Job Discussion Forums

[himynameise]

So I know that you need to reside in a country for at least 330 days in order to qualify for exemption from U.S. taxes. How does this work out if you can't get a residence/work permit right away? Do you somehow need to prove your official residence to the U.S. government?

My time in Austria was only nine months anyway, so I didn't end up qualifying, which was frustrating because we lost 30% of our income to Austrian taxes and then the U.S. took basically an additional 30% of what was left. >_> I'm not complaining about the Austrian taxes because we actually GOT something for that money -- clean, efficient transportation, cheap university courses and medical/dental/vision benefits, among other things. But if I'm making just enough to get by in a foreign country and paying taxes to that country, is there any way to avoid paying so many taxes to the U.S. government if my official residence abroad falls short of 330 days?

ETA: I tried to figure out how to file my taxes from Austria with an accountant (my parents') and various people from the IRS and they all told me completely different things, so that's why the situation is really no clearer to me now than it was a year ago...

[coffeespoonman]

I'm not sure, but I think that's not quite right. The US government can't tax you on anything you make while you're abroad, until you hit like 77,000 USD, at which point they start eating you alive. I don't think the duration of your legal residence in another country affects that.

I think that the 330 days that you're describing has to do with your "tax home", which... ah, I can't remember... But it wasn't too important.

For the record, I have worked full time (legally) in Turkey for the last few years, but I also operate my own business under an American address. I always pay federal and state taxes (and Medicare and social security) on what I earn from my own company, but I pay nothing to the US govt for my Turkish salary.

[fishmb]

Interesting, what's your American business??

[eclectic]

he manufactures coffee stirrers of styrofoam variety 415s polyethylene phosphate.

[eclectic]

330 days? 77,000$? WHo is the american wizard who comes up with these bogus, willy-nilly rules? (Note: willy-nilly usually/always used as an adverb, but I love using adverbs as adjectives for fun.)

[himynameise]

[barabbas]

taxation as confused as representation, I guess.

[randalllpatterson]

guys! you're scaring me! google 'us tax abroad' or something, like i did. it seems pretty clear to me that money earned overseas by a us citizen is taxable income to the irs. i would NOT eff around with those guys. they will notice sooner or later and it would not be unlike tem to freeze whatever they can get to. always remember and never forget: tax evasion is what brought capone down.

[himynameise]

Yeah. Go here to see what I'm talking about. It discusses qualifications for a "tax home" and for foreign income exclusion.

[eclectic]

[coffeespoonman]

From law.com:

Explaining the entirety of the law can be confusing, but in the simplest terms, a U.S. citizen working overseas is exempt from taxes on the first $87,500 of income.

The link is:

http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202428002980&rss=nlj&slreturn=1&hbxlogin=1

About qualifying for the foreign income exclusion and the 330 days, I have no idea. But I know that I absolutely refuse to pay taxes on income that I've already paid taxes on, for any reason.

By the way, my American business is a translation/editing company. I work only by email with companies all over the world (including Turkey), and since I have no office in Turkey, and no property in Turkey, a tax lawyer told me that I could just claim it as self-employment income with on my American taxes (I do have to pay taxes on that) using my parents' address. He warned, however, that if I start making too much money through that, I should probably open up a legal Turkish business just to cover my behind.

[himynameise]

Ooh, what languages do you translate? And do you need a certificate to do that? I've done some German translation here and there, but now I'm starting to strongly consider it for extra income...though I have the feeling that developing my children's book-level Turkish for translation purposes will take quite awhile...

[norwalkesl]

[randalllpatterson]

to himy... - your post is convincing. my reading is that until you've been there 330 days you owe taxes. since the school yer starts in august (or so), i'd probably pay us taxes thte first 2 yrs. even though other posters are willing to take a chance based on anecdotes of people getting away with it, there are other anecdotes of frozen bank accounts and confiscated property for not paying ... whether taxation is 'illegal' or not, it doesn't help me to be logically correct if all my stuff's gone. but i favorited the irs.gov page

[eclectic]

Im tired of Crackpot Realism as its called. Sometimes you have to NOT care and not always do the "safe", "right" things. We are citizens of the Planet Earth, spinning through space. Let them collect their taxes from others so they can build more bombs and attack more countries in their "War On Terror" with OTHER peoples' hard-erned money.

What can they "freeze" if you ain't got nothin' to be frozen?