time tax to remove their wealth.
I’m aware there’s no real way to say anything here without sounding like a pretentious snob, but those income limits aren’t exactly spectacularly high.
I work in tech in NYC and my income is around those limits. My boyfriend is from Switzerland and there’s a non-trivial chance that we’ll wind up there long-term. If I was from literally any other country in the world beyond Eritrea, I would file Swiss taxes and that would be that. Instead, I’ll have a direct financial incentive to give up my native citizenship because I’m from one of two countries that makes a claim to any income earned anywhere in the world, even if I don’t step foot in the country that year. This is particularly rough in Switzerland because average salaries there are quite high, and thus so are costs of living, and so surpassing those limits isn’t a particularly uncommon thing.
I know this won’t garner any sympathy at all, but a bad policy only affecting the relatively wealthy doesn’t change the fact that it’s a bad policy. It could even backfire from a financial perspective, since having renounced American citizenship, I’d be less inclined to spend time in the US and contribute to taxes while visiting, and I’d never move back long-term, cutting off a chance of the government getting full income taxes from me ever again, whereas a change of circumstances might have otherwise prompted me to eventually return to the US.
Not sure if you noticed, but the American social net is fucked. Mostly because of people who make a lot and not contribute back.
If you don’t want to pay taxes, you don’t have to participate in the American system.
If you want all the benefits and none of the costs of being American…
Someone in this thread mentioning offering violin recitials for free
The people this law targets aren’t the ones committing tax avoidance. And the US social safety net isn’t fucked because of a lack money, it’s fucked because it doesn’t even exist in the law.
The exit tax doesn’t do shit to address that. It doesn’t pay for anyone’s healthcare or magically make the poverty cliff go away. It’s a tax on upper income workers. Meanwhile actual rich people get their money through capital gains or loans and don’t pay this shit at all.
Oh but I forgot that since I own a small house in a middle class rural neighborhood and drive a Subaru that I’m “rich” so my opinion doesn’t mean shit apparently.
Arguing that allowing the super wealthy to just take all their stuff and leave wouldn’t hurt the system we have now even more than it already does is one of the most asinine things I think I’ve read on the Internet. Congratulations.
I pay no tax to the US, but I removed about it. I’ve lived abroad since I was 3y.o and realized when I turned 18 that I have to declare to the IRS every year. Let me tell you, it is an absolute pain in the ass when you have to do it yourself, without a US bank account or phone number. Takes me a full working day to declare 0 tax to the IRS when they already know that I owe zero tax because they force any bank I have accounts at to report to them. Half the banks in Sweden simply refuse to have me as a customer because of this, in addition to certain types of income technically being subject to double taxation because of US law.
I can’t even get rid of my US citizenship without paying an absurd exit tax
If that’s true in your case, it means you have over 2 million in assets or made more than 170k averaged over the last five years…
If you’re below both this, you don’t have to pay the exit tax
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
So either you don’t know the basics of what you’re complaining about, or you’re pretending you don’t make an obscene amount of money
…or I don’t have a 5yr record of reporting taxes to the IRS. There’s also the 2’500USD “Administration fee”
It’s not just about money. It’s a labor burden and a privacy intrusion. And even if iceblade02 could renounce for free, they then must carry the renounciation cert for the rest of their life and show it to every bank they deal with and hope that no data entry errors trigger data oversharing anyway.
They must renounce to get their human rights back. Because without renouncing, they lose their human right to non-discriminatory treatment on the basis of national origin (article 1 of the Universal Declaration of Human Rights).
But back to money, that annual tax filing accidental Americans must file costs them $300+/year – accountants do not work for free. It’s effectively a tax on the poor.
$120k is “wealthy” now? 120k isn’t even enough to buy a fucking house in most cities in the US. Actual wealthy people aren’t affected by this law because they don’t have regular income.
I’ve seen this on Reddit before: Six figures means you’re rich, because that was true in the 80s, right? Obviously people don’t have a clue that 40 years of inflation has made that middle class.
Also: income is not wealth, and the willful lack of understanding on that point blows my mind. A person who is wealthy can live an upper middle class lifestyle or better without ever having to work again. A person who has respectable income may have minimal wealth, or even mountains of debt (student loans, mortgage, etc). A person who makes 100k could be a few months unemployment away from losing their house or lease, while a person with “wealth” may not have to work at all.
