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Comment by seanmcdirmid | Hacker News Reader

> be required to pay income tax to the US regardless of where you live/work.

While technically true, you are only really required to file, and then exempt your income via the foreign earned income exemption or the foreign tax credit. This one simple trick means 95% of all Americans working abroad pay no US tax.

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It also means that we Americans working* abroad are radioactive for anything financial beyond a simple bank account or mortgage. Absolutely no one in Germany wants to deal with a brokerage account for me.

Though my husband was all for adding me to his accounts, I’ve carefully kept our finances separate to prevent the nightmare scenario of a bank deciding its American customers are no longer worth the trouble and neither of us being able to get at our money, which happened to some Americans when FATCA was first introduced, and also so at least one of us can buy ETFs in an uncomplicated manner.

* As in, not wealthy enough to be well beyond having to work

> Absolutely no one in Germany wants to deal with a brokerage account for me.

I lived outside for 11 years, but in Switzerland before the crackdown on American accounts. China was no problem, even with FACTA, they just didn't care much, even for investments.

If your husband has a USA permanent resident or on an immigrant visa, the same that applies to you applies to him as well, FACTA applies to all US citizens as well as residents.

Neither is the case for him... when we were first talking about the long term, he was willing to consider living in the US for at least a few years, since he's always enjoyed his visits. Then I talked to enough acquaintances who had Green Card drama for German citizen spouses who had only ever lived in Germany that I dropped the idea.

People complain about German bureaucracy, but I've found the residence permit process to be relatively straightforward and well-documented, and reasonably priced. They were clear about what documents they needed from us and when, and even helped me out when I nearly got stuck here because I applied for a renewal a bit too close to a trip to the States.

US green card for a spouse to come over as an immigrant is also pretty easy, we didn't even need a lawyer for it, just one trip to Guangzhou.

Apparently if one is a sole proprietor in a country that does not have the respective tax treaty with the US, one can be obliged to pay US Social Security and Medicare out of foreign income. I lack any expertise in this domain, but friends of mine who have returned to Romania (which lacks a treaty) after living in the US long enough for citizenship, have complained about having to set up a corporate structure and pay themselves via annual dividends in order to avoid this taxation.

> Apparently if one is a sole proprietor in a country that does not have the respective tax treaty with the US, one can be obliged to pay US Social Security and Medicare out of foreign income.

China lacks a treaty with the USA, which means Americans working in China pay to Chinese social security/medical and they are not transferred to the American equivalents. But ya, you pay SS/medicare on your stock dividends and even your sales to pay taxes (consequently, which you might also pay Chinese payroll taxes on).

Just clearing up some terminology: You're talking about Social Security "Totalization Agreements" [1], which are separate from tax treaties. Romania, for example, does have a tax treaty with the US [2] but not a totalization agreement.

Setting up a corporation suggests that the business should pay the worker "wages" or a "salary". [3] One key difference is that wages are considered earned income, allowing the taxpayer to use the foreign earned income exclusion, while dividends are not.

[1] https://www.irs.gov/government-entities/federal-state-local-...

[2] https://www.irs.gov/businesses/international-businesses/roma...

[3] https://ustax.bz/how-to-structure-your-non-u-s-business-or-p...

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