Being a US citizen is often a big PIA if you have a typical life in a different country. I would guess most of those renouncing their citizenship have not lived in US for decades. It's pretty ridiculous that Americans have to pay US taxes on income earned abroad and follow US laws when they are abroad but it is what it is.
am retiring in a month and slowly working my way through the entire thread, excellent stuff.....anyway there was an interesting article on the book made after this post and it sounds like much of the book is fiction or at the least heavily embellished http://reason.com/archives/2011/04/04/sorry-charley/singlepage ....still an excellent book though but it might be better to think of it as a novel like Steinbeck's other books, read most of them long ago and enjoyed them greatly
While nothing is impossible I would say that if you have a legal entrepreneurial foreign income and it's under a few million a year then you have little to worry about. Few countries that we have discussed will extradite you back to the USA for tax matters, and they have trouble calculating income for their own tax purposes, never mind assisting the IRS.
you can earn up to $92,900 overseas tax exempt in the US. you technically still need to file however and fill out the proper forms. http://www.overseastaxservices.com/index.php?option=com_content&view=article&id=53&Itemid=57#sec2 ...now if you have no income from the US and no records ie W2, 1099, SS heading to the IRS each year and you don't file...are they really gonna know about your foreign income? not sure if foreign income affects future SS payments, but I doubt it. you'll still have to deal w/ the local tax issue of the country you're earning the $ however. when i was living in mexico i meet expats working full time, from professional, tourism, real estate to waiting tables and i asked about taxes (as i was thinking about working myself). they basicly all said, i live in mexico full time, i get paid in mexico and it didn't go beyond there as far as IRS is concerned. take that how you want.
some of the most successful entrepreneurs in the world have no degrees, bailed on finishing or do just average or below if they finished. the entrepreneurial mindset and rank and order study and take test mindset are often very far apart. when i talk w/ other business owners, most felt college did very little for them running a business in the real world. they felt college was intake and spit back out and then stop for the day, but as a business owner there was still 6 more hrs of work to do. college did not teach you how to work long and hard and persist awhile properly dealing with setbacks.
on the flipside, i've meet an huge amount of retired expats in mexico who are very happy to be receiving that SS check each month while living in cheaper mexico (there are books and websites about how to do it as it's one of the better places in the world to do it...i will when the day comes). didn't really ask anyone from this group, unfortunately, about filing taxes and what they do. i know you're not getting over 90K in SS but i'm sure most file and claim the exemption form as the gov. know what they're paying out to these people and you don't want to do anything to loose that income. my landlady was collecting her SS and her husbands pension so she had a great life in mexico.
There are established programs for the young and naturally ignorant people to follow. An 'education'. A path. The initial intentions of these programs were good, imo. The execution of these programs is now 'mostly' (subjective) controlled by weak people (personally weak, imo) with polarlized and idealoigally different views, and agendas than what was the norm and understood when these programs were first founded. The seed that's planted becomes the tree...but not in all cases. There will always be people who do not - and will not - get in the pre-programed line. Good, or bad - just human nature. I agree with what you posted. Against whatever odds, there will always be some people jumping out of the pre-programed line. Self education is not difficult. It occurs at it's own natural pace, as the need is - not pre-planned robotic-like. When thirsty, you drink. Some people drink more often than others. Anyway, good post, imo.
I'm afraid some here are confusing several issues. First of all, even if you reside overseas you ALWAYS have to report and pay taxes on US-source income, whether it's Social Security, dividends from investments, interest from your US bank, or a salary check from the US. The $95K exemption is on foreign-source income that you earn over there and does not originate in the US. However, even on that income you can claim a foreign tax credit for any amount you pay in tax to a foreign government. This whole discussion is irrelevant to those who do not expect to make more than $95K in local income overseas in any year -- which, I think, probably includes most reading this. All the average Advrider denizen can aspire to is ekeing out a modest living running a combination bar and brothel in some run-down port city. And that's if you are lucky.
