r2i forum

ssppss;29182Dear Forum Experts:

I have a few questions on Taxes. I and wife are currently Green Card, 2 kids are USC. I am considering either r2i immediately or work in some Asian country for a few years and then r2i.
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I am currently a Green Card holder. If I live outside the US, then what is the tax rate?

Does this tax rate change if I live in India, or Taiwan, or Hong Kong, or Korea (places I am considering)?

If I take US citizenship, then what is the tax rate?

Do I pay taxes on the whole amount earned to both the local government (India, or Taiwan, Hong Kong, or Korea)? I mean to ask if earn $x, then is the tax calculated based on x for both local and US government? If not, how is it done?[/LIST]I appreciate your help.
Thanks

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1. For your query, what is the tax rate, I am assuming that your question is for USA. The tax rate depends on your net taxable income. If the income is $10K or $10000K, the tax rates are different. As a GC holder, you are liable for US tax on your worldwide income with foreign earned income exclusions.

2. The tax rate in general does not change as far as US ius concerned. US does have reciprocal double tax avoidance agreements (DTAA) with many countries and those DTAA may allow for some specific changes. I hope you did not expect anyone to give you a dissertation for tax idiosyncracies vis a vis each of those countries. You will have to look at DTAA for each of those countried for the detail.

3. No different than if you are a GC.

4. US taxes rsidents on global income and provides some exclusions for foreign earned income. It also allows for credit for foreign taxes paid on taxed income. As to foreign countries, their taxation is per their law. India taxes Indian residents (ROR0 on global income and provides for credits alos on foreign taxes paid.

Desi;294621. For your query, what is the tax rate, I am assuming that your question is for USA. The tax rate depends on your net taxable income. If the income is $10K or $10000K, the tax rates are different. As a GC holder, you are liable for US tax on your worldwide income with foreign earned income exclusions.

2. The tax rate in general does not change as far as US ius concerned. US does have reciprocal double tax avoidance agreements (DTAA) with many countries and those DTAA may allow for some specific changes. I hope you did not expect anyone to give you a dissertation for tax idiosyncracies vis a vis each of those countries. You will have to look at DTAA for each of those countried for the detail.

3. No different than if you are a GC.

4. US taxes rsidents on global income and provides some exclusions for foreign earned income. It also allows for credit for foreign taxes paid on taxed income. As to foreign countries, their taxation is per their law. India taxes Indian residents (ROR0 on global income and provides for credits alos on foreign taxes paid.[/quote]

Desi:

Thanks for the reply. I went through the IRS documents and also this forum. But some help would be appreciated.

I am considering two possible positions that are likely to materialize: One in India at US $75,000. One in Taiwan at $200,000. What would be the US Tax rate for either of them?

I went through the IRS documents and also this forum. But some help would be appreciated. So if I apply foreign credit of $85,000, then can I apply more deductions for my dependents (one wife, two kids)?

In Taiwan I understand that I would be in 40% bracket. So I pay 40% of $200K = $80 K to taiwan. Then does Uncle Sam tax me based on 200K or 120K?

Is there a web site I can find that will tell me if taiwan has DTAA with US?

Thanks.

ssppss;29469Desi:

Thanks for the reply. I went through the IRS documents and also this forum. But some help would be appreciated.

I am considering two possible positions that are likely to materialize: One in India at US $75,000. One in Taiwan at $200,000. What would be the US Tax rate for either of them? [/quote]

I do not know what would the US tax rate be. You have to do an exercise of filling in the form 1040 for each case assumed. You will also have to fill in form 2555. You should also read the publication on USC and resident aliens abroad ( I think it is pub 54). There is an exclusion available on foreign earned income. Your US income will be taxed at a rate after piggybacking on the excluded income after applying the deductions and exemptions.

[quote]I went through the IRS documents and also this forum. But some help would be appreciated. So if I apply foreign credit of $85,000, then can I apply more deductions for my dependents (one wife, two kids)? [/quote]

Yes, exemptions and deductions will be available as well as foreign earned income exclusion. The foreign earned income exclusion is $82,400 and not $85K. However the tax calculation is not straight forward as it requires piggy backing income on excluded amount to get the correct rate, hence an exercise of filling out the forms is the best way to get a good assesment of taxes.

[quote]In Taiwan I understand that I would be in 40% bracket. So I pay 40% of $200K = $80 K to taiwan. Then does Uncle Sam tax me based on 200K or 120K?[/quote]

Based on 200K and not $120K. You will, however, have credits available for foreign taxes paid.

The following documents will be of interest to you.

Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
Publication 514, Foreign Tax Credit for Individuals
Form 2555 (PDF), Foreign Earned Income
Form 2555EZ (PDF), Foreign Earned Income Exclusion
Form 1116 (PDF), Foreign Tax Credit
Tax Topic 853, Foreign Earned Income Exclusion - General

ssppss;29608Follow up on my own post ... I searched on the web, esp IRS site. I do not think US has a double taxation avoidance treaty with Taiwan. So I guess Uncle Sam will take a good chunk of the possible $200K income. So my understanding is that I would be taxed 40% by Taiwan, and about 30-35% by US. Is this a correct assumption?[/quote]

I do not think you are taking into account, the foreign tax credit, the deductions, the exemptions etc. So I suggest read my previous post.