— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 15, 2022
Or Whether A US citizen lives in (and is a tax resident of) Holland and is an airline pilot …
OMG imagine if @Ronald77171496 had known that he was a US citizen while he was flying planes across the Atlantic! Read this article which describes the nightmare imposed on "US citizen" airline pilots who have @taxresidency in other countries. (Applies to cruise ship people too!) https://t.co/gW8G30W9Vq
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 17, 2022
That US citizen, because and only because of the combination of US citizenship-based taxation coupled with living outside the United States, is likely to be subject to double taxation. The following discussion explains why.
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 21, 2022
Part A: Introduction – About Citizenship-based Taxation Part B: How the Internal Revenue Code is designed to mitigate the effects of double taxation in certain circumstances Part C: Determining what is “foreign source” income Part D: The problem of international waters … Part E: The effect of sourcing to the US income earned in international waters by dual tax residents Part F: Deducting “foreign taxes” paid – although income from international waters may not be foreign, it is still subject to the payment of “foreign taxes” Part G: Can a US citizen living abroad be saved by a tax treaty? Maybe if he/she lives in Canada**** Part H: Conclusion and the need for “Pure Residence-Based Taxation”
This 1981 article on the S. 911 FEIE explains the purpose was to make it less expensive for US corps to hire US citizens. It was NOT motivated by any desire to help #Americansabroad. "THE FOREIGN EARNED INCOME EXCLUSION: REINVENTING THE WHEEL" on JSTOR https://t.co/QBSz1f84NS
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) May 12, 2020
I recently participated in a podcast discussing both the opportunities and limitations associated with the Section 911 FEIE (“Foreign Earned Income Exclusion”). It is short and explains why the FEIE is not the answer to the problems experienced by Americans abroad. You can listen to it here:
The podcast was the subject of a post at American Expat Finance. That post prompted me to explore more deeply, the origins of the FEIE. When was it enacted? What was it designed to do? I found a fantastic article that I thought I would/should share.
Introduction: The Purpose and Limited Scope Of This Post
This post focuses on Green Card holders who are filing the 1040 tax return. The 1040 is the return that is filed by all individuals unless you are a “nonresident aliens”. Non-resident aliens file the 1040-NR. This post does NOT discuss (1) when it could be advantageous for a Green Card holder to file a 1040-NR (using a tax treaty tie breaker provision) and (2) what the (DANGEROUS) consequences of filing a 1040-NR (from both a tax and immigration perspective) could be. For a Green Card holder, there can be both disadvantages and also substantial advantages to using a tax treaty tiebreaker to file a 1040-NR. This post assumes that the Green Card holder is filing a 1040 and is specifically focused on the following question: Is it wise for a Green Card holder who is temporarily outside the United States to use the Foreign Earned Income Exclusion found in Section 911 of the Internal Revenue Code (as opposed to the Section 901 Foreign Tax credits) when filing the 1040?
(Most tax practitioners agree, that in general, it is better to use the Sec. 901 foreign tax credits and and not sue the S. 911 Foreign Earned Income Exclusion. Here is a post that explains why this is so. So, why would anybody ever use the FEIE? The answer is that some people live in countries where there is income tax and therefore no foreign tax credit to use against income that is taxable from a U.S. perspective.) Continue reading →
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 26, 2017
The above tweet references a post by Virginia La Torre Jeker describing the “Foreign Earned Income Exclusion” found in Internal Revenue Code S. 911. Her description of the Foreign Earned Income Exclusion includes: Continue reading →