Unemployment in the US

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I think you actually have to give up U.S. Citizenship to escape the clutches of the IRS. My understanding is U.S. Citizens living abroad are still expected to file income tax.

The IRS is sure to develop a grudge against me at some point....I mean I am in college but I find it doubful that it will actually get me a job with decent pay so yeah those loans might be a problem.

Yes. You can thank President Bush for that.

You might consider Thailand. A lot of people retire there (especially from England--not many Americans have heard of it). It is more fun and less dangerous than the Philippines.

A lot of Americans head for Mexico and Central/South America. Some countries have special incentives to attract retirees.

Southern states used to have similar programs, especially for Black residents. I just put the idea out there, for the "Conservatives."

Anyway, I'm not in favour of it. I much prefer early retirement, to reduce the labour force, and put upward pressure on wages.

30 hour work week

That option is already on the table.



Hmmm but wasn't that supposed to be that they can tax you only on money you earn in the US? I mean, if im living abroad and work for a company from that country and pay their local taxes the IRS has no right to tax me again for income earned outside the US. Right?

From what I read they really expect any U.S. Citizen earning income from any source anywhere to file a return.

From what I've heard I think America is the only country that hounds it's citizen's income this much.

http://www.taxmeless.com/IRS593Publication.htm

As a U.S. citizen or resident alien, your worldwide income generally is subject to U.S. income tax regardless of where you are living. Also, you are subject to the same income tax return filing requirements that apply to U.S. citizens or residents living in the United States.

However, several income tax benefits might apply if you meet certain requirements while living abroad. You may be able to exclude from your income a limited amount of your foreign earned income. You also may be able either to exclude or to deduct from gross income your housing amount (defined later). To claim these benefits, you must file a tax return and attach Form 2555, Foreign Earned Income. If you are claiming the foreign earned income exclusion only, you may be able to use the shorter Form 2555-EZ, Foreign Earned Income Exclusion, rather than Form 2555.

You may, on your U.S. return, be able to claim a tax credit or an itemized deduction for the foreign income taxes that you pay. Also, under tax treaties or conventions that the United States has with many foreign countries, you may be able to reduce your foreign tax liability.

If you're retired, and living on social security, then you won't have any federal taxes, anyway.

Previously, the first $75,000 earned abroad was not subject to US federal income tax. President Bush put an end to that, which led to droves of people renouncing their American citizenship.

If you're doing something like giving English lessons in Taiwan, then your income is under-the-table, and Uncle Sam will never find out about it anyway. It's not as if CIA agents will be scouring every corner of the globe, looking for Americans who are working informally.

If you move to a place like Nicaragua, you can live better than a middle class person in the USA, just on your social security.

Not exactly. Social Security income becomes taxable on a sliding scale, maxing out at being 85% includible in Gross Income. For anyone feeling masochistic, IRS Pub. 915 (link) has the grisly details. Basically you add up all your non-SS income received, but the 85% max is reached relatively quickly, especially for those who choose to continue working while also getting benefits, including my favorite social security recipient, Warren Buffett.

Of course, when it was first implemented in the '30s FDR went out of his way to market the whole thing as "insurance" and not as a "tax." So there's never been any kind of needs testing, reduction of benefits, etc. to the old age portion of it. Your benefit is determined solely by your contributions, whether you're Warren Buffett or granny eating canned dog food to survive. (Other stuff was added later, like SSDI. That's a different beast from the Old Age/Survivor benefit.)



Simply untrue. There's been a credit for foreign earned income in the US tax code since the 1920s, and its still there. The hoops you have to jump through to be eligible for it have gotten more difficult, the amount was not adjusted for inflation for a long time (it is now). etc., but AFAIK the basic statute works now as it did then.

With a "credit" you declare the foreign income, do some hocus-pocus (on Form 2555) and then you may or may not wind up with a reduced income tax. But its been that way for a long time.



Actually the renunciation of citizenship business was first passed under Clinton, not Bush. And I think the number who "officially" notified IRS was something under 500, not exactly "droves." (As part of this law you had to notify IRS, who presumed you were subject to US taxation until you told them otherwise.)



True, but if you file a US tax return on this basis you've just committed perjury. Which means (a) potentially being subject to whatever happens to those who perjure themselves and (b) since you've knowingly filed a false return I believe the IRS has forever to come after you. Normally, they've only got three years, six years for a 25% understatement of income (somehow you can understate your income like that and still not file a "knowingly false" return, don't ask me how, but its not the same thing as flat-out ignoring income). So if they somehow get wind of what you did, they can ram you up the pooper, not only for back taxes but penalties and interest, oh, 20 years later.

And if you let slip what you did to the wrong person, watch out for the IRS Whistleblower - Informant Award Program(link).



Maybe, as long as the dollar doesn't descend in value to toilet paper level, as long as you don't get screwed over by the locals, especially in things like real estate, and as long as the political situation there doesn't get ugly. (FWIW, I'd pick Costa Rica over any of the other Central American countries. Belize might work, except for the fact that Honduras claims it as their territory and has been known to send troops across the border who do some rather unpleasant things to the locals before marching back.)

There's a very strange beast that was put into place in 2008, the Expatriation Tax (link). I honestly don't have a clue how it really works, but it sure looks like it is meant to hit any individual with substantial assets who wishes to give up their US citizenship.

What's weird about this is that there doesn't seem to be any equivalent for corporations, though maybe I'm just missing it. I know Stanley Tools announced they were going to "relocate" themselves as a corporate entity from Connecticut to Bermuda, meaning they'd technically no longer be based in the US. The political firestorm made them back off, but it didn't stop Ingersoll-Rand from hopping from New Jersey to Bermuda to Ireland. They are in some sort of highly technical pissing contest with the IRS, over the method they used to relocate, but not over the simple fact that they moved their headquarters abroad despite apparently having all the executives working out of New Jersey (still). And they flat out say "tax benefits" was a primary motive.

I think that moving abroad is the only option for people who are over their heads in student loans.

very good option....i have a friend who just graduated and moved abroad because it was easier to find jobs else where.

Interesting article on the history of taxes for people abroad

http://www.renunciationguide.com/Backgr ... ation.html