# Never Pay U.S. Taxes Again - Legally **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [October 8, 2006, 12:36am UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663 "2006-10-08T00:36:55Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Giles](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giles/32/60_2.png) [@Giles](https://boards.straightdope.com/u/Giles)\ **Post date:** [October 9, 2006, 2:43pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/21 "2006-10-09T14:43:13Z")
[QUOTE=chela] It may be tough to shirk income taxes, but I’ve been checking my local municipalities online property tax database and Im astonished at the number of people who dont pay property taxes. Some for years and years and still they live in the same house. I know that exemptions can be made, the elderly with no income, veterans etc. But those exceptions cannot account for the pages of delinquent property taxes in one city. I think our city assessor must be a dope. :dubious: [/QUOTE] But, eventually, can’t they sell your property to pay for the taxes (plus the compound interest charged on the bill)? In some cases, the taxes may build up to more than the value of the property – so the municiplaity loses part of the taxes, but the property owner gets nothing at all. ---
**Author:** ![Baldwin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/baldwin/32/7264_2.png) [@Baldwin](https://boards.straightdope.com/u/Baldwin)\ **Post date:** [October 9, 2006, 2:52pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/22 "2006-10-09T14:52:48Z")
I avoided paying Federal income tax for several years in the 1980s by making almost no money. (I guess I was what the _Wall Street Journal_ editorial board would call a “lucky ducky”.) There are some drawbacks to this plan, such as living on ramen noodles. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [October 9, 2006, 3:49pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/23 "2006-10-09T15:49:11Z")
[QUOTE=TJdude825] I think the idea was that you stay here, but try to make the IRS believe you left. And the consensus among those in the know in this thread (which I’m not one of) seems to be that the IRS is not easily fooled, so this isn’t really a good idea. Not that laws always conform to common sense either. [/QUOTE] No, the idea, pretty plainly stated in the quote, is that you LEAVE. > [@](#): > > How It Should Be Done > > Long before you formally give up your U.S. citizenship, you should reorder your financial affairs in such a way as to remove from possible government control and taxation most, if not all, of your assets. > Here are the steps you must take: > **• Move abroad and make your new home in a no-tax foreign nation so you are no longer a “resident” for U.S. income taxes;** > • Obtain alternative citizenship and passport; > • Give up U.S. citizenship and change your legal “domicile” to avoid U.S. estate taxes; > • Arrange your affairs so that most or all of your income is derived from non-U.S. sources; and > • Title your property ownership so that any assets that remain in the United States are exempt from U.S. estate and gift taxes. > > The following chart provides a planning timetable: > > Year Action Plan > > 0 Decide to expatriate > 1-2 Strategize with expert advisors > 3-4 Liquidate U.S. assets > 5-6 Choose new jurisdiction > **7-8 Move to your chosen residency haven** > 9-10 Give up U.S. citizenship The plan does allow you to keep some assets in the U.S., but not your self. ---
**Author:** ![JRDelirious](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jrdelirious/32/9531_2.png) [@JRDelirious](https://boards.straightdope.com/u/JRDelirious)\ **Post date:** [October 10, 2006, 12:22am UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/24 "2006-10-10T00:22:07Z")
Right… the plan plain and simply stands for bona-fide **emigrating** , period. I suppose that they figure they’ll pump the sucker for some money before s/he realizes what’s up and says never-mind. In any case, as cited above by others, the IRS is wise to this scheme and they will look out for anyone emigrating above a certain net worth or tax liability-- basically our government already suspects that if you’re rich and are ditching the USA, you’re probably trying to weasel out of taxes. ---
