Reflections on a Wandering Life.....

Saturday, June 30, 2012


Talked to Mark this morning about Obama's Health care plan. He said that the Supreme Court's decision would actually work in favor of people like us who live overseas. Because we don't live in the United States, we won't buy American insurance. Because we don't buy insurance, we will be subject to the tax. But because we don't have American income, we don't have to pay American taxes. So technically, we will not have to buy into those short term insurance deals (which I don't have much confidence in anyway) when we travel to the States. But we should still be covered.

Most countries don't require their citizens to pay taxes if they don't live in the country. But the United States is an exception. Americans are ALWAYS subject to tax. But US tax law does have a foreign income exclusion for all non-US income under the ceiling, which I believe is up to 90 some thousand US dollars now. It's not an exemption. It is an exclusion (FORM 2555EZ). If you fill out the form, which takes about 10-15 minutes, then by the time you get to where it says, "wages, tips, and other compensation," your income is already down to 0 dollars and 0 cents. At that point, you don't need exemptions. Of course, the exclusion only applies to foreign income. And it assumes that you are an employee. Self-employed people have to pay self-employment tax no matter where they live. But I don't pay (US) taxes and I don't pay social security. So according to Mark, if we are not in the US longer than 35 days in any tax year, we're off the hook. Hope he's right.

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