People don’t become filthy rich working full time for six figures. The wealthy (~$20-50m net worth and up IMO) are people who made their money with something other than labor - through investments and things that the government doesn’t really classify as normal income.
Edit: It’s like the saying goes: nobody makes a billion dollars. They take a billion dollars. If you tax the wealthy on income, you collect very little tax, because it’s not classified as income. Meanwhile you’re going to tax an engineer or physician who probably have hefty student loans and work their asses off full time, at the highest marginal rates because we don’t or can’t tax wealth.
Edit2: we’ve got minimum wage internet trolls who think an employee software engineer is basically a cigar chomping capitalist because they make over the median wage. The middle class has shrunk and maybe you’re not in it. Get a clue, dumbasses.
120K lands you at 86th percentile [1]. So… relatively, you are sorta well off.
Sure, you can’t buy a house with that income in a big city. But that merely shows how fucked up the real estate bubble is. Just think, the top 86th percentile earning person is no where near enough to even buy a home. Houses are about 1m in my neighborhood. So you need to earn about 250k/yr to realistically afford a home. That lands you at 97th percentile. So just top 3% of the people can actually afford a home on a single person’s salary. That’s how fucked we are.
The median income for a non-family household (i.e. single) is 45k, and family household is 95k (possibly dual income) according to 2023 census [2]. So, you’re doing relatively quite well in comparison.
Who is “wealthy” is a subjective term. So a median person might see someone making 120k as wealthy. But the person earning 120k might see themselves as poor since they can’t even own a home. Historically, the single income middle class could afford homes.
But that’s true of pretty much every other country in the world as well. So it still doesn’t explain why the US is the only one that charges tax on foreign-earned income.
On the wealthy…
You keep omitting that point, and it’s starting to get old.
But the reason is idealistic.
America was supposed to be the land of immigrants where anyone can immigrate, work hard, and earn wealth.
That system doesn’t work if once you amass your wealth, you fuck off somewhere else and take it all with you. The reasoning is you were able to amass that wealth through America’s social ladder.
If the wealthy (the only ones that pay foreign income tax or exit taxes) don’t want to pay that, they know that being honest will never result in change.
If how I’m saying it doesn’t make sense, use the IRS website I’ve provided numerous times.
You keep calling these people “wealthy” but the income levels you shared don’t even come close to matching that. Also lol at the idea of America being an idealistic place so that’s why people should pay this tax. My fucking ass. America is and always has been rigged for rich people, which should immediately tell you why this law still exists.
How about we actually tax real wealthy people, like millionaires loaning money to themselves, instead of forcing the middle class to pick up the slack yet again?
You cannot expect people to use the irs.gov website. That’s not open to the public. It’s exclusive. Try going there over tor - you will get a 403. Indeed it’s shitty that access to legal information is restricted. It should be open to all.
Because you’re American and should pay taxes no matter if you’re in Antarctica or not. If you’re in a different country and not participating in America’s system, then why are you claiming to still be an American citizen? The answer is to renounce at that point. The right winger “taxes against rich are bad” are starting to come out in this thread lol.
If you think it’s that easy to renounce American citizenship, you have no idea what you’re talking about.
I fully support taxing the rich. I am very explicitly NOT rich. And I cannot come close to being able to afford to renounce my American citizenship.
You seem unaware of the population of accidental Americans. When a Dutch couple gives birth on US soil before returning to Europe, that child automatically a birthright citizen of the US. They can grow up having never set foot in the US (apart from birth), and for the rest of their life they have a legal obligation to file US tax and declare to the US all their Dutch income & bank accounts even if they are below that $120,000 line. They also get targeted for discrimination along with all other Americans by banks who don’t accept Americans (even if they are also Dutch). They have to pay a US accountant upwards of $300/year for the rest of their life just to file that zero.
It’s also worth noting that an income of $120k goes much further in the US than it does in Europe (where they might be living).
So obviously a lot of accidental Americans have become motivated to renounce. But if they already own a home, you can see the problem. I would not say owning a home makes someone “rich”. They still need to work to eat and to maintain the home.
This is the absolute least important problem with American taxes, there’s a thousand other things we’re trying to fix.
Stop pretending like the bottom of “the top 10% wealthiest Americans” need help. We’ve got fucking children starving and not even getting a free school lunch. Excuse us for not having sympathy for everyone making between 120k and 120 million a year.
I’m just blocking all of you at this point, so do t expect another reply