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Old 14.02.2011, 14:14
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US citizen working in the CH- Taxes in CH and US and pension contributions in CH

Dear all,

Just moved form Us to CH and now Uncle Sam is coming in force! How do you suppose to proceed and contribute to the pension plans in CH - 2nd and 3rd pilars , if the US will tax you on the difference between the taxes in CH and US.

Let's say you are saving/deducting some money contributing to the pension plan in CH, then you will have less taxes in CH but more in US; and the US will tax you for that?

How do you proceed? whom to ask? who has this knowledge?

Thank you very much for your time and kind help
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Old 14.02.2011, 14:24
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

Lots of answers to your questions here:

http://www.vonrohr.net/vr/library/FR...%2010%2009.pdf
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Old 14.02.2011, 14:28
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

Thank you very much ... I will look into that.I feel very lost and like a catch 22 and do not know what to do. I assume there are thousands of people from US living in CH and they manage somehow..we can not accept to be taxed 2x.
Thanks again!!!
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Old 14.02.2011, 15:09
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

got tea?
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Old 14.02.2011, 15:41
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

What type of tea?
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Old 14.02.2011, 15:41
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

You shouldn't end up double taxed, the US will calculate your taxes at first ignoring any tax you've paid to CHF, but including all your income (they won't care if a 3a contribution isn't taxable). Then, they should in principle reduce your tax bill by the amount of Swiss tax you pay.

Because of that you really won't get any benefit from the Swiss tax advantaged contributions, so the second pillar stick with the minimum, and the third just ignore. There may also be timing issues, because the Americans will calculate your 2010 taxes in May, but the Swiss may come back three years later and tell you that you owe them something more (by which time it may be tricky to claim that Swiss tax bill against your American taxes, especially if you've moved back).
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We actually don't keep track of that record... You need to call the European fecal standards and measuremments office in Zürich, their number is listed on thier website
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Old 14.02.2011, 15:42
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

You are not taxed twice!! You are given an allowance of $91,000 per year by the US Government. If your net income comes out to more than $91K after deducting all of your living expenses abroad (rent, etc.) you are then taxed on the difference, not the full amount.

If you are merely working and living in Switzerland, this system should work out. Now, on the other hand, if you're trying to hide money in Switzerland...that doesn't work anymore!

There is more information here: http://www.irs.gov/businesses/small/...nal/index.html
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Old 14.02.2011, 16:09
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

Andra, it's hard to give advice, because given the complexity of the US tax code what works best for me may be the wrong solution for you. Tax planning is very much dependent on your individual situation and individual goals.

That caveat aside, we have taken the approach that reducing our CH liability makes it simpler for us to focus on our US tax planning - where planning has a greater impact. We have done this the simplest way possible, by living in one of the lowest tax cantons/Gemeinden in Switzerland.

As others have mentioned, given the US Windfall Elimination Program in addition to the vagaries of the US tax code, participating in the Swiss pension system does not make much sense for us - so we put in only what is mandated, and consider that an extra tax. It's money we will never see again; think if it as the cost of the mountain view.

As it is unlikely we will be able to stay in Switzerland beyond retirement, our retirement planning is US-focused.

So - it's true, US citizens don't really get to take advantage of the low taxes Switzerland has to offer as citizens of other countries can. All in all, we pay a bit more as residents abroad than we would have paid if resident in the US, but it isn't the awful bite that it may at first seem to be.

Best course of action: get help from a professional.

Good luck to you.
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Old 14.02.2011, 17:01
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

You should get your second pillar money back when you leave Switzerland, although that part may be double taxed by the US, I'm not sure of the details.
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Old 14.02.2011, 17:22
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

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You should get your second pillar money back when you leave Switzerland, although that part may be double taxed by the US, I'm not sure of the details.
I was unsuccessful in doing this the first time I left Switzerland. When I returned (within five years) my AHV number had already been disposed of so that money just went somewhere into oblivion... Next time it comes time to leave, I'd like to find a way to take that money with us and then put it straight into our retirement accounts at home. So if you know the procedure for doing so, please share!!!
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Old 15.02.2011, 12:24
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

Thank you very much for the kind recommendation!

