taxes on stocks sold in Germany????

[twostep]

Originally Posted by Bevdeforges

Problem is, if he bought the stock "years ago" (as I think he said in the original post), you have to work with the exchange rate at that time when filing US taxes. I'm not sure what the Germans did about basis prices when we all went to euros in 2002, but I can tell you it only complicates the picture if his basis is in DM and the sale was in euros.

Normally, an investment broker would advise someone to sell off (and reinvest) some stock that was showing a loss in the same year to cushion the tax bite. But a tax accountant handed the sale as a fait accompli really doesn't have any options.
Cheers,
Bev

Even in DM - 10:1???
Let's be realistic - on roughly 3k you loose 1/3. If it throws you into a different tax bracket - oops.

[Bevdeforges]

twostep - being an accountant, I'm used to people sometimes speaking (or writing) in haste and confusing the technicalities of a transaction. The point is that the US tax is based on an amount of money (in dollars) that he never saw. Basically, he's being taxed on paper profits - and what's worse, because he immediately re-invested the money in Germany, he has to dig into his own pocket in US dollars to pay the taxes to the IRS.

Been there - though on the other side of the equation, filing US taxes from overseas or reporting US earnings for my European tax returns. It's frustrating, to say the least.

Marti - if it's any consolation, you're hardly the first foreigner to get tripped up on what seems to be a simple transaction in US taxes. Next time you'll be aware, and perhaps you can take a loss on something to cushion the large gain. It's how it's done for US investors (and French ones, too, as it turns out).
Cheers,
Bev

[twostep]

I know Bev:>) Been there, threw a tantrum, hired a cpa.

[marti]

Originally Posted by Bevdeforges

twostep - being an accountant, I'm used to people sometimes speaking (or writing) in haste and confusing the technicalities of a transaction. The point is that the US tax is based on an amount of money (in dollars) that he never saw. Basically, he's being taxed on paper profits - and what's worse, because he immediately re-invested the money in Germany, he has to dig into his own pocket in US dollars to pay the taxes to the IRS.

Been there - though on the other side of the equation, filing US taxes from overseas or reporting US earnings for my European tax returns. It's frustrating, to say the least.

Marti - if it's any consolation, you're hardly the first foreigner to get tripped up on what seems to be a simple transaction in US taxes. Next time you'll be aware, and perhaps you can take a loss on something to cushion the large gain. It's how it's done for US investors (and French ones, too, as it turns out).
Cheers,
Bev

Thanks for your help, Bev.
I was wondering - if so many foreigners get trapped, isn't there any way to warn them? Do you know how to reach most of the expats in the US?

[Bevdeforges]

Originally Posted by marti

Do you know how to reach most of the expats in the US?

If I did, I'd probably be a very rich woman. But I suspect that every country's tax laws have unpleasant "surprises" like this for the newcomer.

Most US expats overseas don't realize that they will have to file US taxes for the rest of their lives, no matter where they live and no matter what other country's taxes they have to pay.
Cheers,
Bev

[synthia]

There are a lot of people with American citizenship that have never lived in America and don't realize they owe taxes on their income. A child of an expat, born and raised in another country, for instance. I met someone the other day that was born in the US. His parents left the US when he was two, and he has a US passport, and had no idea he should be filing tax returns.

[Bevdeforges]

Originally Posted by synthia

T I met someone the other day that was born in the US. His parents left the US when he was two, and he has a US passport, and had no idea he should be filing tax returns.

Even worse (at least IMO) are the US citizens born overseas, who have never lived in the US - other than vacations back to see Mom or Dad's family - who are supposed to be filing taxes.

I know of one family where the kids all have dual nationalities because of Mom's US nationality. She was heartbroken when her grown son decided to set up his own business in the country where he had been raised, and decided that, "just in case" he had better renounce his US citizenship so as not to run into any tax issues.
Cheers,
Bev

[twostep]

Marti I assume you had help for your visa process. What surprises me is that potential issues such as income reporting were not brought to your attention.

Bev - what is so shocking about not making the US one's center of life?

[Bevdeforges]

Originally Posted by twostep

Marti I assume you had help for your visa process. What surprises me is that potential issues such as income reporting were not brought to your attention.

While many job transfers take things like income taxes into account, I don't think I've ever really heard of any expat getting upfront financial advice to explain the differences between the cultures.

I moved over here to France and have a US IRA and 401K back in the US. Even at a tax seminar here in Paris, organized by some hot shot (and VERY expensive) dual qualified (French and American) tax attorneys, they were very vague on how to handle the US retirement accounts for French taxes (particularly the wealth tax here). I happened onto a section of French tax law that keeps my retirement funds out of consideration (at least for now) for my French taxes - by declaring them as a form of life insurance.

It's not easy knowing what "oddities" of US tax law a newly arrived foreigner needs to know. And once he's sold the stock (or whatever) it's often not possible to shelter the transaction.

Bev - what is so shocking about not making the US one's center of life?

You forgot to add a - When you don't live there, it's amazing what a strange place it can seem.
Cheers,
Bev

[twostep]

Bev - a number of US/German firms "importing" talent on a senior level consider this just part of the relocation package nowadays.

On the other hand - investors have to stay informed. The market is not what it was prior to The Net.