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Old 16.08.2009, 09:31
meloncollie meloncollie is offline
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Re: Double taxation US/Swiss

There are many threads discussing taxation of US citizens/'tax persons'... scroll down to the bottom of this page, several are linked.

The very much condensed and simplified version:

One pays tax first to the country of residence. Switzerland (or more accurately, the cantons) levies a tax on worldwide wealth; if you hold foreign real estate, perhaps a chat with a qualified tax advisor is in order.



But hey, at least in the Swiss system the bulk of the tax I pay stays in my Gemeinde and canton, and I can actually see the benefit to my community.

You should be more worried about how much the US government is going to stick you for...

A US citizen is taxed by the US government on worldwide income, regardless of where in the world one lives.

Essentially, once you qualify as a overseas resident, you may claim the standard expat deduction of 87,000-ish, and/or credit for (most of the) taxes paid to the host country.

Generally, one ends up paying at least an amount equal to the US tax liability, either to one country or the other. Often expats end up with a greater total tax liability, as the deductions often force you into the AMT, some employer-provided benefits may have significant tax consequences, some expat deductions may be reduced by the amount of time one spends back in the US, etc.

Overall, as an expat living in a very low tax Swiss Gemeinde, taking all deductions and increases on the US Federal side in to account, my total tax liability to CH and US combined is about 3-5% more than if I were a US resident.


Additionally, if you last lived in a domicile state, you may also end up owing state income tax. And if you worked in the US while resident in CH, you may owe pro-rated state taxes for the time you worked there.

Bottom line, while as expats we are not counted in the census and may vote only in federal elections, we still end up paying a boat-load of taxes to the US government. The blue passport is a rather expensive accessory. And I expect it to become even more expensive going forward.

Obviously taxes become quite complex when you are a US citizen resident overseas; prior to a move one really should to do some tax planning with a qualified advisor whose expertise covers both US and Swiss tax law.

Oh - and don't forget to file your FBAR...
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