Posted on 04/10/2007 7:21:00 PM PDT by shrinkermd
Tomorrow morning a bright young 42-year-old and her husband and child, leave on an all-expenses-paid business trip to Dubai to discuss working with people who want her there. She is an excellent maker of wedding cakes and is in high demand. She is being offered very good money to leave for Dubai, where things are tax free.
More and more young entrepreneurs will LEAVE the USA and not pay taxes, retaining the right to return when they are older or if things go bad overseas. In the meantime the ridiculous taxes paid here, will not be paid by them.
You are badly misinformed. American citizens owe taxes on all income, no matter the source or their place of residence. You can not report your income, but I would not count on a happy welcome when you try to use your "right of return" in the future. Expect IRS agents to sieze you at the aiport and jail you for tax fraud.
The exemption is approximately $85K per year, indexed to inflation. Earn less than that in taxable income and the IRS does not require taxes to be paid. They ask that you file, however.
another note: I am not the wedding cake maker in question. And am definitely a dude :-)
oops. Also, this thread is over a year old.
My apologies for assuming to much. And thanks for the tax adivce. Wow! That’s pretty cool. $85K is probably way over my annual retirement income. Stay here and pay big taxes or go somewhere else and pay none.
Interesting choice. Maybe Obama will close this loophole too.
I went and looked up some IRS codes. Like everything else it’s way more complicated than either my view or yours. From the web site:
Topic 854 - Foreign Earned Income Exclusion —Who Qualifies?
To be eligible to claim the foreign earned income exclusion or the foreign housing exclusion, you must have a tax home in a foreign country and meet either the bona fide residence test or the physical presence test.
The bona fide residence test can be used by United States citizens; and by United States resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty with an applicable nondiscrimination clause. You must be a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
The characteristics which qualify you as a bona fide resident usually include establishing a home and settling in that country with some degree of permanence. An individual is not a bona fide resident of a foreign country if, the individual claims to be a nonresident to the authorities of the foreign country and his/her earned income is not subject to tax in the foreign country because the individual is considered a nonresident in the foreign country.
The physical presence test can be used by any United States citizen or resident alien. You must be physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. The 12–month period can begin with any day of any calendar month.
If you violate U.S. restrictions that prohibit travel to certain countries, you will not be able to count your presence or residence in those countries in meeting the bona fide residence test or the physical presence test.
Generally, your tax home is the general area of your main place of business or post of duty, regardless of where you maintain your family home. If you do not have a regular or main place of business because of the nature of your work, then your tax home may be the place where you regularly live.
You are not considered to have a tax home in a foreign country for any period for which your household is in the United States. However, if you are temporarily present in the United States on vacation or for your employment, it does not necessarily mean that your household is in the United States during that time.
You qualify for the foreign earned income exclusion only if your tax home is in a foreign country throughout your period of bona fide residence or physical presence abroad. For related information, refer to Topics 853 and 855. Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, contains detailed information on the foreign earned income exclusion and other related areas.
If the information you need relating to this topic is not addressed in Publication 54, you may call the IRS International Tax Law hotline. The number is (215) 516–2000. This is not a toll-free number.
bump
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