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Contrarian Expatriate · June 12th, 2012, 11:45 am

While overseas, one is exempt from paying taxes on the first $90,000 or something in that range. If this site is hosted on a US server, then it might mean all of the income from it is taxable, but that is a question for a tax professional.

I believe Winston must still file a return and report all foreign banks accounts if the total is over $10,000. There are more reporting requirements for accounts totaling over $50,000.

All that should keep him out of net of the IRS.

Renata · Post by **Renata** » June 12th, 2012, 12:04 pm

^^ that's good info there ... I didn't know how all this works either.

but if it's an online business; no employees & you don't live in the US; therefore you're not benefiting from anything of that country, you still are obligated to pay tax???
you know the whole story about why we pay taxes; to run the country, pave roads, waste disposal etc. You live abroad so you're not benefiting from any of this... I wouldn't pay a dime wtf.

AmericanInMexico · Post by **AmericanInMexico** » June 12th, 2012, 12:25 pm

Renata wrote:^^ that's good info there ... I didn't know how all this works either.

but if it's an online business; no employees & you don't live in the US; therefore you're not benefiting from anything of that country, you still are obligated to pay tax???
you know the whole story about why we pay taxes; to run the country, pave roads, waste disposal etc. You live abroad so you're not benefiting from any of this... I wouldn't pay a dime wtf.

Renata, the United States is a very special case (as always). For some reason, every other country in the world realizes that for example if you're French but living and earning money in Japan, then why should you have to pay income tax to France when you earned your income in Japan?

The United States is different. For example, with me living in Mexico I'm still required to file a tax return even though my main source of income here is generated in Mexico. Contrarian Expatriate is right in that the first $90,000 is not taxable, and I am way below that amount so I don't pay any taxes, BUT I still must file a US tax return. It's asinine that if I'm earning money from outside the United States, I have to pay taxes to the United States when the income didn't even originally come from the United States!

This is one of the main reasons why people renounce their U.S. citizenship.

Renata · Post by **Renata** » June 12th, 2012, 12:34 pm

wow ... and you know for so many years people from other countries including mine ran after US citizenship & would do anything to get green cards etc.

AmericanInMexico · Post by **AmericanInMexico** » June 12th, 2012, 12:45 pm

Renata wrote:wow ... and you know for so many years people from other countries including mine ran after US citizenship & would do anything to get green cards etc.

That is true, and many of them still do. The thing is though that despite all these people with their endless drivel about how people immigrate to the United States for "freedom" or other meaningless terms, the truth is that most people immigrate to the U.S. for one reason: a higher wage. I know plenty of people who upon immigrating to the United States found their social life reduced to nothing, since what qualifies as "social life" in the United States is going out with a small group of close friends and getting drunk at some overpriced restaurant where a meal for just one person costs over $30 USD. I can't even imagine spending the equivalent (about $360 MXN) here in Mexico for just one meal. The most I ever spend on a meal here is maybe $100 MXN (about $8 USD); usually no more than about $50 MXN (about $4 USD).

Americans often complain that Mexican immigrants don't "integrate", and I will admit that I too used to get mad whenever a Mexican would approach me in the United States and ask me a question in Spanish rather than in English. Now though I understand why they don't integrate. Why integrate into a society where people don't talk to anyone outside of their close social group and where the most important thing about a person is what kind of job he or she has?

The United States has only two good things about it: it is easy to earn a high wage and it is relatively corruption-free. Here in Mexico I have had to pay bribes at least once a month to corrupt cops; that doesn't happen in the USA. But that's a price I am willing to pay to be Happier Abroad.

eurobrat · Post by **eurobrat** » June 12th, 2012, 12:57 pm

Here in Mexico I have had to pay bribes at least once a month to corrupt cops; that doesn't happen in the USA. But that's a price I am willing to pay to be Happier Abroad.

It's coming soon, I can feel it.

Post by **Winston** » June 12th, 2012, 8:53 pm

This year I have to file, but I didn't the previous years because I didn't make enough to qualify. I believe that the law says that you only have to file if your income reaches a certain level.

Renata, the conspiracy theorists say that the taxes you pay to the US government (which are unconstitutional and illegal by the way) goes to paying the interest on the national debt generated from borrowing from the Federal Reserve.

Renata · Post by **Renata** » June 13th, 2012, 1:21 am

^^ oh my that's not a government that's very mafia

in my country you pay taxes to the country you work in. I'm outside Trinidad & I pay no taxes to them nor do I have to file anything. On the other hand if you have a registered business & live abroad the business will operate as a sole entity & will be liable to pay it's taxes.

eurobrat · Post by **eurobrat** » June 13th, 2012, 3:22 pm

Here is the form: http://www.irs.gov/pub/irs-pdf/f2555.pdf

Renata · Post by **Renata** » June 14th, 2012, 9:10 am

Question; What if you're like me, neither an american/ british/aussie citizen but your e-commerce site, domain, server everything is american hosted... what then? does it matter?

ladislav · Post by **ladislav** » June 14th, 2012, 9:33 am

Last year my legal residency was in Kuwait but I moved to the Philippines later on and was working for Chinese and Russian companies online. I also worked for one California company. The last one issued a W-9 form. But it was for some $2500. I declared my residency as Kuwaiti and even my visa stipulated that. I also declared my Ca income and filed a non resident tax form with California tax board.
Now, if you are a US citizen/resident and you make money off a US source but live overseas, this may not be considered foreign earned income.
Winston had better consult an expat tax accountant

xiongmao · Post by **xiongmao** » June 14th, 2012, 9:59 am

I've been running an online business for 10 years. Though I'm legit, the chances of you getting an audit are pretty low. It's higher risk if you're selling physical goods - in the UK HMRC has been snooping around eBay and Amazon.

If you have business assets in the USA technically you're liable for taxation there. And if you sell goods to Europe technically you need to collect VAT. It's all a minefield really, but if you're making less than $20,000 a year you're not that likely to get busted.

The big problem comes if you get busted after 10 years, then have to pony up 10 years of taxes!

eurobrat · Post by **eurobrat** » June 14th, 2012, 11:10 am

I know papal will let you collect 20k without filing and tax free. Winston should just get s papal account and have the money dumped in there.

Jester · Post by **Jester** » June 14th, 2012, 9:32 pm

eurobrat wrote:Here is the form: http://www.irs.gov/pub/irs-pdf/f2555.pdf

Thanks for posting. Just for everyone's info I think it is very important to file this form and your return on time. Don't skip filing or later you may have to pay tax even on that 90000 that was supposed to be exempt.

Also make sure to pay SE tax if self-employed. On first dollar of profit from your schedule C.

I'm not on the IRS's side, ust want you guys to keep out of trouble.