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Date: Wed, 16 May 2007 09:01:07 -0700 (PDT)
Hi Dan,
You are right, as a US citizen, you have to report your worldwide income
to uncle Sam no matter where you reside. The foreign income exclusion is
$82,400 for 2006. However, the rules have changed effective 2006 and in
order to calculate your tax rate, the exclusion is added back. This
results in a big change for the expats out there. In some situations
(depending on the country you are living) it is actually more
advantageous not to take the exclusion.
The US and Switzerland have a income tax treaty that mitigates double
taxation but doesn't necessarily eliminate it, it depends on your level
of income. However, if you move to Switzerland, you should have enough
foreign tax credits to cover your US taxes (maximum Swiss tax rate is
41.5% if I remember correctly and Federal max tax rate is 35%). Again, it
depends on your income level.
Concerning your wife, if she has a green card at the present, she will
also have to report her worldwide income to the United States, so for tax
purposes it doesn't make too much of a difference whether she is a US
citizen or not. If she doesn't have a green card, then it is different.
You would be able to file a US tax return on your own as head of
household possibly or married filing separately so that your wife doesn't
have to report her income.
Please note that I am an international tax consultant and I will be happy
to answer any of your questions. If you do move to Switzerland, I would
be able to refer your to a US CPA specialized in expat taxation.
Regards,
Maria
Received on Wed May 16 2007 - 09:10:48 PDT
