[simulate-me]

The IRS taxation of American's abroad is basically just filing a normal federal tax return and claiming a $100k+ exemption on foreign earned income. It's very simple. The meme that the process is "vexatious and obdurate" seems most often propagated by those who have never done it.

[orangepurple]

Taxation of citizens abroad is simply wrong and a violation of sovereignty. You never heard of GILTI and have fun with almost every bank in the country turning you away immediately based on your place of birth (USA). In that case you are guilty of US citizenship until proven innocent. Have fun accepting contract work ("self-employed") and dealing with GILTI if you run your own foreign company. If you are a US citizen freelancer abroad youwill get slammed with double self-employment tax.

[Dracophoenix]

You're forgetting FATCA, which is a hassle for anyone who needs a bank account in a foreign country to get paid.

[orangepurple]

FATCA is a crime against humanity and a blatant violation of sovereignty. Thanks Obama?

[Dracophoenix]

I don't know if your statement is sincere or sarcastic. But assuming you're sincere, in addition to being a violation of national sovereignty, FATCA is most certainly a violation of the 4th and 5th amendments.

[_kmrr]

Those who’ve never done it? Mmmm, no. It’s the opposite of what you say, and not a “meme” but reality. Citizenship based taxation instead of reasonable residency based taxation is vexatious, obdurate, and I’ve done it regularly and am doing it now. Those defending the US system are the ones who have never done it - or are at best passers-by with no financial planning or career path (including a pension) or family, taking a few years abroad on a modest salary and go home.

As an American working abroad who is about to wire the IRS a ridiculous sum of my money earned while living and working in a home for a company that happens to not be in the US, I assure you the exemption you refer to (FEIE), which is CAPPED at that $107K, is insufficient. That is because it covers wage income only and has numerous other limitations, including complete ineligibility if taken in conjunction with the other weak avenue (FTC) to only mildly offset a policy that should not exist to begin with.

Retirement, foreign investment (which is local to me) such as company equity, home sales, etc gets taken away by a country to which I have no ties other than citizenship. The FTC/FEIE, which by the way you can’t combine and which allows only one selection per eight years, does not free you of this and leaves you still sending huge amounts of your earnings to the IRS pointlessly after paying taxes to where you actually live and work.

No other developed nation does this. The US’s extraordinary system of extraterritorial taxation severely harms me and 9 million Americans abroad. We are already paying taxes where we actually live and work. No one else but American citizens have to “send money home.” And forget about self employment - it’ll destroy you. Solely by virtue of your passport. Don’t even start me on FATCA, a horrific intrusion preventing many of us from getting bank accounts - for the same issue domestic politicians recently defeated (remember the outrage over Treasury wanting to inspect accounts with over a certain amount of money deposited? We actually live that).

In case it’s not obvious, I am an American living abroad balancing a career and financial plan with this horrid system. Definitely not someone who’s “never done it.” There are activist groups for this among other Americans dealing with this draconian nonsense, but we are up against the aforementioned - as well as, I’m sorry to say bluntly, poorly informed sentiments from people who actually have “never done it” - or for whom it was trivial, as you say, because they were lucky or young enough to have no serious financial obligations or concerns.

Never mind the fact that it’s wholly unnecessary and legally simply a relic of the Civil War, likely generates very little for IRS vs how much it costs, and continues only because the tax prep industry (eg TurboTax) has a strong lobby vs disempowered citizens writing to disinterested lawmakers. This is the only reason it still exists. Defending this ridiculous practice makes absolutely no sense if you don’t work for one of these companies.