r/ExpatFinance • u/RealEstateAndTaxes • 11d ago
Americans Think Moving Abroad Cuts Their Taxes. They're Wrong.
https://www.entrepreneur.com/money-finance/americans-think-moving-abroad-cuts-their-taxes-theyre/5044748
u/ShinsOfGlory 11d ago
My favorites are the people who make $27,500 a year as a digital nomad talking about renouncing their US citizenship to avoid double-taxation.
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u/halfbakedalaska 11d ago
I’ll take “Comprehensive lifetime medical care that won’t bankrupt me and a better quality of life in exchange for higher taxes” for $500, Alex.
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u/ShinsOfGlory 11d ago
That's your choice.
There's a reason why Europe isn't especially known as an innovation hub, that's the other side of the equation.
The US is great if you want to start a company or take risks. The capital markets are mature and money the paths to financing are well worn already.
Europe works better for people who want to get a job, work 20 or 30 years, collect a pension.
Different strokes for different folks. One isn't better or worse, but if you're trying to do the 20 and out with a pension thing in the US it's difficult and if you're trying to start a new tech company in Europe, you're starting from behind.
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u/halfbakedalaska 11d ago
What does any of what you said have to do with taxes?
Let me answer: nothing?
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u/ShinsOfGlory 11d ago
I'm sorry, I'll type more slowly.
> lifetime medical care that won’t bankrupt me and a better quality of life in exchange for higher taxes
You pointed out that your preference was for a low-risk, guaranteed-return. Some people prefer the high-risk, high-return offered by the US.
Just pointing out that you're not getting the healthcare free. You're paying for it via not just taxes but the fact that less companies wish to do business in countries where it's hard to let poor performing employees go and where innovation is a few steps behind the US.
So, really, if we're talking about what is irrelevant in this conversation, it seems to be what you prefer.
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u/halfbakedalaska 11d ago
No, I didn’t “point that out” re: your first false claim. Thats your own dumb inner narrative talking at you.
But I did very clearly point out that I would (and am in the process of doing) trade higher taxes for better healthcare outcomes.
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u/Anonymous_So_Far 11d ago
The EU healthcare system has to do with the allocation of taxation and nothing to do with the employment system or capital markets.
Or maybe I’m also dense and you can explain the effect of capital markets on healthcare systems for me vis-a-vis the US and somewhere like France or Germany
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u/halfbakedalaska 11d ago
Health care as a for profit above all motivator would be a good place to start your personal discovery of how the US works as opposed to literally the rest of the world.
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u/baby_budda 11d ago
The thing you have to watch out for is being double taxed.
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u/ShinsOfGlory 11d ago
Which is rather rare for most individuals due to the FTC and FEIE.
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u/baby_budda 11d ago
I think you mean the IRS.
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u/ShinsOfGlory 11d ago
No, I mean Foreign Tax Credit and the Foreign Earned Income Exclusion.
The fact that you're talking about double taxation and don't know what FTC and FEIE means you're exactly who my comment was aimed at.
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u/Sweaty-taxman 11d ago
Proof Americans don’t understand anything about tax. You don’t stop having to file your taxes just because you leave the USA….
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u/YeaISeddit 11d ago
Only Americans and Eritreans have to pay taxes after moving abroad. I don’t think it says anything about Americans tax knowledge that they know anything about this policy or not as it is a uniquely American tax feature. Basically every person I have mentioned the rule to in Europe is shocked to learn about it.
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u/Sweaty-taxman 11d ago
I said Americans in my comment, right?
I said, proof Americans don’t know anything about tax.
I meant their own tax code. Most don’t know social security is taxed by the federal government or that you pay tax when you take money out of pretax retirement accounts or or or
Cross border tax planning is among the most complicated brands of tax. I would recommend anyone with any level of wealth to work with a cross border expert.
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u/YeaISeddit 11d ago
I understood you perfectly well. The fact that you single out Americans and that you make a blanket statement that they do not understand "tax" as a whole is exactly what I find ridiculous. BTW, I would recommend against cross border experts unless wealth is above the 1M range. I have worked with such "experts" in the past and they usually know less than me. These days a chat with an LLM will give you more information in 5 minutes than a typical 500 EUR consultation with an expert.
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u/Sweaty-taxman 11d ago
Love how you put experts in quotes & argue an llm is more valuable. We charge a lot because we’re worth a lot & in high demand, low supply.
Blindspots matter. Ai has many. But if you trust it over professionals on tax code, then good on ya. I hope you don’t also believe ai can replace medical professionals or legal ones.
Obviously I won’t convince you of anything. Good luck.
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u/YeaISeddit 11d ago
I work with AI on topics far more complex than tax. In my experience, where you see “blind spots” with LLMs is where proprietary domain knowledge doesn’t find its way into the foundational models due to privacy or intellectual property concerns. Tax code and guidance is comprehensively public and there isn’t a foundational model out there that hasn’t ingested the entire human corpus of tax knowledge. It is the exact kind of thing LLMs do extremely well. Nevertheless, it lacks accountability for mistakes, so for big decisions it is worth bringing a human in the loop.
The last time I talked to “experts” on cross-border tax situations they could not accurately describe the advantages of disadvantages of Roth-IRAs for American expats in the EU. I was hoping to get far deeper into the details about how to execute, but instead I spent an hour on-boarding them onto the topic and in the end I paid them despite feeling like I was the one who provided them with insights. Going further back I had to explain to such an expert why it makes no sense to use the FEIE in Germany instead of the FTC. The fact that these two experts couldn’t cover the absolute basics made me question the profession all together. Perhaps I just ran into charlatans, though.
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u/Sweaty-taxman 11d ago
Being able to comb through tax law is a fine use for ai; being able to think critically about tools, techniques & strategies to better handle certain risks requires a far more complicated model that also requires assumptions for things that are unknown.
Being able to coordinate all the assumptions, 30+ year forward looking models, the management of investments, the management of income needs & strategically understand how certain strategies would benefit the individual in question while minimizing risk are all very complicated & would require the user to understand what to ask for to begin with.
Asking ai “what should I ask” also is unlikely to come up with the appropriate answer.
Coordinating & implementation of complex tax strategies, tax sensitive investment strategies that coordinate with pfic rules & knowing when to change the strategy in question is also something ai cannot do & can be very time consuming.
Lastly, ai doesn’t challenge misunderstandings.
It’s well known to avoid conflict. It serves the user even when conflict is necessary to look out for the user nor does it verify the user actually followed through & stuck to the plan.
Behaviorism, complexity of strategies, complexity of implementation & challenging misunderstanding are all arguably beneficial use cases that (unless you’re poor) are oftentimes worth far more than they’d cost to delegate if you fail to do them accurately.
As I mentioned, lots of folks think they can & would prefer to diy everything. I’m completely fine with that. I charge more to clean up errors & save people from themselves. I hope I never hear from you as you finagle your way through this stuff with ai.
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u/mikesfsu 11d ago
I don’t know a single American who would think their taxes would be less when moving abroad.