**Author:** ![Uzi](https://avatars.discourse-cdn.com/v4/letter/u/91b2a8/32.png) [@Uzi](https://boards.straightdope.com/u/Uzi)\ **Post date:** [October 10, 2006, 5:47am UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/25 "2006-10-10T05:47:59Z")
[QUOTE=JRDelirious] In any case, as cited above by others, the IRS is wise to this scheme and they will look out for anyone emigrating above a certain net worth or tax liability-- basically our government already suspects that if you’re rich and are ditching the USA, you’re probably trying to weasel out of taxes. [/QUOTE] Don’t people have to pay taxes every year? Then what taxes would a person be weasling out of by emigrating? And if you then move to a foreign jurisdiction and the IRS is bent out of shape about it, so what? Obviously, if the taxes you owe are so great that you figure it is better to renounce your citizenship, then you are probably not hard up for money. If my job here in the ME was long term, I’d move out of Canada to avoid Canadian taxes. Luckily, it is perfectly legal. If you don’t work and live in a country then you don’t pay taxes in that country no matter what your citizenship. Seems obvious. ---
**Author:** ![Mindfield](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mindfield/32/19759_2.png) [@Mindfield](https://boards.straightdope.com/u/Mindfield)\ **Post date:** [October 10, 2006, 1:20pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/26 "2006-10-10T13:20:36Z")
Am I the only one picturing that commercial nut in the suit with all the the question marks on it ejaculating about how to get money from the government? Only now he’s ejaculating about how to avoid giving money _to_ the government? Okay, maybe it’s just me. ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [October 10, 2006, 2:18pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/27 "2006-10-10T14:18:06Z")
[QUOTE=Really Not All That Bright] Wouldn’t it be _common sense_, rather than a book, that tells you that leaving the United States will get you out of paying US taxes? [/QUOTE] No. See post#9. > [@Uzi](#): > > If you don’t work and live in a country then you don’t pay taxes in that country no matter what your citizenship. Seems obvious. To most of the civilized world, it seems obvious. The United States, however, taxes expatriates and even will attempt to tax people who have left the country and renounced their citizenship. See post #9. ---
**Author:** ![glee](https://avatars.discourse-cdn.com/v4/letter/g/b5a626/32.png) [@glee](https://boards.straightdope.com/u/glee)\ **Post date:** [October 10, 2006, 2:26pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/28 "2006-10-10T14:26:45Z")
Never pay US taxes - legally … I’ve done it! 😃 Just because I was born in the UK of UK parents and pay UK tax. :smack: ---
**Author:** ![Hal\_Briston](https://avatars.discourse-cdn.com/v4/letter/h/a9a28c/32.png) [@Hal\_Briston](https://boards.straightdope.com/u/Hal_Briston)\ **Post date:** [October 10, 2006, 5:00pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/29 "2006-10-10T17:00:15Z")
Well, I guess it’s slightly better than the “I forgot to pay my taxes” strategy (equally useful for an armed robbery charge). ---
**Author:** ![Driver8](https://avatars.discourse-cdn.com/v4/letter/d/b5a626/32.png) [@Driver8](https://boards.straightdope.com/u/Driver8)\ **Post date:** [October 10, 2006, 5:11pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/30 "2006-10-10T17:11:00Z")
[QUOTE=Freddy the Pig] No. See post#9.To most of the civilized world, it seems obvious. The United States, however, taxes expatriates and even will attempt to tax people who have left the country and renounced their citizenship. See post #9. [/QUOTE] Is this true? If an American citizen moves to say South Africa, earning South African rands which never leave South Africa, will the IRS try to tax them on this income? If so, are they credited for the taxes paid to the South African Revenue Service? I have done this in the opposite direction, I am a South African who has lived in the United States for two years. There are several provisions in the South African tax code that means my United States income earned while I am not a resident of South Africa is not taxable in South Africa. I am surprised that this is not more universal. ---
**Author:** ![Gary\_Robson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gary_robson/32/3448_2.png) [@Gary\_Robson](https://boards.straightdope.com/u/Gary_Robson)\ **Post date:** [October 10, 2006, 5:26pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/31 "2006-10-10T17:26:14Z")
[QUOTE=Freddy the Pig] The United States, however, taxes expatriates and even will attempt to tax people who have left the country and renounced their citizenship. See post #9. [/QUOTE] Explain this to me. Right now, I live in the U.S., earn money in the U.S., have my assets in the U.S., and pay taxes in the U.S. If I move to Australia next year, take all my stuff with me, get a job there, become an Australian citizen, and renounce my U.S. citizenship (after paying my U.S. taxes current, of course), then all of my income is taxable in Australia, not the U.S. How could the I.R.S. think it had any claim whatsoever to a piece of the Australian income earned by an Australian citizen? The O.P. is basically saying that one must pay one’s taxes _somewhere_, and if you don’t like U.S. taxes, go live and earn money somewhere else and pay their taxes instead. ---
