Taxation

[RIKKA]

I spoke to a Tax accountant today actually on a pending move to RSA from USA. An option is to have your hubby listed as a contractor your tax liabaility in RSA can be zero, jus get paid to Gibraltar, Cypress or Caymans. If he is an employee then look into Tax Treaty between Oz and RSA as you could offset the tax.

Synthia, only an american can appreciate our funky tax law. The more you make the less tax rate you pay. The more creative and crafty you are the more you save. I heard on TV today Warren Buffett (third richest man in the world) Admits he pays a lower tax rate than his secretary.

Beleive me our tax law is complicated. Exemptions, exclusions, and deductions. Amazing.

[synthia]

Yeah, the laws are amazingly complex, and the more money you have the more ways you have of sheltering money from taxes. I did see an article the other day that said that in the last couple of years the burden has somewhat shifted, with the highest income individuals paying a much higher pecentage of the total taxes taken in. I find it hard to believe. A statistical trick, perhaps?

[dhandaulat33]

Okay, do you know the American government is forcing taxes upon the average citizens? I think under the age of 18, American citizens should not be forced to pay taxes because they are not given the ability to vote for representation. Why should a minor be forced to pay when the minor's voice is often ignored and never plays an immediate role in politics? If I can't vote then I shouldn't pay taxes.

[synthia]

All governments force people to pay taxes. No one does it voluntarily.

Do you think that a child movie star, for instance, should be allowed to earn millions tax free just because of age? And that rich kids with trust funds that pay out interest and dividends should get that money tax free? That would be a great break for the rich.

As a minor, you are, financially, sort of 'owned' by your parents. Except states that require a certain percentage of earnings above a specified limit be put into a trust fun, all the money you earn legally belongs to your parents. They can take money from your bank account, sell stock you may have bought, and even sell your Christmas presents if they want. For many years there were legal debates about whether children had any civill rights at all.

[Bevdeforges]

Nice argument - but US expats have to file and (in some cases) pay US income taxes, too, and though we technically can vote back in the US, no one listens to us, either. Most Congressional reps have no idea that overseas residents can vote - so they don't open or read letters (or e-mails) that come from outside their district).

Plus, expats pay taxes in the country where they live and don't get to vote there at all unless they take local nationality. Life is unfair.

[jmspringbok]

If I live in SA I have to pay taxes in the US and SA? That isn't right! The tax rate in SA is what about 40%? If I had to pay taxes both places I wouldn't have anything left over to live on. Are there ways of sheltering money?

We are still in the US, thinking about how to make a living in Cape Town.

[Bevdeforges]

If you are a US citizen, you have to file a US tax return and declare your worldwide income no matter where in the world you are living. Generally, you can exempt a big chunk of your "overseas earned income" (i.e. salary earned in another country) and then there are tax credits you can apply against the US tax on other sorts of income.

There are also tax treaties with about 50 countries to try and reduce the danger of double taxation (especially for things like pensions).

The tax situation is often a nasty surprise for US expats. If you're thinking of moving overseas, it's worthwhile to look into it before you decide. It's more a nuisance than anything else, though if you have complicated financial arrangements, it can be more difficult.