retirement/investment tax haven?

Do these not exist any more for US taxpayers? I gather you always owe federal taxes even if you reside/retire outside the country, which is quite strange given you are not reaping the benefits. Not a practice by other countries on their expatriates.

Will this hold for the draconian 2014 health care requirements too? If you retired to Thailand with it's world class cheap hospitals for foreigners, would you still have to pay for some US healthcare plan that doesn't even cover anything foreign?

Technically speaking you avoid fed tax if you live in some US possessions like US Virgin Islands, but you normally simply pay your fed tax to the local gov't instead. I think American Samoa may be an exception, but no welcome mat for immigrants.

For local taxes there are the well known states such as TX, FL that don't have income taxes, but may have higher other taxes such as for real estate. Is there a such a state with low tax overall, where you don't substitute one tax for another? Similarly the foreign employment tax credit does no good if you substitute one tax for another.

I'm not suggesting trying to escape taxes and still receive services, but reducing both of them. Especially if you are flexible about where you reside. Maybe ideas will start flowing after April 15...

Reply to
dumbstruck
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Yes - Alaska See

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"The overall tax burden in Alaska, taking into account taxes paid by individuals, results in a ranking as 50th most-tax burdened state in the country, according to Tax Foundation. That?s right, dead last. Put another way, it?s the least tax burdened."

Reply to
bo peep

SNIPPED

I have no idea whether you'll be on the hook for the new health care rules if you live outside the U.S. But you do have an option for getting out of Federal and State taxes, especially if you expatriate and don't want the services offered by the U. S. - simply move to a tax free state like Florida, then expatriate, maybe to Thailand, and rescind your U. S. Citizenship. You'll have to pay Federal taxes for 10 years, but then you're off the hook and free as a bird.

Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

Oh yes you are still reaping the benefits, of holding a US passport. When and if you need the protection of the US embassies, they are there for you as a US citizen. For that you pay US taxes.

Or, you can renounce your citizenship, pay cap gains tax on all you stock holdings as though you just sold them, continue to pay US taxes for 10 yrs, then you are free to not have to pay US taxes.

Reply to
PeterL

Not to mention that without taxation, you get no representation. That is, US citizens everywhere retain their right to vote. And unlike some other countries, you don't have to return to vote.

American Citizens Abroad - Voting in Federal Elections:

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ABC News: _Overseas Taiwanese Return Home to Vote_ "Unlike the United States, Taiwan does not permit absentee voting. All votes must be cast inside the country."
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Reply to
Mark Freeland

Quite untrue - residents of US possessions get no federal taxation or voting for standard federal offices. Well, Puerto Ricans pay a per capita dribbling of fed taxes

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. Unfortunately most such territories have recently upped their localtax to match the bloated federal amount (using fed forms) and anywaycan be newcomer unfriendly and dysfunctional places as a social/attitudinal consequence of their dependency. Furthermore voters don't elect US presidents - states do, with their winner take all suppression of minority votes, etc. You could say other federal offices are voted in by public union and other special interests in many states. Bottom line is that voting is a paltry justfication to hemmorage tax money, just as is a potential visit to an embassy. Instead why not charge a $million for each exercise of such privilege and take up the world standard of no expatriate taxation instead - or at least tax at reduced level!

I bet a US nonresident will have to pay extortionate 2014 tax penalty for lack of US health care plan. I bet someone renouncing US passport loses their lifetime of social security and *care contributions, besides that 10 more years of income tax

It wouldn't be much of an issue until now when the US is turning into a huge social expenditure quagmire. You should be able to opt out of the umpteen new safety nets and not have to pay for them. Earlier expenses made more sense, such as core unavoidable functions of gov't like defense. You may not like details of such policy, but on the whole you benefit from lack of piracy etc everywhere you go.

Reply to
dumbstruck

Do they still have the reverse income tax - an annual rebate for $900? Wonder why so few take it up (brrr...). Actually they don't have low expenditures but low tax due to oil revenues, which no doubt will be banned by the EPA soon enough.

I take it this info originates from 2009

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was before the extortionate costs of public pension and otherescalations were recognized in state budgets. Some state are notpushing back on this, but embracing exponential costs and thus taxwallops even for 2011. Looking at the 2009 data, you could throw out the top and bottom 5 and everything is a quite similar percent in the high single digits. Not much to choose from them except they are averages and don't account for instance that there can be very uneven application of tax burden - making firefighter and other public groups income free of state tax for example, and jacking up everyone else.

The high/low 2009 states were partly understandable by the high/low numbers of high income residents which would have disproportionate revenue effect by progressive tax rates. Not a lot of frugal states listed where I would want to live in year round, but I guess you only have to put in half a year for residency.

Local tax burdens could change a lot in near future based on how public workers are managed. See "How public servants became our masters"

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"Shakedown: The Continuing Conspiracy Against the AmericanTaxpayer"
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. My locationis embracing runaway needless expenses without a Wisconsin whimper... Last desperate idea: How does the IRS tax islamic sharia bonds which hide the interest? I guess it's sort of like a zero coupon bond, so maybe could convert your retirement egg to those and live overseas with reduced federal taxes? Maybe the IRS is politically timid and taxes them at near nothing?

Reply to
dumbstruck

The question posed was "outside the country". US possessions are not outside the country (and are thus outside of the boundaries of consideration).