**Author:** ![Gary\_Robson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gary_robson/32/3448_2.png) [@Gary\_Robson](https://boards.straightdope.com/u/Gary_Robson)\ **Post date:** [October 10, 2006, 5:32pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/32 "2006-10-10T17:32:10Z")
I must learn to preview and look for posts where others say the same thing I’m saying. Sorry about that, **Driver8**. ---
**Author:** ![madmonk28](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/madmonk28/32/20811_2.png) [@madmonk28](https://boards.straightdope.com/u/madmonk28)\ **Post date:** [October 10, 2006, 6:08pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/33 "2006-10-10T18:08:32Z")
[QUOTE=InvisibleWombat] Explain this to me. Right now, I live in the U.S., earn money in the U.S., have my assets in the U.S., and pay taxes in the U.S. If I move to Australia next year, take all my stuff with me, get a job there, become an Australian citizen, and renounce my U.S. citizenship (after paying my U.S. taxes current, of course), then all of my income is taxable in Australia, not the U.S. How could the I.R.S. think it had any claim whatsoever to a piece of the Australian income earned by an Australian citizen? The O.P. is basically saying that one must pay one’s taxes _somewhere_, and if you don’t like U.S. taxes, go live and earn money somewhere else and pay their taxes instead. [/QUOTE] I have legally been exempt from most of my US taxes. I live overseas. If I spend at least 330 days out of the US I am exempt from paying taxes on any income under $90k (I think that is the current threshold). I still file a return, but claim exempt status and submit evidence (a letter from my employer). ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [October 10, 2006, 7:33pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/34 "2006-10-10T19:33:48Z")
Two cases–the simpler case of an American living and working abroad, and the more complicated case of an American attempting to renounce their citizenship: [QUOTE=Driver8] If an American citizen moves to say South Africa, earning South African rands which never leave South Africa, will the IRS try to tax them on this income? If so, are they credited for the taxes paid to the South African Revenue Service? [/quote] Yes, and in general, yes. From the [IRS FAQ](http://www.irs.gov/faqs/faq13.html): > [@](#): > > **I am a U.S. citizen working abroad. Are my foreign earnings taxable?** > > A U.S. citizen or resident alien is generally subject to U.S. tax on total worldwide income. To be sure, there are exclusions and exceptions, as per **madmonk28**. But the mere fact of living and working abroad doesn’t exempt you from American taxation. > [@InvisibleWombat](#): > > If I move to Australia next year, take all my stuff with me, get a job there, become an Australian citizen, and renounce my U.S. citizenship (after paying my U.S. taxes current, of course), then all of my income is taxable in Australia, not the U.S. How could the I.R.S. think it had any claim whatsoever to a piece of the Australian income earned by an Australian citizen? You tell me. But they do! To be sure, they won’t come after you unless you have a high enough income to generate a tax liability of $124,000 per year–which is a lot, but by no means Rockefeller territory. Per the IRS: > [@](#): > > The expatriation tax provisions under Section 877 of the Internal Revenue Code (IRC) apply to US citizens who have renounced their citizenship . . . > > **Expatriation after June 3, 2004** > > The American Jobs Creation Act (AJCA) of 2004 amends Section 877 of the Internal Revenue Code (IRC), which provides for an alternative tax regime for certain, expatriated individuals. Amended IRC 877 eliminates the tax avoidance criteria for imposition of the expatriation tax on certain types of income for 10 years following expatriation, and creates objective criteria to impose the tax on individuals with an average income tax liability of $124,000 for the 5 prior years or a net worth of $2,000,000 on the date of expatriation. . . . Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer. ---
**Author:** ![Gary\_Robson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gary_robson/32/3448_2.png) [@Gary\_Robson](https://boards.straightdope.com/u/Gary_Robson)\ **Post date:** [October 10, 2006, 8:51pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/35 "2006-10-10T20:51:21Z")
Reading that, it says that I’d only be subject to U.S. tax on my Australian income in years where I came back to the U.S. for a significant amount of time. I still don’t see, given the exact example I gave, how the U.S. would have any jurisdiction whatsoever. ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [October 10, 2006, 9:13pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/36 "2006-10-10T21:13:59Z")
