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3·19 hours agoThat’s right.
The Foreign Earned Income Exclusion specifically applies to earned income, and does not apply to unearned income.
yes, customs and border protection keeps records of legal entries and exits to and from the US.
why?
“Ok, but realistically…”
The family is more susceptible than you suspect, as well as being under constant and significant duress.
I’m not sure why they would stay dual citizens if their entire purpose is to live in a different country permanently, but:
If, in your situation, the family kept all their money abroad, never reports, uses or transfers a significant amount of that money, waits 40 years, filling falsified us taxes and legitimate South African taxes the entire time, their son also never uses or transfers that money until he begins to launder it through a personal corporation that he has to keep consistent business records for, maintaining fake employees and fake patients false receipts and false invoices, a falsified or real office and equipment that either way he has to pay real rent on, and slowly reintroduces that money back into his “legitimate” accounts, then after half a century and a never-ending amount of effort at maintaining a comprehensive deception while they all continue to fill out their falsified US tax forms and legitimate South African tax forms consistently every year and never using the extranational or laundered money irresponsibly, never make a regular everyday mistake on any tax forms so that the IRS or South Africa performs an audit, and everything else goes right, apparently never live in the US but continue to file US taxes for their entire lives, tax evasion could work for that family and they could “get away with it”.
is it worth it?
I don’t think so. I can’t see any upside to that sort of tax evasion.
“Let’s assume… let’s say…”
Yes, hypothetical and real situations occur because tax evasion seems much easier than it is, the risk seems lower than it is, the effort seems lower than it is, and the reward seems greater than it usually is.
that’s why so many people attempt it. that’s why you don’t report selling a desk on Craigslist.
nobody’s saying that self-reporting is a perfect, foolproof taxation model. it’s a model that does what it’s supposed to. it allows the IRS to function as efficiently and effectively as it currently knows how to.
“Does the IRS have authority to issue such requests to foreign banks?”
issue requests, sure.
and companies with an international presence or countries with a working relationship with the US would be happy to respond to the IRS at least in rough confirmation.
4 out of 5 people in the US would never have to worry about making more than $125 k a year, but if you’re reporting $60,000 annual income and then buying a house every year, the IRS would start looking into it.
irs interest depends on how large the income disparity appears to be before they start officially investigating and probing for more certain corroboration and confirmations.
it’s just like your taxes in the US.
If you have a yard sale and don’t report it, the IRS isn’t going to pay attention to the extra $200 you didn’t report that year unless you happened to sell a personal boat later that year for 200k.
it’s all about what flags the interest of the IRS.
“How would the IRS even know what foreign bank to issue these requests to?”
If you have over 10,000 usd abroad in total, all foreign holdings included, you are required to file what is called an fbar that year, which really is I think five fields on one form, you fill out the name of the Bank, address, the country and the amount.
that’s so the IRS can keep tabs on. approximately how much you’re making versus how much you say you’re making if you’re keeping your savings overseas.
“…gets tracked on a per-individual basis.”
No worries, these are all great questions and I’m treating them like a refresher course.
The IRS is largely dependent on self-reporting whether us citizens or residents are inside or outside of the country, which largely works because maintaining a believable fiction about your income is not easy to consistently pull off and consequences for self-reporting income incorrectly are so much higher than the amount of taxes most people are going to pay that it makes sense to self-report as accurately as you can.
1·22 hours ago“Still not using that noggin to learn new tricks, eh?”
Don’t feel bad you fell behind, you’re just confused.
I can help you with that, but leading you to comprehension is very much a horse to water situation.
i’m trying to keep these answers as simple and complete as possible for you, so which parts appear to you as “new tricks”?
“If you think that was a…”
is this more of your “not responding”?
you’re not very good at it.
not if you are earning that money while you are outside of the country.
so if you do remote work for a US company that pays money to your us Bank account but you are outside of the country for 330 days, then you don’t pay taxes on the first 125k of your income that year.
here’s how the IRS explains it:
“The source of your earned income is the place where you perform the services for which you receive the income. Foreign earned income is income you receive for performing personal services in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in France is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is in New York City.”
Great question!
they wouldn’t know initially.
you report your income, and then if the IRS suspects foul play, they would check later.
If you’re making over 125k, then you’ll likely have some kind of connected web/media presence that would allow them to at least circumstances confirm your position and standing within the field.
they could also check your bank balance and international holdings against the amount you said you’ve been making and see if it matches up.
“I refuse to continue responding”
Thanks for telling me you aren’t going to talk to me by sending me a really long message.