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.

"This table does not include Federal tax revenue data from ... U.S. territories other than Puerto Rico, and U.S. citizens and legal residents living abroad, _even though they may be required to to pay Federal taxes_". Your citation.

In other words, the entry tells you to draw no conclusions from the omission of data.

Winner-take-all is not required by the Constitution, and not universally true in fact. Nebraska and Maine are not winner-take-all states.

Electoral college electors, not states, elect presidents. Representative democracy in action (and many states still allow electors to use personal judgment). However, what's your point?

Expatriates still have the right to vote for electors. And while technically states select electors, _all_ states (cf. winner-take-all) have delegated that authority to voters (including expats); the last to do so was South Carolina for the 1868 election.

As to the other federal offices (representative, senator), expats get to vote for those too.

Your assertion was qualitative, not quantitative - that one does not reap benefits of citizenship. That has clearly been refuted.

Done (taxes for earned income reduced). See Pub 54, and Form 2555.

Reply to
Mark Freeland

A little background on tax law and on religious law:

Zero coupon bonds, like TIPs, generate phantom interest, which is subject to tax annually.

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And that's the way all taxable OID bonds are treated.
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&id4 You get a little break on market discount - you're not taxed annually on it, but when you dispose of the bond (sale, redemption, call), the discount is treated not as capital gain but as ordinary income. (Though if it is in your benefit, you may choose to amortize the discount and pay taxes annually.)
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Sukuk are usually intended to function as conventional bonds, but they are structured as a religious (legal) fiction - that they represent an ownership interest in an underlying, income-producing asset. Rent (payment for use of a physical asset) is permitted, interest (payment for use of money) is not.

US tax law favors substance over form - that is, the fiction of ownership and rent may satisfy Shariah law, but the reality is that these are bonds, and the IRS generally treats them as such. See:

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(p.2 - US treatment) Don't confuse "hiding" interest with hiding income. The income is out in the open, and the only tax issue is how to characterize that income.

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comparing Sukuk and Eurobonds with respect to risk; decent intro on sukuk.)

Reply to
Mark Freeland

with my Iatlian Passaporto, Italy can bail me out, and I don't have to pay Italian income taxes since I don't live there.

Is this really true? I was loking into USVI, and they pay US income tax, as far as I could tell. The taxes somehow (and likely somewhat) go to the USVI, so no (or less) local taxes there. Can anyone elaborate on this?

for the taxes I could save, they can keep my vote for president!

Reply to
Pico Rico

Venice is one of the most beautiful cities in the world. Yes, it costs more than USA in general, but with a little financial planning (notice how I cleverly made this an appropriate newsgroup subject), why not live there and forget about US taxation?

Reply to
HW "Skip" Weldon

OK if you want to rely on the Italian navy and air force to bail you out, it's your choice.

Reply to
PeterL

well, if I live there, I have to pay Italian income tax. And the greedy U.S. will still want to tax my worldwide income.

The best deal I recall was a German who lived in Florida, but had all his income attributed to his Bermuda (I think) enterprises. No U.S. income to speak of, and Germany does not tax worldwide income.

Reply to
Pico Rico

Well, when have the U.S. navy and air force bailed me out (personally)? What in the world will I ever be doing to need such bailing out?

Reply to
Pico Rico

The military is sort of like a fire extinguisher - if you have a fire extinguisher at home, but you have never had a fire there, it doesn't mean that the extinguisher is not doing it's job, or that you will never need it. Here is an example of a single individual getting bailed out by the military:

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"Its better to have it and not need it, than to need it and not have it".

Reply to
bo peep

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yes, but I don't go to Somalia. There is the concept of fire prevention, too. The better job you do of fire prevention, the fewer fire extinguishers you will need.

When you say "it is better to have it and not need it, than to need it and not have it", you must also do a cost benefit analysis. You do not pay 100% of your income for fire protection and insurance, do you?

Reply to
Pico Rico

Today we build walls to keep our citizens in. How ironic.

To address the OP - tax shelters, in my experience, were never such a 'hot' deal to begin with, and people who got into them may have ended up worse off than if they had done nothing. Record (vinyl), exploration (oil & gas), horses, for example, may have never been viable business ventures. I too have wondered where tax shelters went, but it may be that reason. Other factors may have been an overall reduction in tax rates (reducing the incentive) and maybe lack of Congressional support.

Reply to
dapperdobbs

I don't know what **you** may be doing. But I can think of a couple of examples. The US navy sharp shooters killed two pirates at high seas (one of the most amazing shooting I have ever heard of) to rescue the captain and crew of a US merchant ship. Former president Carter went to North Korea to escort two US reporters from NK jail.

But if you don't need it, it's fine. Then don't pay US taxes. But you can't say just because you don't live inside the US, your US taxes serve no purpose.

Reply to
PeterL

We do not pay anywhere near 100% of our income as taxes.

Reply to
PeterL

I never said that. I will say there is a lot of waste! And unwise and unnecessary wealth transfer.

and, I don't have the choice of not paying US taxes, even if I move to another country. I still have all that waste to support!

======================================= MODERATOR'S COMMENT: Tax rants are off topic here. Please direct any future comments to financial planning. And another reference to America as "greedy" will send you to the woodshed.

Reply to
Pico Rico

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