Go Back   English Forum Switzerland > Help & tips > Finance/banking/taxation
Reply
 
Thread Tools Display Modes
  #1  
Old 22.01.2015, 21:38
Ocean8's Avatar
Newbie 1st class
 
Join Date: Jan 2015
Location: Winterthur, CH
Posts: 24
Groaned at 0 Times in 0 Posts
Thanked 11 Times in 5 Posts
Ocean8 has no particular reputation at present
Living in Switzerland USA Taxes

Greetings,

I'm looking to move to Switzerland in a few months. I am a US resident and soon to become a citizen. My original citizenship is from a country in South America. I heard that us United States residents have to pay taxes both in Switzerland and in the USA when living in abroad. I just have a few questions regarding this issue.

I would like to know if there is anyway around this in my case? Also if some one could please explain how does "Foreign Earned Income Exclusion" work?

Lets say as an example i make sfr 80,000 in one year. What would be the taxes that i would have to pay to Switzerland and the USA?

What would be more beneficent for me working for a company or having my own business?


Thank for any possible help.

Kind Regards to everyone.
Reply With Quote
  #2  
Old 22.01.2015, 21:49
Sean Connery's Avatar
Forum Legend
 
Join Date: Nov 2011
Location: Zurich
Posts: 4,924
Groaned at 75 Times in 70 Posts
Thanked 6,395 Times in 2,931 Posts
Sean Connery has a reputation beyond reputeSean Connery has a reputation beyond reputeSean Connery has a reputation beyond reputeSean Connery has a reputation beyond reputeSean Connery has a reputation beyond reputeSean Connery has a reputation beyond repute
Re: Living in Switzerland USA Taxes

are you going to get rid of your green card?

have you tried searching the site for "FATCA" "FBAR" and other such terms?
Reply With Quote
This user would like to thank Sean Connery for this useful post:
  #3  
Old 22.01.2015, 21:52
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Misery-Courtion
Posts: 13,472
Groaned at 169 Times in 134 Posts
Thanked 9,605 Times in 5,488 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Welcome to the forum.

Firstly, what do you mean by you're looking to move to Switzerland? Have you got a job lined up? Are independently wealthy? Because those are the only two ways you can do it unless you're married to a Swiss/EU national.

Secondly, no - there's no way around it. Start your research here:

http://www.irs.gov/Individuals/Inter...-Aliens-Abroad

Also note that when you open a bank account here you will need to sign a W-9 form to allow said bank to pass your account into on to the IRS. This is due to the US's FATCA law which basically assumes that any American citizen/Green Card holder not living/working in the States must be a tax cheat.

On top of having to file US tax returns you will also need to file a FBAR form for your "foreign" account/s if the aggregate total of them comes to more than $10,000 at any time of the year.

Also note that a) even if you registered a company here it wouldn't grant you residency rights so you can't get in that way and b) no bank would open a business account for you if you have signatory rights on the account because the business account would also have to be reported on a FBAR.

Also note that if you ever return to your South American home country to live you will still have to file US tax returns. Their tax laws are based on citizenship, not residency, so it doesn't matter where in the world you live you still have to file.
Reply With Quote
The following 3 users would like to thank Medea Fleecestealer for this useful post:
  #4  
Old 22.01.2015, 22:50
Ocean8's Avatar
Newbie 1st class
 
Join Date: Jan 2015
Location: Winterthur, CH
Posts: 24
Groaned at 0 Times in 0 Posts
Thanked 11 Times in 5 Posts
Ocean8 has no particular reputation at present
Thanks for the welcome and such a quick reply Medea / Sean.


I'm coming into Switzerland by means of a marriage visa. Thanks for the info on FBAR and FATCA.

What about if i open a bank account in Switzerland using my current South American Passport (I most likely wont do this, but just doesn't hurt to know).

The question of working for a company or opening a business was more geared towards the financial taxable aspect instead of migratory but thanks anyways it is still valuable information

What about the "Foreign Earned Income Exclusion" has anyone used it? How does this work?

Thank you

Quote:
View Post
are you going to get rid of your green card?

have you tried searching the site for "FATCA" "FBAR" and other such terms?

No. I'm not planning to at the time. I have to figure out if i can get used to the life in Switzerland first. I have been there before but never lived there.