Didn't read this whole post but does anyone consider the Mexican Federal work permit process for working in Mexico as a foreigner? I believe it is quite complicated and you risk jail time if you are caught working without one. Work Permits: Advice from an old hat By Julie Black © 1999 All Rights Reserved. Ask no more. Yes, foreigners can legally work in Mexico, for any length of time, provided they obtain the required permission from the Mexican Immigrations Office. If you are one of those souls here in Mexico for an "extended stay" or longer, you may wonder, fret, or even wring your hands in worry, as the case may be, about how to acquire that most essential of documents - the work permit. The answer's simple, although painstaking at times. It's a matter of accumulating an inordinate amount of paper work and dutifully paying the fee. Over the years I've become quite familiar with obtaining this permit, known as an FM-3 Visa and would like to share the procedure with you. Please bear in mind that minor changes may occur and expect the entire procedure to require at least several trips to the Immigrations Office; in my own experience, up to five. Also, make sure to have two photo copies of each document that you present.
In Mexico, like many places, there is the law and there is reality. If you are working at a salaried position, or making pretty big buck$, then you probably want to jump through hoops and get your permits in order. If you are talking sales or being an intermediary for food and beer money then not so much Before the economy turned down there was a small army of gringos in Nuevo Progreso who were steering tourists to certain dentists and so forth. Clearly illegal activities, but since they were boosting the local economy they were tolerated.
I don't think I will ever get the option of retiring. There is no way SS is going to cover me enough to be able to get by. And I have done zero investment or anything. I know nothing about that. I pretty much live barely keeping my account above 2 or 3 paychecks worth. And this is with student loans being my only real debt, though that is probably the worst debt to have...
Well what some have done is to build up their credit card limit high enough to pay off their student loans and then when/if things get tough......you have a loan that CAN be discharged through BK. Then you would not have to worry about what little, if any, of your SS check would be kept to pay the student loans. I believe way back in this thread there was someone who built up their credit to the point they bought a house in Mexico on their Visa and then just left to live there debt free so to say.
Well, what do people do with their earned income? They generally put it in a bank. And what are foreign banks REQUIRED to do for each USA citizen account holder? That's right... they are required to report it back to the USA. (Not all countries, but USA is working on this.) Just because you are abroad doesn't mean the USA doesn't know what you are doing. As we all know, there are thousands of people who are not filing taxes each year living right here in the USA as well, but that doesn't make it a good idea, either. As technology increases and the world is getting smaller each year, it is increasingly easy to track people down who are trying to pull a fast one.
Spoke to my accountant on this as I have lived out of the country twice. Was told that as long as you are out of the US for 330 days per calendar year there is (up to) an $80,000 dollar exemption per per person for the tax purposes. You could visit any other countries...no problem...but the clock starts running even if you touch down in the US on a flight to somewhere else! Some food for thought. This info is two years old and may have changed slightly so check with who you have to check with.
no doubt all what you say is true and valid, however mexico is a cash society all the way around, taxing and income reporting is marginal at best, safe sales are prevalent, security is prison like (bars everywhere) and most living in mexico are escaping any thing related to the US. from the conversations i've had, most all self employed work in mexico is cash in pocket, cash out for bills and no questions asked. take that how you want. for the year i lived in mexico, cash was the only payment accepted for 95% of the things that needed to be paid for. everyone accepted cash payments on the spot or 3rd party payment spots for everything. most of the country does not have a credit or debit card nor were checks used like in the US. i asked a motorcycle shop sales guy about how people buy bikes. he said even the wealthy just show up with a wad of cash. i think the credit cards charged 6% transaction fees to accept so most businesses did want to accept or passed that fee along. use a card you pay 6% more...guess what everyone has cash in hand.
i asked everyone who was swinging a stick to make a buck in mexico if they had working papers and almost everyone laughed and said no...nobody bothers. if the US is a country of laws, Mexico is a country of DIY. you need to live there for any amount of time to comprehend this fact. when i first got there i keep asking is it ok to do this or that...after a bit the longer timers said do what you need to do and don't worry about what other think as they don't care what you do. if you are not affecting me then have at it is the mindset. this concept freaks out way too many people in the US.
Yep, if you are a "US person", i.e. citizen or green card holder, you have to file and you must report ALL holdings (along with your earnings) outside the US if their value totals over $10,000 US. And that includes any accounts you have "signing authority" whether it is your money or not. The penalties for not doing this are onerous. Part of the reason for the current rush to renounce US citizenship, perhaps? :huh