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Old 1st July 2014, 07:44 AM
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Users Flag! Originally from usa. Users Flag! Expat in singapore.

Originally Posted by AmericanWantsToLeave View Post
My dad thinks I'm an idiot for wanting to leave the US and says I'd be paying a huge amount in taxes to both countries and such.
Your father is misinformed.

Under the U.S. income tax code, U.S. persons (U.S. citizens, U.S. nationals, and U.S. permanent residents) residing overseas pay no more than the U.S. income tax rate or the foreign income tax rate, whichever is higher. Moreover, if the foreign income tax rate is lower than the U.S. income tax rate, typically U.S. persons residing overseas pay a lower income tax rate than similarly situated peers living in the U.S. If that's not enough, a higher foreign income tax rate is often recoverable in the form of future U.S. income tax savings, as would be the case when receiving income in a comparatively high income tax jurisdiction followed by moving back to the U.S. and receiving taxable income in the U.S.

The primary provisions in the U.S. income tax code that result in what I just described are the Foreign Tax Credit and the Foreign Earned Income Exclusion.

All that's without any tax treaty. The United States and Italy specifically have a tax treaty that provides more tax breaks to certain individuals and organizations. Also, Italy happens to be a comparatively high income tax jurisdiction, and those higher Italian tax payments may be recoverable from your U.S. tax bill if you return to the U.S.

Please note I'm describing income taxes. Social insurance taxes (payroll taxes), for example, can operate differently, though as it happens the U.S. and Italy have a Social Security treaty, too. Also, taxes are only one part of one's financial life and not necessarily even the most important part. For example, in Italy general tax revenues (income taxes, VAT, excise taxes, etc.) pay for publicly supported medical care available to all Italian citizens (and many others) living in Italy. Medical care is not 100% free for most people -- that's an exaggeration -- but one's out-of-pocket costs are much lower than U.S. norms. Opinions differ, but most people think Italy offers a much better deal on medical care than the U.S. does (even post-PPACA).

Nothing I just wrote should be construed as a recommendation on where to live, but "you'll pay double the taxes" and variously similar assertions are simply not accurate.
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