Have a wonderful day,
Andra
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Old 15.02.2011, 20:08
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

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I was unsuccessful in doing this the first time I left Switzerland. When I returned (within five years) my AHV number had already been disposed of so that money just went somewhere into oblivion... Next time it comes time to leave, I'd like to find a way to take that money with us and then put it straight into our retirement accounts at home. So if you know the procedure for doing so, please share!!!
AFAIK,

Your contributions to the CH 1er column are recognized by the US gummint and you can have them paid out to you from CH to the US. don't know the details since that will probably change...

How much of the 2er column contributions can be taken depends upon the pension fund and its bylaws. Most allow you to take your contribution and nearly ALL of the company's as well but you need to transfer it directly into a US instrument. If you have the money in your hand, you will be taxed. If not, you will not. 3rd columns can be transferred to an IRA in the States.

AFAIK, the key is to never have the funds 'in your hand'. They need to go from one institution to the next.
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Old 15.02.2011, 20:16
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

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AFAIK,

Your contributions to the CH 1er column are recognized by the US gummint and you can have them paid out to you from CH to the US. don't know the details since that will probably change...

How much of the 2er column contributions can be taken depends upon the pension fund and its bylaws. Most allow you to take your contribution and nearly ALL of the company's as well but you need to transfer it directly into a US instrument. If you have the money in your hand, you will be taxed. If not, you will not. 3rd columns can be transferred to an IRA in the States.

AFAIK, the key is to never have the funds 'in your hand'. They need to go from one institution to the next.
Excellent!!! Thank you so much. I'll keep that in mind. Not for a few years yet, but good to know.
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Old 15.02.2011, 22:44
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

Foliorose, you should take a look at this to understand how receiving a foreign pension may affect your US Social Security:

http://www.ssa.gov/pubs/10045.html
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Old 16.02.2011, 07:55
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

FYI- While getting your US taxes done, might as well get the FBAR forms out of the way. This is for any account/ pension fund/ company signature rights to accounts, ect over $10,000 at any point in the year. Failure to report this will result in a fine!
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Old 16.02.2011, 10:40
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

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FYI- While getting your US taxes done, might as well get the FBAR forms out of the way. This is for any account/ pension fund/ company signature rights to accounts, ect over $10,000 at
any point in the year. Failure to report this will result in a fine!
Just to be clear, the question isn't whether you have one account with more than $10k. If the total of all of your overseas accounts is, at any point in time over $10k, then you must file.

http://www.irs.gov/businesses/small/...57,00.html#who
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Old 16.02.2011, 20:18
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

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Excellent!!! Thank you so much. I'll keep that in mind. Not for a few years yet, but good to know.
You need to keep a constant eye on this since the pension fund laws are constantly changing. I'm in my company's pension oversight committee and it is nearly a full time job.
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Old 02.04.2011, 18:35
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

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3rd columns can be transferred to an IRA in the States.
This is interesting--how does this work? Would it apply to a Roth as well? (trickle from a 3a to a Roth to stay under yearly limits?) I was resigned to the fact my Roth would sit with no other contributions while I am earning foreign (read: non-US taxable) income, because my earnings are exempted being less than the $91k. (I don't earn chf 120k, and know where brown sugar is)
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Old 02.04.2011, 19:29
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

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3rd columns can be transferred to an IRA in the States.
I would like to learn more about this, too. Does anyone work with a tax advisor who REALLY understands both systems? I've talked to two who've both said don't bother with the 3rd column, but if this is true, then the 3rd column would be worth contributing to.

*holding head*
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Old 03.04.2011, 11:31
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Re: US citizen working in the CH- Taxes in CH and US and pension contributions in CH

I am guessing this would apply after you leave Switzerland, and are once again earning taxable US income. So your yearly contribution could then come from money once sheltered in a Swiss account.

I suppose you have to ask why you wouldn't want to keep a retirment hedge in a stronger currency? Any ideas why not to keep money in francs, even if you leave?
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