But you are exempt until you declare over $80,000 in earnings if you live outside the US for more than 11 months out of the year. So its a tax free $80,000. Biometric passports were one of the tools used to crack down on "domicile fraud" so you need to really really be outside the US now. John Kerry's wife got in trouble for this as she was suppose to be in Zug for last year, but was in the US. HAHA....... So many people who used to own foreign residences could declare that they were living abroad. Now they cant.

But yes, if you make more than the $80,000, tax treaties mean nothing to you. You get whacked no matter what. Thats why 400,000 Americans give up their citizenship every year. I dont think its that extreme for me, but its robbery to tax people who dont live in the country.

Are you saying, people making more than 80,000, don't get foreign tax credits? I am confused on that point because it wasn't in line with my understanding of the situation.

I am not arguing the principle, I am trying to understand the facts.

http://www.irs.gov/faqs/faq13-7.html

This seems to confirm my understanding but perhaps I am missing the finer points.

When you live outside the US for more than 335 days in the year

And you make less than $80,000

You pay no taxs.

If you make more than $80,000, you get taxed on the amount above that I believe.

Depending on your income, you might have to pay 42% on the amount over this. So if you make $100,000 you have to pay taxs on $20,000 worth of that.

So you owe the IRS $8,200. Once again I dont know what the tax rate is, but I have a rather wealthy friend who lives and works in London investcing money. He paid 42% on his bonus amount of roughly $900,000. He was not happy!

Are you sure you aren't confusing UK tax with US tax? Seriously, I don't think you are right. he would first pay UK tax which would probably be about 42% for a high earner.

If you make say 200,000. You can claim foreign tax credits for any tax you pay in Switzerland on the income between 80k and 200k.

This is not my area of expertise but what you are telling me is not in line at all with what people including people at KPMG have told me.

I think because this is "trading income" it gets taxed differently as well. But I dont know? But yes, you dont get taxed trwice, but you get the short end of the stick because either way you need to pay the largest amount of the two.

But you might be correct? Not sure what his specific issues were?

Do you know what the tax rate would be above $200,000? If my boss makes $23M a year, what would he get sacked for if he was a US citizen?

The top US marginal rate is 35%, I believe, which kicks in at maybe 300,000 or so (i could be wrong). The top Uk tax rate is 40% and kicks in much lower plus I believe there is national insurance (Social Security) of 12%, which is uncapped unlike the US.

But this is all income tax, not sure about investment income.

How did the Irish do that?

The US used its muscle and forced Swiss Banks to annually transmit details of US citizens' accounts.

The Swiss agreement with the EU is only to deduct taxes on interest and pass it on, without revealing details of individual EU citizens.

Its the luck of the Irish!

You can either exclude 85,000K from your taxable income OR

You can take foreign taxes paid as a tax credit

It depends on your tax situation as to which is better.

Cheers,
Grant

Thanks. So you aren't necessarily double taxed- pay taxes on the same income twice? You just are taxed at the worst rate of the two countries. correct?