• 25 Posts
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Joined 1 year ago
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Cake day: June 12th, 2023

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  • “Ok, but realistically…”

    The family is more susceptible than you suspect, as well as being under constant and significant duress.

    I’m not sure why they would stay dual citizens if their entire purpose is to live in a different country permanently, but:

    If, in your situation, the family kept all their money abroad, never reports, uses or transfers a significant amount of that money, waits 40 years, filling falsified us taxes and legitimate South African taxes the entire time, their son also never uses or transfers that money until he begins to launder it through a personal corporation that he has to keep consistent business records for, maintaining fake employees and fake patients false receipts and false invoices, a falsified or real office and equipment that either way he has to pay real rent on, and slowly reintroduces that money back into his “legitimate” accounts, then after half a century and a never-ending amount of effort at maintaining a comprehensive deception while they all continue to fill out their falsified US tax forms and legitimate South African tax forms consistently every year and never using the extranational or laundered money irresponsibly, never make a regular everyday mistake on any tax forms so that the IRS or South Africa performs an audit, and everything else goes right, apparently never live in the US but continue to file US taxes for their entire lives, tax evasion could work for that family and they could “get away with it”.

    is it worth it?

    I don’t think so. I can’t see any upside to that sort of tax evasion.

    “Let’s assume… let’s say…”

    Yes, hypothetical and real situations occur because tax evasion seems much easier than it is, the risk seems lower than it is, the effort seems lower than it is, and the reward seems greater than it usually is.

    that’s why so many people attempt it. that’s why you don’t report selling a desk on Craigslist.

    nobody’s saying that self-reporting is a perfect, foolproof taxation model. it’s a model that does what it’s supposed to. it allows the IRS to function as efficiently and effectively as it currently knows how to.


  • “Does the IRS have authority to issue such requests to foreign banks?”

    issue requests, sure.

    and companies with an international presence or countries with a working relationship with the US would be happy to respond to the IRS at least in rough confirmation.

    4 out of 5 people in the US would never have to worry about making more than $125 k a year, but if you’re reporting $60,000 annual income and then buying a house every year, the IRS would start looking into it.

    irs interest depends on how large the income disparity appears to be before they start officially investigating and probing for more certain corroboration and confirmations.

    it’s just like your taxes in the US.

    If you have a yard sale and don’t report it, the IRS isn’t going to pay attention to the extra $200 you didn’t report that year unless you happened to sell a personal boat later that year for 200k.

    it’s all about what flags the interest of the IRS.

    “How would the IRS even know what foreign bank to issue these requests to?”

    If you have over 10,000 usd abroad in total, all foreign holdings included, you are required to file what is called an fbar that year, which really is I think five fields on one form, you fill out the name of the Bank, address, the country and the amount.

    that’s so the IRS can keep tabs on. approximately how much you’re making versus how much you say you’re making if you’re keeping your savings overseas.

    “…gets tracked on a per-individual basis.”

    No worries, these are all great questions and I’m treating them like a refresher course.

    The IRS is largely dependent on self-reporting whether us citizens or residents are inside or outside of the country, which largely works because maintaining a believable fiction about your income is not easy to consistently pull off and consequences for self-reporting income incorrectly are so much higher than the amount of taxes most people are going to pay that it makes sense to self-report as accurately as you can.







  • oh i see. thanks.

    yea, the 1116 is for people paying formal taxes to the foreign government directly, usually because you’re living there as a permanent resident or operating a business full-time and significantly, have established your permanent tax home in that other country.

    using the 1116, you don’t pay all of the taxes twice, although you still pay some of them twice because the US wants that cash.

    the FEIE, form 2555, means that your tax is still in the US and only requires that you’re not in the US for 330 days out of the year to exempt income tax on up to 125k of income earned while outside of the country.

    the feie does have a residency test as well, but the physical presence qualification of 330 days each year is simpler and requires much less trouble to set up initially (permanent residency, switching tax homes, work permits and all that) to qualify for, so I only deal with the physical presence test.



  • “so, ive lived outside of the US for over 15 years”

    sounds very likely. must be why you’re unaware of the tax form designation and function you’ve filled out “15” times.

