I spoke with Atossa Abrahamian of Reuters regarding my case. Her article is now available online, and I am pleased with her general tone; she treats us favorably and does not accuse us of being tax cheats, like so many other journalists have done.
I spoke with Atossa Abrahamian of Reuters regarding my case. Her article is now available online, and I am pleased with her general tone; she treats us favorably and does not accuse us of being tax cheats, like so many other journalists have done.
I know Roger… See the Facebook Democrats Abroad Brazil: http://www.facebook.com/groups/demsabroadbrazil/. I don´t understand why these fellow Americans Abroad in Brazil are not as distressed as I am. Mistery. The same for Democrats Abroad. They at least mentioned the problem and said that they are working on it, but when I talked about the issues of Americans Abroad no big support. On the other hand as we know Republicans Abroad Europe are really addressing these issues. I feel sorry because I am a Democrat and want Obama to be Re-elected. But it is conflicting for me.
@markpinetree- and there is the rub. If you let your political affiliations override your own self interest then the silence that you get from the Brazilian branch of Democrats abroad is the result.
The party should be the vehicle for the expression of the will of its members and not the other way around.
recalcitrant wrote: “The party should be the vehicle for the expression of the will of its members and not the other way around.”
Too true! That’s a great way to put it.
Uh, Roger: http://en.wikipedia.org/wiki/Godwin%27s_law
@broken man Yeah, you gotta love Godwin’s law. (note to self: do not compare the Obama adminstration to the Nazis in the interview with Pete the Planner in half an hour).
I must say that I continue to support President Obama and the Democrats when I conpare them with the Republicans. But as an American Abroad we should not take sides. We are going to welcome anyone who understands our plight and supports us. We are not the same as Americans in yhe USA who are investing dollares earned in the USA in foreign banks,
“We are not the same as Americans in yhe USA who are investing dollares earned in the USA in foreign banks,”
Now you may want to break that stereotypes. There are so many immigrants in the US who can be considered Americans in the US (canadian-americans, indian-americans, chinese-americans) and who have left assets in their home countries before moving to the US. They may be in a similar situation with respect to their assets left outside before moving to US.
@Kumar, when persons from other countries relocate to the US and become green card foreign residents, indeed the income from assets they beomes taxatble by the US, and those assets have to be reported to the IRS so they can make sure you are paying taxes on them.
I have a question: When persons from other countries relocate to Canada and become permanent residents of Canada, is income from assets they left behind taxed by Revenue Canada? I know there is no Canadian equivalent to FBAR and FATCA, but the question is whether the income from those assets and the capital gains if they are sold abroad for a prorfit are subject to taxation by Canada.
@Roger
Yes income from US assets is supposed to be reported by Permanent Residents of Canada. It’s called worldwide income and it is taxable. My husband received a 1099 for a tiny bit of interest years ago which he included on his Canadian tax return. I think it’s the same for capital gains but the only thing we had was a house and because it was a primary residence it was all tax exempt when we sold it.
@Roger Conklin
I have spent years preparing Canadian income tax returns. Canadians (and I mean both citizens and residents of Canada) are taxed on their World Income. Now having said that, I can’t help but believe that since our tax system is an honour system, there are people in Canada that are not reporting income and capital gains from abroad. Certainly, if I had a client who I suspected was being less than forthright about their world income, I would refuse to do their tax return.
The Canadian tax return also has a question on the front information page: :”Do you own any foreign property with a cost base greater than $100,000.00″. If the answer to that question is yes, there is a special form (1135) to be filled out where you list the value of the foreign assets such as, Greater than 100,000 or greater than $300,000 etc and then report the amount of income you are reporting on the return from those assets. Many people are under the impression that by ‘foreign property’ they mean ‘real property’. However, it refers to any foreign assets, such as, real property, stocks, securities, business etc. Again, I wonder if all individuals are honest with their answers. I have gotten to know my client base quite well and I believe they all answer that question honestly.
Many years ago, when I was working for someone else, I remember doing a tax return for a foreign born, permanent resident of Canada. The only income being reported was ‘social assistance’. The individual had enough gold jewelry on that had it been melted down they could have lived for 25 years or more. I saw them drive up to the office in a Mercedes. I suspect they did not answer many questions honestly. But it was not my job to accuse them of dishonesty.
Thanks to all who responded with respect to the taxation of foreign income to residents of Canada. These comments clarifity the situation. Thanks very much.
Does Canadian tax law allow a foreign tax credit offset against the Canadian tax on such foreign source income?
On foreign capital gains is the tax calculated on the difference betwen the acquisition and sale price, both expressed in Canadian dollars, or is it calculated on the gain in foreign currency converted to Canadian dollars?
