Clear up some myths about USA for me, please

[synthia]

You have to have building permits and get inspections and conform to building codes in the US. Your electric and plumbing work must be inspected, and there are rules about how many outlets you must have per wall and how high a fence can be, all that stuff. When I was thirteen my family moved because the house we were living in was taken by eminent domain for a highway. The owners got less than fair market value, too.

What we don't generally have is a lot of easements. In England people are allowed to hike almost everywhere, and I think they can camp on private property, too. In the US, going onto someone's property uninvited can be considered trespass and you can be prosecuted for it.

If you are an American, you must file and declare all your income from any source, no matter where or how it is earned. Al Capone was finally jailed, not for any of his gangster activites, but for income tax evasion.

Say you are an American working in Germany, earning $100,000 per year in salary, $10,000 per year in interest and dividends, and $20,000 a year in rental income from a condo you own in Tahiti after expenses like the mortgage and maintenance. Your total income is $130,000. You are entitled to an exemption on the first $80,000 you earn in Germany, leaving you with an income of $50,000. Your taxes will then be figured as if you had a salary of $20,000 plus the other inocme. Then you may be able to take a credit for your German taxes paid on that $20,000, because you are then being taxed twice.

However, there are tax treaties, and if you are transferred and paid by an American taxes, you won't pay any German taxes, but will pay full US taxes just as if you were working in the US. Since US taxes are lower, this is a good deal.

[Bevdeforges]

Originally Posted by synthia

Your taxes will then be figured as if you had a salary of $20,000 plus the other inocme. Then you may be able to take a credit for your German taxes paid on that $20,000, because you are then being taxed twice.

However, there are tax treaties, and if you are transferred and paid by an American taxes, you won't pay any German taxes, but will pay full US taxes just as if you were working in the US. Since US taxes are lower, this is a good deal.

I should point out that the way the overseas earned income exclusion works has changed recently. In the example you cite, you would have to figure your taxes on your income with the entire earned income and then subtract the taxes on just the earned income portion. What this does is push the taxes you pay on what's left over into the higher tax brackets.

The other thing to watch out for is that it's not automatic that you won't pay German taxes if you're employed by an American company. To fall under that particular wrinkle of the tax code you have to be on a genuine transfer, with the intention of returning within a certain period of time and maintaining your US social security status while you are gone. If you work for a US company in Germany and "just happen" to be a US citizen, you pay regular German taxes and pay into the German social insurances (which is actually, in some ways a better deal).
Cheers,
Bev

[twostep]

Bev - that is the infamouse Catch 22 - it does not apply for her.

[MichelleAlison]

Originally Posted by synthia

You have to have building permits and get inspections and conform to building codes in the US. Your electric and plumbing work must be inspected, and there are rules about how many outlets you must have per wall and how high a fence can be, all that stuff. When I was thirteen my family moved because the house we were living in was taken by eminent domain for a highway. The owners got less than fair market value, too.

What we don't generally have is a lot of easements. In England people are allowed to hike almost everywhere, and I think they can camp on private property, too. In the US, going onto someone's property uninvited can be considered trespass and you can be prosecuted for it.

Hi Synthia,

I think you will find that all the above laws apply in the UK also - trespass is trespass.

Michelle

[synthia]

Bev - I thought I said that the option of paying US taxes was only available to those who had transferred to Germany.

When did they change the earned income stuff? That was a really nice break, having the taxes start on my interest and dividend income as if that was my sole income, thus letting me have that money tax free since it was less than the standard deduction and personal exemption.

[synthia]

Michelle -

I keep reading about all the rights for hiking trails. We really don't have that here. And I guess I got the idea about camping in fields from Brits who were planning on doing that in the US, because they assumed it would be OK.

[Fatbrit]

Originally Posted by synthia

Michelle -

I keep reading about all the rights for hiking trails. We really don't have that here. And I guess I got the idea about camping in fields from Brits who were planning on doing that in the US, because they assumed it would be OK.

Maybe have a read here. There is no equivalent in the US.

[Bevdeforges]

Originally Posted by synthia

Bev - I thought I said that the option of paying US taxes was only available to those who had transferred to Germany.

When did they change the earned income stuff? That was a really nice break, having the taxes start on my interest and dividend income as if that was my sole income, thus letting me have that money tax free since it was less than the standard deduction and personal exemption.

Even for those who transfer to Germany with a US company, it's not an automatic option.

The earned income thing changed for the 2006 tax year. (Caught me completely by surprise, too.) I'd love to see how much tax revenue they actually get from overseas taxpayers, since they seem to be on a campaign of squeezing them for as much as they can lately. Every few years someone raising the bright idea of doing away with the overseas earned income exclusion altogether.
Cheers,
Bev

[synthia]

I remember thinking it was great not to even have to pay social security. Now I wish I had been required to, because I could use the credits.

[Bevdeforges]

In some countries these days you can "buy back" credits for years you didn't contribute to the national pension scheme. Usually this is for years you attended school or were off on maternity or other sorts of leaves that don't count toward pension credits. I suppose time spent overseas would be up for buying back, too, though I'm not sure.
Cheers,
Bev