Free_at_49
Recycles dryer sheets
- Joined
- May 7, 2005
- Messages
- 132
First, reading and understanding the relevant Double Tax Treaty between the US and "the other country" is imperative, provided one exists. No two treaties are exactly the same. The previous comments concerning how IRA, ROTH, etc. work in the UK may not apply to other countries. If a treaty exists, there will also be a "Technical Explanation". This is the treaty put in everyday english (to some degree), and may be easier to understand. It is also imperative to understand the "saving clause" contained in all US treaties. It comes about as the result of the US unique Citizenship Based Taxation. As a result, many of the benefits of the treaty do not apply to US citizens abroad. It is necessary to understand the limited number which may benefit the US citizen abroad, and if they apply to you.
For the UK double taxation of the IRA might be avoided by use of the resourcing basket of form 1116 where the US income is resourced as UK income in order to offset US tax by claiming the UK tax paid on the income.
Be aware that income primarily from US sources allows for the use of tax software. If the majority of income is foreign, and especially if it is retirement income possibly from more than one foreign country, tax software is useless.
I’m thinking of splitting my time between Italy and the Greek islands. If I live on a boat, do I even have an address? Is one forced to have a permanent address for IRS purposes?
My ideal solution would be to keep my US citizenship, login to Vanguard once a year from wherever I happen to be, withdraw whatever $ I need for living expenses, have VG withhold the appropriate % in tax, and file my US tax return online just as I do now. That seems very compliant to me, because I’d be doing exactly what I do now, except I’d be living in whatever country I chose.
As a retiree, I will have no EU-borne income, only US income from mutual funds. To avoid tax evasion, Italy and Greece have a so-called imputed income, based solely on the fact that one owns/rents a home, has a car, and other types of “luxury”. There is a tax credit for US taxes paid, so even though there is no outright double-taxation, each EU country considers your financial life by its own rules, so compliance is a huge problem for those of us that are not tax geeks. In any case, renouncing seems to offer no advantage unless you can also take all your money with you and sever all ties?
As for healthcare, I can walk into any public clinic or hospital in EU, but I don’t like doing it. I’ve lived most of my adult life in Canada & US so I feel I’d be taking advantage of the EU’s universal system. So I intend to buy private insurance. Likewise, by leaving Canada I’m forfeiting (the best) healthcare to which I’ve contributed. Ideally there should also be healthcare reciprocity treaties, as already exist between EU countries.
Any ideas?