    “You don’t only fill out the 2555.”

    to qualify for the FEIE, you do.

    “I know a bunch of americans here and never once have I heard of the 2555 called a “FEIE Form””

    oh really, all of your friends abroad that you don’t call expats like literally every other long-term traveler?

    and they’re also very familiar with form 2555 but exclusively refer to it by the awkward moniker “form 2555”?

    “come on gang, let’s go to the 20 U.S. Code Chapter 16”

    " you mean the library?"

    " right, but I very naturally refer to the library by its legal code designation: 20 U.S. Code Chapter 16"

    pffhaha, come on!

    “pointed out that you absolutely do pay tax”

    arguing against a point nobody made, for unknown reasons.

    “just not to the US, you pay to the government in the country where you’re living.”

    1. this is largely incorrect, expats usually don’t have to file taxes in the countries they travel in because of #2

    2. it sounds like you’re trying to talk about permanent residency abroad, which is a. rare and unnecessary for most travelers b. a different topic c. one of the only situations in which you would pay separate federal taxes abroad and d. not some sort of prerequisite to using the FEIE.

    “You said “you don’t pay tax on the first approx 125k””

    this quote is incorrect, I assume as a misdirect for the topic changes.

    “its not tax free, its just to the government of Australia or wherever you live instead of the US.”

    this is incorrect as well, your first $125k of income is tax-free, and most people are not required to file federal income taxes in the countries they are traveling in.

    sounds like you’re trying really hard to switch topics from travel tax tips to permanent immigration tax law, but you aren’t familiar enough with either term to pull it off.

    quick note: the “domicile” tax you keep talking about paying to the foreign government isn’t some separate expense you file an extra tax form for while abroad, you just rent a place and the tax goes to the government in that price up front.

    If you make over 125k, you can use the housing exemption(as people actually call it) to reduce your tax burden, but as with most of your misdirects, that’s very rarely applicable.

    you don’t have to fill out an extra form for each place you rent a condo in.

    “I also mentioned that people will pay tax on earned income under that 125k if youre in the states over 35 days, but that its prorated”

    this is incorrect afaik, but maybe I dont understand the context of your nonspecific terms.

    I think I know what you’re misunderstanding with the prorated feie(qualified days calculated outside of the calendar year in addition to the physical presence test I’m talking about here) but either way, you still have to be outside of the country 330 days to qualify for the FEIE.

    if you point me to the source you’re paraphrasing, I’ll check for you.

    especially this prorared calculation, which I have never heard of:

    “(if you were one day over, or 329 if you were over by two days, etc)”

    I’m very curious to learn where you got that from.

    “just trying to expand and clarify on your post.”

    that didn’t work, you either just repeated what I said in different words(to me!) or muddied the waters with incorrect information.

    No worries.

    “apparently its your area of complete expertise”

    I appreciate it, but I’ll take “storied familiarity”

    If you asked questions instead of making assumptions, you could have saved us all time and I could explain all those buzzwords you found properly the first time.

    “just googling shit to bask in the glory of your genius”.

    again, thank you, and again you can just ask questions instead of frantically searching the internet for counterpoints that don’t exist or correlations that are irrelevant to the post.

    “stay cool”

    ƪ⁠(⁠˘⁠⌣⁠˘⁠)⁠ʃ


  • I find a lot of things funny.

    your comments are funny.

    you sent me two comments, the first of which was wrong on both counts and sounded like it was straight copy pasted from something you just searched,

    and then after I corrected you on those points,

    without any acknowledgment of your mistakes, you sent a second comment that paraphrased three things I had written earlier to me.

    Why?

    what was your end game?

    I know there’s foolery in there somewhere, and I don’t stand for foolery!

    are you trying to sounds smart by repeating interesting things I said in this post?

    repeat them to other people, they will be impressed.

    but I rode those things.

    Why?

    what was the point of your first and second comments?

    it sounds like you were trying to “um actually” me, but didn’t know what you were talking about, which is hilarious.

    I guess that made you feel bad.

    try not to one-up people unless you at least have your facts right.

    and definitely don’t try to one-up people by repeating the things they wrote back to them.

    that won’t work!