Tales of Repatriation

America 101 - Taxes

The Tax Man speaks every language.

I know this to be true because I can (proudly) state that I was required to file a tax return in 3 different countries for 2019.

3, you ask? Yes, 3.

I filed a return in Singapore (moved there 1 March 2019), Kenya (left 29 February 2019 BUT my company in Kenya is where consulting fees go so it's like I never left) and the United States (because they never let you go). Why simplify when you can go complicated?

If you ever find yourself living the expat life (and I highly encourage that you do at some point if only for a year or two), you should probably deeply investigate and learn all of the income (and business) tax ramifications within your new host-country AND what happens to your tax life at home.

Some of you may ask...if I'm not coming back, should I care? And the simple answer is – yes. If you stop caring and stop filing as an expat, the US Government has the right to take away Little Blue (your passport) and that, friends, would make living overseas as an American very challenging and in most cases, illegal. (Passports are a whole other conversation.)

So, if you're wandering off and relocating abroad, what's the first step?

1. Find a VERY savvy, US-based tax advisor (CPA) who speaks "expat tax". My wonderful tax human is based in San Diego, CA and keeps me out of trouble – in America. He can do nothing to keep me out of trouble in Kenya or Singapore so I have to find and work with his equivalent in those countries.

Tax filing, in my opinion, can be chopped up into 3 categories that require 3 distinctly different approaches. The categories are Rising World, Developed World, and America.

Here are some tips for all of you – based on the category of tax adventure you're moving into:

Rising World – Kenya – Personal Tax Rate – 35%

#1 – Get yourself educated quickly. You'll likely discover that there are tax rules for locals/citizens and tax rules for YOU. You may pay a higher tax rate, face more scrutiny, and be a bit more "harassed" than your local friends. Should you decide to open a business in said land (I had 7 businesses in Kenya, each with 3 bank accounts – good times), you will become best friends with the tax authority who will enthusiastically (and maybe aggressively) review your tax returns (monthly, yearly, etc.) in the hopes of finding a small irregularity so that your work permit can be held ransom unless you pay a bribe to make it all go away. (That's another story.)

#2 – NEVER pay a bribe.

You will likely have to fight and prove your innocence, but trust me, that's a lot more fruitful than taking the short route and paying a bribe. Once the tax guy knows you'll pay a bribe, he will tell every other office you deal with, say immigration, city council, etc., and you will become the "pay a bribe" person to everyone including local police.

#3 – Maintain your accounts – Keep your personal and business accounts in order and consult with several LOCAL CPA's, etc. to make sure that you are compliant. READ the actual laws that are being enforced (tax code reading rates right up there with IKEA instructions) and stay educated. When Mr. Inspector/Auditor/Bribe person comes through your door, knowing the rules and being able to speak about them is a fantastic deterrent.

#4 – Keep an identical set of documents somewhere away from your office and home – and not in your best friend's house. Documents have a habit of being altered and/or disappearing. When "they" discover that you have a system of transparency, in duplicate, the conversation becomes easier.

#5 – File on time with enthusiasm! You are a guest of the country and there are no points for being late. Make all payments on time, smile, and remember, it's all about the adventure.

Developed – Singapore – Personal Tax Rate – 0-22% (I paid about 11%)

#1 – I moved to Singapore and figured out that in order to survive and thrive in a hyper-connected, futuristic country, I had to embrace the use of apps. There is an app in Singapore for absolutely everything. Taxis, food, work permits, taxes, health...the list is endless. I added about 30 different apps to my life when I moved to Singapore.

#2 – The rules for running a business and maintaining a work permit are painfully clear and you must follow the rules or you will be politely invited to leave. Sincerely, Singapore.

#3 – You will file and pay all tax(es) on time or you will not be allowed to leave Singapore until the bill is paid. Sincerely, Singapore.

#4 – The corporate tax rate in Singapore is 17% and somewhere around 11% for personal income tax. It's one of the lowest tax rates in the world. Stop whining and pay the tax or we will not let you leave until you do. Sincerely, Singapore.

America – Personal tax rate (Federal) - 10%, 12%, 22%, 24%, 32%, 35% and 37%

If you are an expat, you must file a Federal return. The Federal tax system for expats goes something like this:

#1 – You must file or we can take your passport.

#2 – You must declare any/all bank accounts (business and personal) or we can take your passport and you will be fined.

#3 – If you have spent more than 35 days in the USA in a 12-month cycle, you are a tax resident in America and you will pay USA income tax in addition to whatever tax you are paying elsewhere.

#4 – If you make under certain thresholds (for single/married), you are tax exempt (pay 0 but must file).

#5 – If you make over the threshold, prepare to pay. Dual taxation is as fun as it sounds.

#6 – Your return is due on time like everyone else. We don't care about your "expat issues".

#7 – If you have a business partner that is not a US citizen, we want their information, too.

#8 – If you live overseas but are paid in America, you are taxed like you live in America.

#9 – Find a very savvy expat tax preparer/expert or you are doomed.

#10 – The US Embassy in your host country is a not a tax preparing, filing, or assistance office.

I am a global citizen, tax resident in 3 countries, holder of one passport (actually two American passports but that's another story), and filer of many returns.

Tax returns are part of my super powers.

#expat

#expatriate

#repatriation

#ustaxes

#taxseason

#taxreturn

#cnnmoney