Just a friendly reminder that the April 15th tax deadline is fast approaching with our friends at the IRS. Americans living abroad have until June 17th to file their returns, but still any taxes owed to the US government that are outstanding must be paid by April 15th.
For those in France, the US Embassy Paris has a page dedicated to taxation resources, including many links to IRS and forms (like the 2555-EZ form for Foreign Earned Income Tax Exclusion). As the article stipulates, if you’re American and work and reside outside the US, you may be able to exclude up to $95,100 USD annually in foreign income. Check out the links above for further information.
AARO has some views on taxation of Americans abroad, worth the read.
Time recently published an article talking about how more Americans abroad are giving up their citizenship mostly due to heavier taxation.
On a related note, I recently wrote a piece interviewing Andy Coyne from Association of Americans Resident Overseas (AARO) for the April newsletter of My American Market (pages 4-5), and taxation is one of the main topics.
This is certainly a controversial issue, giving up U.S. citizenship. Have any of my readers done this or are considering doing this? Why or why not?
excerpts from the Time article:
John says that since he moved to Europe 25 years ago, U.S. tax regulations have become more and more burdensome. “Every time I turn around, I get smacked in the face with some new restriction as a result of being a U.S. citizen abroad,” he says. And because the U.S. government requires other countries to abide by its banking and financial rules when dealing with expatriates, Americans living abroad are often denied services because of the increasingly complex legalities and logistics involved in serving U.S. customers. Many U.S. expats report being turned away by banks and other institutions in their countries of residence only because they are American, according to American Citizens Abroad (ACA), a Geneva-based worldwide advocacy group for expatriate U.S. citizens.
“We have become toxic citizens,” says ACA founder Andy Sundberg. Paradoxically, by relinquishing their U.S. citizenship, expats can not only escape the financial burden of double taxation, but also strengthen the U.S. economy, he says, adding, “It will become much easier for these people to get a job abroad, and to set up, own and operate private companies that can promote American exports.”
With the recent passing of the new health care bill in the US, I thought posting this piece from the New York Times was timely:
March 23, 2010, 11:19 AM
What the Health Care Overhaul Means for Americans Abroad
By JENNIFER SARANOW SCHULTZ
On Monday, Times reporters answered reader questions about how the health care overhaul will affect consumers. But one reader question that remained unanswered was how the legislation will affect Americans abroad. Here’s the answer.
According to Tom Rose, chairman of the Association of Americans Resident Overseas‘ Committee on Social Security and Medicare, the legislation doesn’t have any effect on Americans abroad, except that it exempts them from the penalty for not subscribing to health insurance in the United States. “That is only logical as most Americans abroad have coverage in their country of residence,” Mr. Rose said.
Similarly, the Web site of the American Citizens Abroad organization pointed out that, as of January, neither the House nor Senate bill would tax Americans abroad for not having insurance in the United States, and both “specifically exclude overseas Americans from proposed mandatory U.S. health insurance coverage.”
According to the organization, an earlier version of the Senate health plan would have taxed Americans abroad.
But the group noted on its site that provisions for financing the legislation were “likely to affect Americans overseas, whether they be additional taxes on high incomes or increased deductions for Medicare and Social Security (which would affect American-owned businesses abroad).”
How do you think the legislation will affect Americans living abroad? If you’re an expat, how do you think the legislation may affect you?
London and Colonial launches EU SIPP for expats
International Investment| 16 Nov 2009 | 15:05
Author: Sitanta Ni Mathghamhna
London and Colonial has today announced the launch of the EU SIPP, for individuals resident outside the UK.
The EU SIPP is similar to UK SIPP but enables a wider range of investments including residential property in both the UK and EU, provided they are not used by either the SIPP member or a connected person.
It allows for a tax free lump sum of 25% of the fund value to be taken from the age of 55, with the remainder providing income, which can be paid monthly, quarterly or annually. There is the additional option to receive ad hoc payments during the year.
The SIPP is primarily aimed at ex-patriot individuals who have been living outside the UK for five tax years or more.
Adam Wrench, Product Development Manager at London & Colonial, says: “When investors move abroad they typically leave their pension behind in the UK or transfer to a QROPS.
“Once they have been resident overseas for at least five tax years, transferring to the EU SIPP will give them more flexibility to manage their retirement options and to make provision for their dependents.”
The EU SIPP pays out 100% to beneficiaries on the member’s death, whereas in the UK, tax rules means up to 82% of an individual’s pension fund is lost on death, even if the member is a non UK resident at the time.
Adam Wrench adds “This provides the opportunity for estate planning to be undertaken knowing tax will not be automatically deducted from the pay-out.”
“Quite often where a husband and wife have emigrated together, in the event of the death of one of them the surviving spouse will return to the UK. With the EU SIPP the non-residency status of the scheme is locked in.”
Additional features of the scheme include no restrictions on borrowing either for the purchase of commercial or residential property or for other purposes, compared to a 50% restriction under UK SIPP rules.