Hi Everyone,
For all you americans out there... or anyone else that knows how our tax system works I am a bit confused.
I saw on the news recently that a lot of Americans have been giving up there citizenship to escape paying taxes and I thought well, if they don't live in the States then why on earth would they have to pay if they are paying taxes in their residing country?
Well I don't know where I have been but how long has this law been around that just for BEING American you have to pay taxes? I thought there was some income limit.
Anyways, If anyone can help me, has anyone filed taxes yet? If so, what is the process like? or does anyone know of an accountant here in Switzerland that can help? I am a bit stressed because I am already paying taxes here so does this mean I am going to have to continue paying both countries?
Thanks for you help!

At the very least, you need to fill out the forms to show that you need pay nothing.

I did that for many years, got tired of it, and gave up my citizenship before the dollar tanked big time (which it later did).

The dollar is worth about 1/3 of what it was when I first came here in '82.

The deductible is NOT 3x what it was 30 years ago.

Tom

Take a deep breath. It really is not that complicated. You are allowed to exempt $95,000 of foreign earned income. Additionally you can deduct the money you spent on housing here, you also get a credit for any foreign taxes you paid. Unless you have a complicated financial structure, properties, tax sheltered retirement plans, etc, then i would recommend turbo tax. It worked for me.

Bottom line, your salary is what decides a lot. If you earn 120K, you wont be taxed twice.....if you are in the 500K range income wise, then you will definitely be taxed twice. In either case, you need to file the return ASAP

The concept of double taxation should not exist.

You are required to pay the difference in the higher tax rates in the US.

OP, you sound like a delinquent filer. There are special rules/programmes for people like you to come forward and disclose. Ignorance of the laws is unfortunately not an excuse.

Your best bet is to seek a US tax firm who often offer an hour free consultation. Get an idea of your situation as to how simple or complicated it is. Many peoples situations are not as simple as they think.

Once you know the facts I.e. liabilities if any, cost of compliance then you can make a decision.

There are several small companies found online in the Zurich and Geneva areas. Big 4 do not handle this kind of work.

This is probably not the right thread to ask this question, but does anyone have any idea about how the foreign housing exclusion works? Does it apply to anyone living and working abroad regardless if you own a house in the US or if the employer provides you with a housing allowance. I've been living and working in CH without interruption for over 6 years and I have not taken the housing exclusion per the advice of some people, however do I have the right to take it anyway?

Well, my work was basically done by Turbotax. It looked correct when i printed it out.

Anyways, according to this document the requirements are:

General Rule
To qualify for the foreign housing exclusion or deduction, you must:

• Be a U.S. citizen or resident alien (for federal tax purposes),
• Have foreign earned income (income received for working in a foreign country),
• Have a tax home in a foreign country,
• Meet either the bona fide residence test or the physical presence test, and
• Have paid (or incurred) foreign housing expenses.

So basically there is nothing that forbids you from having a home in the US as long as you meet those tests. You can exclude the rent, insurance and parking spot. I dont think you can exclude a place if you own it.


Why anyone would advise you against it, is beyond me. If they are the same people who told you you don't need to file, then I wouldn't put much faith into that. How much you can exclude is tough to figure out on your own, you really need some kind of special calculator because its location specific. (turbo Tax does a good job)


PS: one thing i learned this year is that your employers contribution to pillar 2 (Pensionskasse) has to be added to your income as taxable income (in the US)

[QUOTE=kiwiguy08;1545362]Well, my work was basically done by Turbotax. It looked correct when i printed it out.

Anyways, according to this document the requirements are:

General Rule
To qualify for the foreign housing exclusion or deduction, you must:

• Be a U.S. citizen or resident alien (for federal tax purposes),
• Have foreign earned income (income received for working in a foreign country),
• Have a tax home in a foreign country,
• Meet either the bona fide residence test or the physical presence test, and
• Have paid (or incurred) foreign housing expenses.

So basically there is nothing that forbids you from having a home in the US as long as you meet those tests. You can exclude the rent, insurance and parking spot. I dont think you can exclude a place if you own it.


Why anyone would advise you against it, is beyond me. If they are the same people who told you you don't need to file, then I wouldn't put much faith into that. How much you can exclude is tough to figure out on your own, you really need some kind of special calculator because its location specific. (turbo Tax does a good job)


PS: one thing i learned this year is that your employers contribution to pillar 2 (Pensionskasse) has to be added to your income as taxable income (in the US)[/QUOTE]

And is not qualified as excludable income

Also, overseas filers have an automatic 3 month extension to file, I believe. At least that is what I keep telling myself when Outlook keeps reminding me to file my taxes and I snooze on it I think until June 15 or 30th...

2 month, til 15 June.

However, be aware, late payment interest kicks in from April deadline. Late payment penalties kick in at June deadline.

You can file Form 4868 to extend beyond April deadline until 15 October. Penatlies and Interest still apply as per the above.

You can also file a Form 2350 should you qualify for above mentioned foreign earned income and housing exlcusions and need a special extension to meet the phyiscal presence test or bona fide residence test to take the exlcusions. Again, penalties and interest still appy as per the above.

This year, late payment interest is set a 3% per year and is calculated per each day your liability if any is unpaid.

Late payment penalties are 0.5% per month.

duh - I can't count, I knew it was sometime in June. I've already done the taxes on Turbo Tax and I don't owe, so I have procrastinated. Why, I don't know! How hard is it to go in, print out the returns (have to file separately with my non-US husband who gave up his green card last year, yeah!) and send them in?

Sorry I don't know about Turbo tax, I know of it but not used it. I am not a US cit so don't have to file.

If you don't owe then great, no interest or penalties apply. Assuming you have prepared correctly. Not doubting your ability just wouldn't want any surprises for you.

Out of interest, are you filing form 2555? If so, ensure the reduction ratio was applied to your foreign tax credits. Likewise, as above, you should be reporting employer paid pillar 2 as income which does not qualify for exclusion.

Do you have a link to confirm this? It seems quite illogical.

Deloitte is doing my Swiss and US taxes this year for the low, low price of (say what????)

I will come back to you on this. I think it comes down to what constitutes earned income and the fact it's a pension, but let me find resource.

Are you asking us to guess?

Hmmm....3400CHF?

Actually I'm expressing shock. But if you'd like to guess you're welcome to do so. I'll start you off by giving you a hint.

It's somewhere between 1,000 and 10,000 CHF.

I am not sure ...have to see what turbo tax wants me to do. Although, since we are filing separately and I have no foreign earned income, just some capital gains from accounts that were in my name that needed liquidating to buy house here, things aren't quite so complicated... And I only need to include hubbies income through April of last year which is when he gave up the green card.

you must earn too much, then not a bad problem to have!

7,500 or thereabouts