Last edited by 3Wishes; 22.01.2015 at 23:00. Reason: merging successive posts
Reply With Quote
This user would like to thank Ocean8 for this useful post:
  #5  
Old 22.01.2015, 23:03
3Wishes's Avatar
Moderately Amused
 
Join Date: Jul 2010
Location: Bern area
Posts: 6,522
Groaned at 43 Times in 39 Posts
Thanked 9,155 Times in 4,356 Posts
3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute
Re: Living in Switzerland USA Taxes

You need to disclose to the bank that you're an American citizen/green card holder and sign the W-9. No getting around it. The banks are being extra careful because the FATCA agreement signed with the USA allows the IRS to come after the bank with hefty penalties if they have American clients that haven't complied with the filing/payment requirements.

Oversimplified explanation of the double-taxation agreement - you'll pay tax living and working here. That amount will be offset against your U.S. tax obligations. If you owe more here than you would in the U.S. then you don't pay anything to Uncle Sam. If you owe less, then you get to pay Uncle Sam the difference.

Note that filing taxes is independent of FBAR.
Reply With Quote
  #6  
Old 22.01.2015, 23:06
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Misery-Courtion
Posts: 13,472
Groaned at 169 Times in 134 Posts
Thanked 9,605 Times in 5,488 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Quote:
View Post
Thanks for the welcome and such a quick reply Medea / Sean.


I'm coming into Switzerland by means of a marriage visa. Thanks for the info on FBAR and FATCA.

What about if i open a bank account in Switzerland using my current South American Passport (I most likely wont do this, but just doesn't hurt to know).

The question of working for a company or opening a business was more geared towards the financial taxable aspect instead of migratory but thanks anyways it is still valuable information

What about the "Foreign Earned Income Exclusion" has anyone used it? How does this work?

Thank you




No. I'm not planning to at the time. I have to figure out if i can get used to the life in Switzerland first. I have been there before but never lived there.
You will still need to tell the bank about your American connection. If you don't and they find out about it later, they're likely to close the account immediately. Given that your bank choices are already limited - UBS, PostFinance, Credit Suisse and the cantonal banks of Zurich and Basel - I wouldn't risk it.

Do not have joint accounts as these would also need to be reported on an FBAR.
Reply With Quote
  #7  
Old 23.01.2015, 09:10
Forum Veteran
 
Join Date: May 2009
Location: suburbs of LA, USA
Posts: 934
Groaned at 11 Times in 10 Posts
Thanked 873 Times in 439 Posts
BrianJW has a reputation beyond reputeBrianJW has a reputation beyond reputeBrianJW has a reputation beyond reputeBrianJW has a reputation beyond repute
Re: Living in Switzerland USA Taxes

The taxes are quite complicated. But to put it simply, if you are considered legitimately living abroad and eligible for the FEIE under US tax law (which if you move full-time to CH for a year or more you would likely meet) you would pay no US tax on the first USD $90,000 approx. After that you pay the difference between the US rate and the Swiss rate.

Then there is US state taxes, which you may also be up for I didn't check where you live. Varies from state to state.
Reply With Quote
This user would like to thank BrianJW for this useful post:
  #8  
Old 23.01.2015, 09:47
Newbie
 
Join Date: Apr 2013
Location: Basel
Posts: 9
Groaned at 1 Time in 1 Post
Thanked 8 Times in 3 Posts
B-Star has no particular reputation at present
Re: Living in Switzerland USA Taxes

It's not really that hard as a US citizen. File 1099, 2555 with housing, and then the FBAR. Get the forms from the IRS website. It takes ten more minutes than usual for filing taxes in the states if you make less than around 110,000CHF (which won't be taxed in the US). If you are over that amount, then hire a tax adviser to play the numbers for you.
Reply With Quote
The following 3 users would like to thank B-Star for this useful post:
  #9  
Old 23.01.2015, 09:50
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Misery-Courtion
Posts: 13,472
Groaned at 169 Times in 134 Posts
Thanked 9,605 Times in 5,488 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Quote:
View Post
It's not really that hard as a US citizen. File 1099, 2555 with housing, and then the FBAR. Get the forms from the IRS website. It takes ten more minutes than usual for filing taxes in the states if you make less than around 110,000CHF (which won't be taxed in the US). If you are over that amount, then hire a tax adviser to play the numbers for you.
Isn't there a 1040 or a 1040NR in there somewhere too?
Reply With Quote
  #10  
Old 23.01.2015, 10:22
Newbie
 
