You Should Know @lemmy.world Varyk @sh.itjust.works 2 wk. ago

YSK that if Americans live outside of the US for more than 330 days a year, they don't have to pay taxes on $125,000 of their income that year

why: so the government won't be able to use your money for whatever the fuck they're planning for the next 4 years.

as a traveler, none of my money has been funding Israel, for example.

one-step method: you basically fill out one extra tax form called FEIE while you're doing your taxes, write down the dates you were outside of the country, and then since you aren't in the country and are not receiving any services from the US, you don't have to pay income tax up to a certain amount (it's a little over 125k this year).

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But if you earn over the threshold, you're expected to pay taxes to the US government, no matter where you're actually living or working, no matter if you're also paying taxes wherever you currently are. The US is the only country in the world to assert that it has the right to tax its citizens remotely in this manner. It's not normal.
I always find it mad as hell that Americans have to pay tax in the US even if they are living and earning elsewhere

Especially given generally Americans are pretty allergic to reasonable taxation
However, since you don't pay taxes on that money, it can impact which kinds of retirement accounts you can use based in the US, if any. Also, trying to invest as a US citizen outside the US can suck because of all the agreements with US banks. Many Japanese platforms, for instance, won't touch me because of US reporting requirements. I also can't functionally use the tax-advantaged retirement accounts here because many amount to what are called PFICs by the IRS which requires paperwork and are taxed punitively more than wiping out any advantage the retirement accounts would have.

You're also going to have a rough time getting a US investment account if you don't have one already. Then you have to figure out how to have a US phone number because two-factor auth basically requires it for any bank or anything that will touch you.

There are other "fun" things about being a US citizen living abroad.
It might be interesting to crosspost this to !politicaldiscussion@lemmy.world

Also, I know you mean good, but this isn't relevant to probably a high number of Lemmy users who are not US citizens
The exemption only applies to earned income, meaning you cannot apply any of that $125k to stuff like investment returns, dividends, royalties, or rents collected.
Unless you renounce US citizenship of course. I understand it's a bit extreme, but it is a solution
Yeah, it goes up faster than inflating each year, it seems. 126,400 per person or 253k for married I believe this year, which is a pretty fair bit especially considering you deduct the taxes you locally pay off the top first, afaik
If you were employed by a foreign company that has no presence in the US how exactly would the IRS know whether you've earning more than $125k?
I'm seriously tempted to sell all my stuff and just become a nomad.

Sounds pretty dreamy all in all.
Does project 2025 get rid of the IRS? If so, how would this be enforced?
https://getyarn.io/yarn-clip/a421c712-bdee-42c4-9a0b-5e5c30a05c58

Sorry for the link but it's the first one I found to the Python sketch.
These posts are always so funny to me, because it implies you were completely happy with what the US has been funding for at least a year but now you want to talk about tax avoidance?

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