Re: US Taxes on X-Pats

[Vincent Cate <vince@offshore.com.ai>]

On Sat, 17 Aug 1996, DAVID A MOLNAR wrote:
> On Sat, 17 Aug 1996, Vincent Cate wrote:
> > It is not exactly that bad if you are outside the USA. I got ahold of the
> > IRS codes on this before I left the USA (so about 2 years ago).  The rule
> > then was that the first $70,000 you earned was tax free if you were
> > outside the USA for 330 days or more of the year.  From another x-pat in
> > Anguilla I heard that the $70 K had been increased. 
> 	Is this so? Last I had heard, Congress was looking at eliminating 
> the credit altogether. It's slightly misleading to call it "tax free", 
> though; the way I understand it, it's not included in the IRS's 
> estimation of your assets, but may play a factor in determining the final 
> amount of $$$ you end up paying. Very rarely does it translate directly 
> into a $70,000 break on your taxes, although it does help.

I am sure one of the 100+ X-Pats on this island would have been talking
about it if this were going to be eliminated, and I have not heard
anything. So I am sure it is still there.  But you can call 1-800-tax-1040
to check. After they finish with this question, ask them what it means in
the tax code where it says that income taxes are "voluntary complience". 
Have your Websters open to the definition of voluntary. Always good for a
laugh. 

The idea was no taxes on the first $70,000 earned outside the USA.
Dividends and interest were not counted as "earned".

Having $70,000 that you can earn tax free will never translate into a
$70,000 break on your taxes (unless they get to 100% tax rate). 

   --  Vince

-----------------------------------------------------------------------
Vincent Cate   vince@offshore.com.ai  http://www.offshore.com.ai/vince/
Offshore Information Services         http://www.offshore.com.ai/