Join Date: Apr 2013
Location: Basel
Posts: 9
Groaned at 1 Time in 1 Post
Thanked 8 Times in 3 Posts
B-Star has no particular reputation at present
Re: Living in Switzerland USA Taxes

You're right . The 1040 long and put in foreign excluded income in "other income". I forgot that one, but it's the usual form for any tax payer.
Reply With Quote
  #11  
Old 23.01.2015, 10:30
MennoFloyd's Avatar
Senior Member
 
Join Date: Aug 2013
Location: Deutschschweiz
Posts: 292
Groaned at 2 Times in 2 Posts
Thanked 420 Times in 193 Posts
MennoFloyd has become a little unpopularMennoFloyd has become a little unpopular
Re: Living in Switzerland USA Taxes

Quote:
View Post
It's not really that hard as a US citizen. File 1099, 2555 with housing, and then the FBAR. Get the forms from the IRS website. It takes ten more minutes than usual for filing taxes in the states if you make less than around 110,000CHF (which won't be taxed in the US). If you are over that amount, then hire a tax adviser to play the numbers for you.
In theory, the above may be correct, but in practice, I would disagree that it is simple. As soon as you join a pension plan, generally required in Switzerland, it starts to get complicated.

Let's also not forget the new IRS form 8965 "Health Coverage Exemptions" which should normally be completed by US taxpayers living abroad, or face a $600 fine for not doing so:

http://www.irs.gov/pub/irs-pdf/f8965.pdf

See pp. 2 & 9 of instructions for Form 8965 for additional information:
http://www.irs.gov/pub/irs-pdf/i8965.pdf
Reply With Quote
The following 2 users would like to thank MennoFloyd for this useful post:
  #12  
Old 23.01.2015, 10:30
3Wishes's Avatar
Moderately Amused
 
Join Date: Jul 2010
Location: Bern area
Posts: 6,522
Groaned at 43 Times in 39 Posts
Thanked 9,155 Times in 4,356 Posts
3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Quote:
View Post
Isn't there a 1040 or a 1040NR in there somewhere too?
Yup. That's the actual filing, not the supplementals.
Reply With Quote
  #13  
Old 23.01.2015, 10:35
Corbets's Avatar
Forum Legend
 
Join Date: Mar 2007
Location: Zug, CH
Posts: 2,827
Groaned at 155 Times in 111 Posts
Thanked 5,368 Times in 1,832 Posts
Corbets has a reputation beyond reputeCorbets has a reputation beyond reputeCorbets has a reputation beyond reputeCorbets has a reputation beyond reputeCorbets has a reputation beyond reputeCorbets has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Quote:
View Post
It's not really that hard as a US citizen. File 1099, 2555 with housing, and then the FBAR. Get the forms from the IRS website. It takes ten more minutes than usual for filing taxes in the states if you make less than around 110,000CHF (which won't be taxed in the US). If you are over that amount, then hire a tax adviser to play the numbers for you.
You forgot the final step.

Pay out your back-end for the "privilege" of your citizenship.
Reply With Quote
The following 3 users would like to thank Corbets for this useful post:
  #14  
Old 23.01.2015, 11:13
Forum Veteran
 
Join Date: Dec 2014
Location: Geneva
Posts: 1,044
Groaned at 15 Times in 12 Posts
Thanked 1,218 Times in 542 Posts
neddy has an excellent reputationneddy has an excellent reputationneddy has an excellent reputationneddy has an excellent reputation
Re: Living in Switzerland USA Taxes

I have heard of people giving up their US citizenship because of recent issues.
Reply With Quote
  #15  
Old 23.01.2015, 11:48
st2lemans's Avatar
Forum Legend
 
Join Date: Dec 2010
Location: Lugano
Posts: 18,067
Groaned at 924 Times in 720 Posts
Thanked 19,584 Times in 9,430 Posts
st2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond reputest2lemans has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Quote:
View Post
In theory, the above may be correct, but in practice, I would disagree that it is simple. As soon as you join a pension plan, generally required in Switzerland, it starts to get complicated.
How does a pension make it complicated?

If you receive a pension, then it becomes more complicated, but just paying into one doesn't.