The diffence between these two methods can be substantial if the foreign currency has significantly changed in value over the years between purchase and sale. In the US the purchase and sale price have to be in dollars at the excange rate in effect on those transaction dates.
I have a nagging question that I never got a clear answer. An American Living and Working in Brazil, if he is Self Employed, he has to pay SS Self Employment Tax to the IRS USA, even if has to pay the same to Brazil. But if the same American is an employee of a Brazilian Company he only pays Social Security Tax to Brazil, not to the USA. Can anyone explains the rationale for this? As Self Employed in Brazil I have to pay SS Self Employment Tax in both countries. Right there is 32% tax. And I have no return in terms of SS pension. It is a donation. How can I survive this?
About this question of citizens in their own country, as well as resident aliens (green cards) that left or started accounts in a foreign country. Of course they have to report. For instance if I reside in Brazil and have investments in the USA I have to repport this in my Brazilian Income Tax return. But Brazil will give me credit for the taxes I pay in the USA and only will charge me the difference, if any, of the taxes I would have to pay in Brazil. So it is not the way is being said that I will have to pay taxes in investments I have in another country. I hope this is the same for Canadians and others, otherwise this would be double taxation.
@markpinetree, I might be able to explain it. Under US tax law if you live and work outside of the US for a foreign employer you do not pay US social security tax and you are not covered by any US social security benefits. If you work abroad for a US employer or a subsidiary of the US company, that that US company may optionally elect to include in in US social security if it inclues ALL of its US expartriate personnel. In this situation you pay the employees portion and the US parent company or US employer pays the employer’s portion.n this case the decision is made by the US employer or parent company. If you are a US person abroad and are self-ermployed, that you are obligated to pay the self employment tax (which is the social security tax.) Don’t ask me to explain the logic behind this, but those are the rules.
Now that I am retired and receiving US social security retirement benefits, the years I worked for a Braziian employer and did not pay US social securithy tac did not count in determining my US social security pension.
@Roger Conklin
In answer to your previous post. Yes, there is an allowable Foreign Tax Credit. Regarding Capital Gains, – the tax is calculated on 50% of the difference between Adjusted Cost Basis (purchase price) and Proceeds of Disposition. These amounts would be converted to Canadian dollars on both purchase date and sell date. So you are correct – it can make a huge difference because of the exchange rate differences.
Roger isn´t this complicated? In a way I am glad that I paid SS Self Employment Tax all the years I worked in Brazil as a dual citizen. This gave continuity to my SS contribution and allowed me to be retired today receiving a SS US Pension. I also paid Brazilian SS Taxes and for the same reason I do have a small Brazilian SS income now (I contributed less because I worked less time in Brazil) When I lived and worked in the USA I did not have to pay income tax or SS tax in Brazil. But now at 79 and retired in both countries, being in Brazil I have to pay SS Self Employment Tax in both countries and this will not increase my social security income in neither. It is now a donation. I guess there is no way to change this but it is very difficult for me to afford. The money I left invested in the USA -earned there- I must declare in the Brazilian Income Tax Return. And I get credit for the taxes I pay in the USA. The problem however are the forms, endless forms to be filled in Brazil and in the USA. It takes a lot of time even if I end up not having to pay taxes because of tax credits. Yes, moving to live and work in a foreign country – not your own – complicates things a lot. This is especially true if you ar an American because the US IRS goes after you. Perhaps in the future as more people do this, there will be an easier way.. Thank you.
@Markpinetree. Thank you. I totally agree with you. There is nothing that is either reasonable or just about the US citizenship-based tax system. But it is the law.
When I lived and worked in Brazil I paid Brazilian Social Security Tax for the 6 years of those years that I was employed by a Brazilian company. For about 6 of those years I was on the payroll of either a US employer or the Brazilian subsidiary of a US employer, during which I paid double social security taxes to the US as well.
I am 81 years old. Currently I receive US Social Security retirement benefits. Living outside of Brazil do I have a right to any retirement benefits for those 6 years I paid Brazilian Social Security taxes? How would I proceed to file for those benefits living outside of Brazil? I have never thought much about it because, as I recall when I lived in Brazil retirees there had to appear personally at a bank every month to collect their reirement benefits and have a Certidao de Vida in hand to prove that they were indeed alive in order to collect them. Also there were exchange control laws at that time which allowed benefits to be paid only in Brazilian currency which could not be converted to dollars or any other foreign currency for remittance outside of the country.
Roger I did not quite understand. I then paid Brazilian SS (INSS) for six years. Is this what happened. Did you have a Brazilian SS (INSS) number? Give me sometime and I will try to find the answers.
@markpinetree, I will look through my papers and reply directly. Many thanks
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