“People aren’t going to take you seriously…”
I certainly haven’t had this problem yet.
(you’re the case in point, beeteedubs).
I’m not sure how those two questions are related, but Batman’s very knowledgeable in pretty much all sciences, and extremely technologically talented, so I don’t see how he could not stop a runaway monorail.
this genocide is The conclusion of a 50-year crusade by the Israelis, and Trump said he’s fully on board with Netanyahu finishing his attack on Palestine.
and dumps is going to be in charge of The US military in a couple months.
so there isn’t much you can do
this will be one more concluded genocide in the books.
set his own shoelace on fire and then tied it to the scarecrow to set it ablaze.
what a coup de gras!
“man I’m not going to read…”
consistency is key.
“your tax professional who didn’t know about the 2555 was an utter hack”
proving you can’t read properly straight away, I see.
“it’s understood by everyone else I know that lives outside the US.”
this is incorrect, the feie is not commonly known about by US expats in my real experience in the real world(which you can infer by the fact that I know what I’m talking about and am burdened with correcting your numerous errors)
I have yet to meet a single person that knows about the feie abroad.
“if you were paying taxes on your income to the US under 125k…”
I was not. that is the whole point of this post.
“These posts are always…”
show me.
I haven’t seen any other posts about the FEIE(except for mine earlier this year).
“…it implies you were completely happy…”
not at all, in fact, the post body specifically contradicts your implication.
your “implication” is drawn entirely from your own flawed assumptions and unnecessary ignorance.
“…now you want to talk about tax avoidance?”
I’ve been talking about the feie for years, so in the future you might want to check yourself since you just wrecked yourself.
oh i see. thanks.
yea, the 1116 is for people paying formal taxes to the foreign government directly, usually because you’re living there as a permanent resident or operating a business full-time and significantly, have established your permanent tax home in that other country.
using the 1116, you don’t pay all of the taxes twice, although you still pay some of them twice because the US wants that cash.
the FEIE, form 2555, means that your tax is still in the US and only requires that you’re not in the US for 330 days out of the year to exempt income tax on up to 125k of income earned while outside of the country.
the feie does have a residency test as well, but the physical presence qualification of 330 days each year is simpler and requires much less trouble to set up initially (permanent residency, switching tax homes, work permits and all that) to qualify for, so I only deal with the physical presence test.
“are you aware that…right facing arrow”
yup.
I’ll make a note of your difficulties though:
“confused by…quotation marks.”
“Finds…own quotations…difficult to read…”
okay, got it.
“I’m not talking about all possible fantastic timelines”
you literally said “best-case scenario”
A few American 80-year-olds dying oh heart attacks is fairly realistic.
“Trump came out of left field…”
I can’t tell if you’re trying to paraphrase what I said or…I don’t see the point of this section at all. You’re agreeing with my point that sometimes things that seem inevitable are not inevitable.
“Illuminate me. Please. Instead of just saying I don’t, explain to me what I don’t understand that makes anything I’ve said not a real, valid concern.”
Sure.
A conservative majority is a problem, but does not create the inevitabilities you are worried about. Yes, things will likely get much worse for most people because Trump was elected, but importantly:
Is everything over and nobody can ever change anything again as you claim?
No, of course not, because inevitabilities are unfeasible in the real world.
You’re wallowing in a moment.
Time to move on.
“Laws only work if they are enforced.”
As they worked in extracting about a hundred million from Trump and convicting him 34 times.
“Can you provide proof to me that he has already paid E. Jean Carroll $100 million?”
He’s posted bond(paid the money) for those cases specifically(consequences of the legal system).
Here’s all the other major legal consequences to his ongoing cases. As mentioned, many are cases he is definitively unlikely to succeed in claiming as “presidential duties” as they happened out of office or are state cases not liable to federal oversight.
https://edition.cnn.com/2024/11/06/politics/what-happens-to-trump-criminal-cases/index.html
He’s spending time and money defending himself and so far, losing those cases. Those are consequences.
These cases are ongoing. You’re complaining about mights and maybes rather than the consequences he’s already faced that specifically disprove your “no consequences” theory.
“He pay that $100 mil yet?”
Yes, he did.
When you pay bond, you provide the money that is held in escrow until the completion of the appeals process.
“I’m not sure how much I can help you.”
No worries, I made that estimate a few comments back.
“HE WON.”
He won before. Four years later he lost, his policies were reversed and remarkably progressive legislation was passed.
