Job Discussion Forums

t_murakami · Joined: 22 Mar 2007 Posts: 26

Hello,

First I must apologize for boring my Aussie, SAer, Scotts and other cousins with this queston: (How the dust bin lids, by the by?) Smile

Anyway, my KSA income was non-taxable for 2006. However it did go into figuring my tax bracket for other income (estate sales, sales of stocks krugerands, yachts, Loire chateaux, etc.) Very Happy

Guess i was imprudent to sell just my winning stocks, so I had a big capital gains. Now the US IRS wants a stack of bills from me.
My tax advisor (dear old mum) has some expertise (years with HR Block)
but she seems to think there is no way out of this jam, but to pay.

She tells me this is some new tax law that includes ones' overseas income
in figuring tax on other incomes.

I was just hoping some clever USer out there would have some advice or a nice loop-hole for me regarding reducing reported KSA or such.

cheers, T

veiledsentiments · Joined: 20 Feb 2003 Posts: 17644 Location: USA

Sorry... your mother is right. Fortunately the max tax on Capital Gains is 15%, so it could be worse (depending on your other investment income - which is also taxable).

I don't know of any law that affects the investment income versus overseas income. I'll have to check that out later.

Afraid you're not rich enough to get a loophole. Embarassed

VS

Van Norden · Joined: 23 Oct 2004 Posts: 409

veiledsentiments · Joined: 20 Feb 2003 Posts: 17644 Location: USA

Yes, it's too late because under US law, the transaction had to take place prior to 12/31...

VS

t_murakami · Joined: 22 Mar 2007 Posts: 26

Thanks to VS and Van Norden for responding.

I am afraid no loopholes for me. Maybe for 2007 I ll found a charity to shelter potential alcoholics (meaning me and select ESLers ,in Cap Ferat or Bensancon, you know, away from the vineyards but near many liquorstores,beaches or peaks)... Whaddya think?

In the end the evil G-men have me. So the lesson is to sell some of those losing trades every year to keep the jaws of the Tax Man off your trouser legs.

The new law in the US requires US ex-pats to include all foreign-earned pay when calculating a base for capital gains. it was NOT a law in 2006.

I even went thru my sales to redo "first-in first-out standard gain/loss calculations" but was no help really.

The key is to hold some stocks over a year, tough I find it a often poor strategy given recent volatiliy of Nikkei 225 and even the DOW. still, I think with the shortage of metals due to "Chindia" growth , there are still some great long-term plays in mining and uranium mining for a brave new world.

Anyway, I hope your accountants used the correct new forms to keep you out of jail when you next land at JFK. Very Happy

cheers

veiledsentiments · Joined: 20 Feb 2003 Posts: 17644 Location: USA

At least the fact that you are paying taxes on capital gains shows that you are making money with your trades... not always the case. Cool

But it is irritating to have to throw hard earned money at a government who squanders it so outrageously.

VS

scot47 · Joined: 10 Jan 2003 Posts: 15343

Now you KNOW that our nice Uncle Sam needs thatmoney. He has things to pay for in Ay-Rak.

Paul in Saudi · Joined: 03 Mar 2003 Posts: 404 Location: Doha, Qatar

Pay the tax. They got Ali Al-Caponi for tax evasion, they can get you too.

B the way did you know the storage fees for all your stuff back in the States is deductible?

veiledsentiments · Joined: 20 Feb 2003 Posts: 17644 Location: USA

The problem is that few have enough deductibles for that to be of much good. In order to itemize you have to have high mortgage interest expense and property taxes. The majority of expat EFL teachers use the standard deduction and thus this item isn't helpful.

My first contract in Oman, I paid off my mortgage and thus I was unable to itemize for the rest of my time overseas. Sad

VS