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Old 12.09.2015, 20:08
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State Taxes for Americans born abroad?

Hi all,

Sorry if this has already been addressed, but I couldn't find any information on it when I tried to search.

So, I'm an American citizen living & working in Switzerland with my wife, who is Swiss, and my son, who is currently only Swiss. We've debated whether or not to get him American citizenship, and there's been a question that's nagging me.

Currently, I still have to pay state taxes in the last state I lived in while in the United States. How would this work for my son, if he has never lived in the U.S.?

My instinct is that he wouldn't have any state taxes, but with the amount of errors I've received in my state tax forms in the last two years, I wouldn't be surprised if there is some automated system that would screw him over. (California just sent me separate tax forms for both my and my wife, on different accounts, with all the same exact information and fees, not including my taxes already paid, and the form addressed to me arrived later as it was incorrectly sent to Svalbard instead of Switzerland.)



Anyway, thanks in advance for any advice or help.
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Old 12.09.2015, 20:14
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Re: State Taxes for Americans born abroad?

I don't know anything about state taxes (or taxes in general) - but I believe the general consensus in this forum about getting American citizenship for children is: "If you love them, just don't".
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Old 12.09.2015, 20:26
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Re: State Taxes for Americans born abroad?

If you meet the three criteria below, you should be able to stop filing a California tax return:

Avoiding California State Income Taxes Moving Abroad


It is often difficult to give up your obligation to pay California taxes when starting to work abroad. California is an "Intent State." That California wants to continue to tax you until you show the intent of moving your tax domicile to another country or state. They look at all of the facts and circumstances in retrospect years later to determine if you actually had the "intent" to move your tax residency to another country.

There is a solution to the ambiguities involved with successfully giving up your California residency for tax purposes. That is the Safe Harbor Rule which can be used. Under that rule:
  • You must remain living and working outside of California for at least 546 days under a contract of employment;
  • You do not have more than $200,000 in investment income;
  • You do not return to California more than 45 days during any calendar year.
If you meet these criteria, you are automatically deemed to be a California nonresident for the period you work abroad even though you may still have a California drivers license, voter registration, etc.

It is important to successfully avoid California tax domicile status when living abroad since California does not allow the foreign earned income exclusion or foreign tax credits. If means if you remain a California tax resident a lot of taxes may be due.

http://usexpatriate.blogspot.ch/2012...ome-taxes.html

Also, this Wall Street Journal blog on children born abroad to Americans might be worth reading:

http://blogs.wsj.com/expat/2015/02/1...s-citizenship/
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Old 12.09.2015, 20:27
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Re: State Taxes for Americans born abroad?

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Currently, I still have to pay state taxes in the last state I lived in while in the United States.
Do you still have California sourced income or are they just trying to milk whatever they can out of you? California FTB sucks but if you aren't a resident there and you have no income that can be attributed there, you should be able to tell them to eff off pretty easily.

I cut my ties clearly with California by moving to Nevada prior to moving here. If I ever move back to California, I'll make sure to become a resident in Nevada first as I've heard some bad stories about the Califronia FTB upon repatriation.

Your son has no California obligations.
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Old 12.09.2015, 21:08
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Re: State Taxes for Americans born abroad?

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I'm an American citizen living & working in Switzerland with my wife, who is Swiss, and my son, who is currently only Swiss. We've debated whether or not to get him American citizenship, and there's been a question that's nagging me.
He's a US citizen, regardless of whether you get him a passport or not.

Unfortunately.

Tom
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Old 12.09.2015, 21:27
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Re: State Taxes for Americans born abroad?

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Do you still have California sourced income or are they just trying to milk whatever they can out of you? California FTB sucks but if you aren't a resident there and you have no income that can be attributed there, you should be able to tell them to eff off pretty easily.

I cut my ties clearly with California by moving to Nevada prior to moving here. If I ever move back to California, I'll make sure to become a resident in Nevada first as I've heard some bad stories about the Califronia FTB upon repatriation.

Your son has no California obligations.
I have a limited partnership from which I receive funds. I'm not so concerned about the California tax as the other thing, because eventually I can get a hold of a human to take care of it, even if it reportedly difficult for even the people in the know.

Thanks, though. It's good info for when I divest myself of that asset.

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Old 12.09.2015, 21:54
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Re: State Taxes for Americans born abroad?

I guess you know all about FATCA? and the tax implications?
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Old 13.09.2015, 16:31
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Re: State Taxes for Americans born abroad?

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I guess you know all about FATCA? and the tax implications?
I do, thanks. Kind of hard to live here and not know about it.

Side question: How does one thank a post on these forums? I've seen it alluded to, but I've not found the option myself.
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Old 13.09.2015, 17:19
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Re: State Taxes for Americans born abroad?

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I do, thanks. Kind of hard to live here and not know about it.

Side question: How does one thank a post on these forums? I've seen it alluded to, but I've not found the option myself.
You'll see the Thanks button once you have 10 posts.
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