“You haven’t proven me wrong on a single thing.”
a few things I have proved you wrong about:
- You believe Trump has faced no consequences. Trump is a convicted felon, legal sex offender, required to show up in court for years and spend his time and money and being sentenced(so far) to two payments to Carroll totaling 91 million bucks.
So you were wrong about that.
- You were wrong about best-case scenarios
3.wrong about the “king” thing
- wrong about the inevitability of Trump since he lost the 2020 election.
They’re are more, but…yea I did prove you wrong. A bunch.
“Do you honestly think that all conservative policy and efforts stop when Trump dies?”
No, this is counterintuitive to everything I’ve been teaching you about how government works.
I’ll listen to your theory, though.
“You’re being a contrarian”
I’m correcting your inaccuracies. You are taking it personally, but these are facts and you have the facts wrong.
If you were speaking accurately or could back up your defeatist anxieties with facts, you would face fewer corrective statements.
“…how to properly use this site’s functions”
Quotations being inside quotation marks is confusing for you. Already noted that one above.
“I have nothing to learn from you.”
Enjoy those cave shadows.
“considering you deduct the taxes you locally pay off the top first”
i understood local taxation to be inclusive to the FEIE, can i see your source?
“so, ive lived outside of the US for over 15 years”
sounds very likely. must be why you’re unaware of the tax form designation and function you’ve filled out “15” times.
“You don’t only fill out the 2555.”
to qualify for the FEIE, you do.
“I know a bunch of americans here and never once have I heard of the 2555 called a “FEIE Form””
oh really, all of your friends abroad that you don’t call expats like literally every other long-term traveler?
and they’re also very familiar with form 2555 but exclusively refer to it by the awkward moniker “form 2555”?
“come on gang, let’s go to the 20 U.S. Code Chapter 16”
" you mean the library?"
" right, but I very naturally refer to the library by its legal code designation: 20 U.S. Code Chapter 16"
pffhaha, come on!
“pointed out that you absolutely do pay tax”
arguing against a point nobody made, for unknown reasons.
“just not to the US, you pay to the government in the country where you’re living.”
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this is largely incorrect, expats usually don’t have to file taxes in the countries they travel in because of #2
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it sounds like you’re trying to talk about permanent residency abroad, which is a. rare and unnecessary for most travelers b. a different topic c. one of the only situations in which you would pay separate federal taxes abroad and d. not some sort of prerequisite to using the FEIE.
“You said “you don’t pay tax on the first approx 125k””
this quote is incorrect, I assume as a misdirect for the topic changes.
“its not tax free, its just to the government of Australia or wherever you live instead of the US.”
this is incorrect as well, your first $125k of income is tax-free, and most people are not required to file federal income taxes in the countries they are traveling in.
sounds like you’re trying really hard to switch topics from travel tax tips to permanent immigration tax law, but you aren’t familiar enough with either term to pull it off.
quick note: the “domicile” tax you keep talking about paying to the foreign government isn’t some separate expense you file an extra tax form for while abroad, you just rent a place and the tax goes to the government in that price up front.
If you make over 125k, you can use the housing exemption(as people actually call it) to reduce your tax burden, but as with most of your misdirects, that’s very rarely applicable.
you don’t have to fill out an extra form for each place you rent a condo in.
“I also mentioned that people will pay tax on earned income under that 125k if youre in the states over 35 days, but that its prorated”
this is incorrect afaik, but maybe I dont understand the context of your nonspecific terms.
I think I know what you’re misunderstanding with the prorated feie(qualified days calculated outside of the calendar year in addition to the physical presence test I’m talking about here) but either way, you still have to be outside of the country 330 days to qualify for the FEIE.
if you point me to the source you’re paraphrasing, I’ll check for you.
especially this prorared calculation, which I have never heard of:
“(if you were one day over, or 329 if you were over by two days, etc)”
I’m very curious to learn where you got that from.
“just trying to expand and clarify on your post.”
that didn’t work, you either just repeated what I said in different words(to me!) or muddied the waters with incorrect information.
No worries.
“apparently its your area of complete expertise”
I appreciate it, but I’ll take “storied familiarity”
If you asked questions instead of making assumptions, you could have saved us all time and I could explain all those buzzwords you found properly the first time.
“just googling shit to bask in the glory of your genius”.
again, thank you, and again you can just ask questions instead of frantically searching the internet for counterpoints that don’t exist or correlations that are irrelevant to the post.
“stay cool”
ƪ(˘⌣˘)ʃ
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exactly, the feie makes tax mitigation way simpler for most full-time travelers at most income levels.
you’re welcome, I love it when people find this stuff useful!