[QUOTE=InvisibleWombat] Reading that, it says that I’d only be subject to U.S. tax on my Australian income in years where I came back to the U.S. for a significant amount of time. [/QUOTE] No. You have liability if your average tax liability for the previous 5 years was \>=$124,000, **or** if your net worth at the time of expatriation is \>=$2 million, **or** if you spend more than 30 days in the United States in a given year. Obviously, I don’t know if any of those apply to you, and if they don’t, then you’d be OK. But your exemption would be due to failure to meet the income and wealth criteria, not the mere fact of renouncing your citizenship and leaving the country. ---
**Author:** ![Sunspace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunspace/32/1250_2.png) [@Sunspace](https://boards.straightdope.com/u/Sunspace)\ **Post date:** [October 10, 2006, 9:24pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/37 "2006-10-10T21:24:58Z")
I’m having a hard time wrapping my mind around this. If you, a US citizen and resident, moved to Australia as a poor but welcome legal immigrant, acquired Australian citizenship, ended your US citizenship, severed ties, etc (as described in several posts in this thread)… and then the next year struck it rich in the kangaroo mines and became the wealthiest person in Australia… the IRS would still believe that it had a claim on your newfound wealth… even though that wealth was not earned in the US? ---
**Author:** ![Sunspace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunspace/32/1250_2.png) [@Sunspace](https://boards.straightdope.com/u/Sunspace)\ **Post date:** [October 10, 2006, 9:27pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/38 "2006-10-10T21:27:51Z")
[QUOTE=Sunspace] I’m having a hard time wrapping my mind around this. If you, a US citizen and resident, moved to Australia as a poor but welcome legal immigrant, acquired Australian citizenship, ended your US citizenship, severed ties, etc (as described in several posts in this thread)… and then the next year struck it rich in the kangaroo mines and became the wealthiest person in Australia… the IRS would still believe that it had a claim on your newfound wealth… even though that wealth was not earned in the US? [/QUOTE] And I’ll add, "…and even though you weren’t in the US when you were earning it? ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [October 10, 2006, 9:36pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/39 "2006-10-10T21:36:46Z")
[QUOTE=Sunspace] If you, a US citizen and resident, moved to Australia as a poor but welcome legal immigrant, acquired Australian citizenship, ended your US citizenship, severed ties, etc (as described in several posts in this thread)… and then the next year struck it rich in the kangaroo mines and became the wealthiest person in Australia… the IRS would still believe that it had a claim on your newfound wealth… even though that wealth was not earned in the US? [/QUOTE] No, then you’d be OK, unless you were careless enough to spend 30 days in the United States. (Oh my God–29 days! Gotta get back to the mines **now**!) The income and wealth criteria apply at the time of expatriation (which I believe is when you renounce your citizenship, not when you leave the country). I should emphasize that I don’t have any especial expertise in this; I’m just reading it off of the IRS web site, but it correlates with the posts by **Eva Luna** and **China Guy**. (Well, it _almost_ correlates; it appears they were discussing the situation before 6/3/2004, when the IRS would attempt to subjectively determine whether you left to avoid taxes–now, there are objective income and wealth criteria.) ---
**Author:** ![spingears](https://avatars.discourse-cdn.com/v4/letter/s/ebca7d/32.png) [@spingears](https://boards.straightdope.com/u/spingears)\ **Post date:** [October 10, 2006, 9:47pm UTC](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663/40 "2006-10-10T21:47:42Z")
[QUOTE=astro] Interesting article [Never Pay U.S. Taxes Again - Legally - By Robert E. Bauman](http://www.escapeartist.com/efam/59/Taxes_OffshoreHaven.html) Yes it’s _that_[Robert E. Bauman](http://en.wikipedia.org/wiki/Robert_Bauman) [/QUOTE] I’d suspect that ‘Robert’ raises the money to live well on and pay HIS taxes, to avoid prosecution, by selling others books on how to avoid paying taxes. :rolleyes: “Nice work if you can get it.” [Previous page](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663.md?page=1) [Next page](https://boards.straightdope.com/t/never-pay-u-s-taxes-again-legally/375663.md?page=3)