Tom
Reply With Quote
  #16  
Old 23.01.2015, 12:37
Medea Fleecestealer's Avatar
Forum Legend
 
Join Date: Jul 2011
Location: Misery-Courtion
Posts: 13,472
Groaned at 169 Times in 134 Posts
Thanked 9,605 Times in 5,488 Posts
Medea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond reputeMedea Fleecestealer has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Quote:
View Post
I have heard of people giving up their US citizenship because of recent issues.
Yep, thousands have done so over the last few years, me included. What you have to remember is that for every person who formally renounces there are something like another 5/6 who relinquish. Even the hike in the cost of renouncing doesn't seem to have put people off.
Reply With Quote
  #17  
Old 23.01.2015, 15:06
Member
 
Join Date: Jan 2010
Location: Coppet
Posts: 128
Groaned at 1 Time in 1 Post
Thanked 120 Times in 46 Posts
acf69 is considered knowledgeableacf69 is considered knowledgeableacf69 is considered knowledgeable
Re: Living in Switzerland USA Taxes

If you have a green card you can always file as a non-resident and eliminate your tax obligation. You cannot as a citizen.
Reply With Quote
This user groans at acf69 for this post:
  #18  
Old 23.01.2015, 16:07
3Wishes's Avatar
Moderately Amused
 
Join Date: Jul 2010
Location: Bern area
Posts: 6,522
Groaned at 43 Times in 39 Posts
Thanked 9,155 Times in 4,356 Posts
3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute3Wishes has a reputation beyond repute
Re: Living in Switzerland USA Taxes

Quote:
View Post
If you have a green card you can always file as a non-resident and eliminate your tax obligation. You cannot as a citizen.
This is not completely true. Once you have a green card, the IRS considers you a U.S. person for tax purposes, no matter where you live or how many days you spend in the U.S. per year.

Obviously if you live in the U.S. you cannot file as a non-resident. Even if you live abroad, you probably still have to file but whether or not you have to pay taxes will depend on the taxation treaty with the country where you reside - same rules for citizens as for green card holders. From the 1040NR instructions:

Quote:
In most cases, you are a lawful permanent resident if the USCIS has issued you an alien registration card, also known as a green card...you remain a resident for tax purposes even if the USCIS would not recognize the validity of your green card because it is more than ten years old or because you have been absent from the United States for a period of time.
You are correct that citizens cannot file as non-resident aliens. However they can use various tactics to reduce or eliminate tax obligations, such as the FEIE. Keep in mind as a green card holder you'd still be subject to FBAR reporting even if you didn't owe any taxes.

More information here:
http://www.irs.gov/Individuals/Inter...eenCardHolders
Reply With Quote
  #19  
Old 26.01.2015, 17:04
Ocean8's Avatar
Newbie 1st class
 
Join Date: Jan 2015
Location: Winterthur, CH
Posts: 24
Groaned at 0 Times in 0 Posts
Thanked 11 Times in 5 Posts
Ocean8 has no particular reputation at present
Re: Living in Switzerland USA Taxes

Thanks for all the reply guys. Hope everyone had a great weekend. Great information here, very helpful.

So in conclusion of what i understand. This is what US citizens and Residents have to do to survive taxes abroad (Switzerland).

File 1099 or 1040
File 2555 with housing
File 8965 "Health Coverage Exemption"
Fill out FBAR online
If you make less than $110,000 you will probably pay no taxes to the USA ?
Reply With Quote
  #20  
Old 12.08.2015, 19:52
Newbie 1st class
 
Join Date: Jul 2015
Location: Zug
Posts: 14
Groaned at 0 Times in 0 Posts
Thanked 5 Times in 3 Posts
InZug2015 has become a little unpopularInZug2015 has become a little unpopular
Re: Living in Switzerland USA Taxes

In addition you might need to add a 8938 in case your assets exceed certain limits. In case your income exceeds the foreign earned income & housing exclusion, there's additional forms required. When it comes to what counts as income there's a couple of things you need to be aware of, for example that your employer's pension contribution counts as earned income and the AHV, IV, EO, etc. contributions are not deductible.
Reply With Quote
Reply




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Taxes: Working for Switzerland, living in the UK ValerieG Finance/banking/taxation 8 04.03.2014 14:45
Pros and Cons of living in the USA cf. Switzerland Joe755 Other/general 161 09.08.2011 11:58
Living in Switzerland, insuring a car in USA? sflorida_sweetie2 Transportation/driving 10 30.03.2010 13:01
Living in USA with Switzerland Health Insurance alfons Insurance 31 13.11.2009 22:34
translating a book for EU editor while living in switzerland- taxes? crimson Finance/banking/taxation 0 06.02.2008 17:48


All times are GMT +2. The time now is 17:40.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2016, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0