Finally Repatriating...Tax confusion

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Finally Repatriating...Tax confusion


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Old 29th November 2019, 11:58 AM
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Default Finally Repatriating...Tax confusion

The short story: Moving back to US in April 2020
My foreign earned income will be around 40k for those four months, about 8k over the prorated maximum exclusion amount (around 31k)

Looks like I'll be paying 22% tax on that 8k if my foreign income is over 41k according to the new tax brackets. If it's less, I'll pay 12%.

I'm looking at either 1 or 2k in taxes when I return in April.

My question is...is there anyway to avoid paying any taxes altogether??

I think my only option would be to come home in April for a few weeks and then live outside the US the rest of the year in order to qualify for the physical presence test.

Anybody have any comments on this would be super helpful. I'm not looking to spend $300 to have my taxes done if it's as simple as this.

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Old 29th November 2019, 06:46 PM
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Quote:
Originally Posted by mrktstrtmyhm View Post
My question is...is there anyway to avoid paying any taxes altogether??
Yes - do not report the income. Admittedly that's more evading taxes than avoiding taxes, but it will work.

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I think my only option would be to come home in April for a few weeks and then live outside the US the rest of the year in order to qualify for the physical presence test.
Seems like an expensive way to get out of paying one or two thousand in taxes.
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Old 30th November 2019, 01:28 AM
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If you do report the income and are getting paid in riyals instead of USD, you could compare daily exchange rates when you received the income to the yearly average rates and see which is more favorable to your tax bill. That said, the IRS says that rates must be "used consistently," and I don't know whether that means you can use spot rates one year and yearly average rates in another.

The IRS has in the past been known to question FEIE claims from residents of countries that have no income tax (maybe less so lately due to negative publicity and staffing issues), so if you're reporting any income, I'd be reluctant to report any of it in a questionable manner.

You may also be eligible to reduce tax by making creditable IRA contributions, or, if you get a high-deductible plan once back in the US, an HSA.

Aside from that I agree with the previous reply.

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Old 30th November 2019, 06:10 AM
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Yes - do not report the income. Admittedly that's more evading taxes than avoiding taxes, but it will work.
Yea? So just keep the four months of income in cash so there's no trace of it right.

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Old 30th November 2019, 10:32 PM
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Yea? So just keep the four months of income in cash so there's no trace of it right.
Look at what the IRS will know and not know. It won't know anything about income beyond what you tell them. But it may know something about your bank balances if you are subject to FATCA reporting.

Tax evasion at your own risk if returning to the US - I might not want to take any chances only to save a thousand or two - but as a general rule the IRS knows next to nothing about what goes on outside the country.


Last edited by Nononymous; 30th November 2019 at 10:35 PM.
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