Well thats understandable then. I bet a lot of people hit by AMT for the first time have the same reaction.
You might want to check with a tax pro in the USA to make sure your’e not missing anything.
Maybe theres other tricks you’re missing.
I wonder if our tax policy is designed this way to partially discourage or punish brain drain?
Did you get a $28,000 raise for 2017? If not, how did you avoid it in 2016 and 2015? If you did get a raise and didn’t figure in the tax implications, then I’m not sure what to say. The foreign income exclusion has been around $100k for the past few years when you received it, so it shouldn’t have been a surprise. Lesson learned for next year.
The COL varies all over the USA, yet the federal tax rates are consistent, so I don’t quite get why the COL in Switzerland has anything to do with it. Also, when you said you lived in a shithole, I thought you were referring to the country, not your apartment. There are millions of Americans and billions of people world wide that would gladly trade places with you
OK unless I’m missing something you’re making gross income $130k and the taxes you’re paying are :
Swiss taxes :
social taxes, unemployment insurance $12,500
income tax $15,500
additional tax due $3500
IRS tax bill $4000
total tax bill = $35,500
If you are single person with standard deduction living and working in the US then you’d be paying:
gross income $130k
IRS tax $26,470
SS & medicare tax = $9730
total = $36,200
Thats before any state level taxes in the US and its just about the same net bill $35.5k vs 36.2k but you’re actually paying less net in Switzerland.
But in most states you’ve got state taxes too to push it up even more. Here in Oregon you’d owe another $10,661 on top for $46,861
Does Oregon allow the same exclusion of foreign income? I just looked up California and it looks like they don’t, so if OP is a tax resident of a state that doesn’t conform to the federal exclusion, the state income tax isn’t really relevant in comparison because it’s the same whether OP is working abroad or in the US (unless OP has changed domicile or qualifies to not file as a resident).
I’m talking about someone working and living here in OR. Comparing his bill to what people here pay.
I’ve no idea how OR handles foreign income…
(eta : I see my original post wasn’t really clear on that so I edited to say the figures were comparing to someone living and working in the US)
Oh ok, fair. But depending on Oregon’s rules, if he were domiciled in e.g., Oregon before he left, he may have to still pay Oregon income tax on his worldwide income (depending on its treatment of foreign income). So what I’m saying is that his state income tax stays the same whether he’s working abroad or in Oregon.
Using Oregon just as an example state - I don’t know how they treat any of this.
Yeah… or similarly in other states with a state income tax.
OP might have another tax bill surprise…
I don’t remember the specifics of my 2015 taxes, but I did spend the first 2 months in the US. In 2016 I had a 3 month long unemployment stretch, so I wasn’t over the Foreign Earned Income Exclusion.
Also, when you said you lived in a shithole, I thought you were referring to the country, not your apartment. There are millions of Americans and billions of people world wide that would gladly trade places with you
I was referring to my specific apartment. I’m living in a very small apartment to keep housing costs down. It is in a mixed neighborhood, where a lot of gentrification is going on, and ours happens to be one of the older unsightly ones that is occupied mostly by lower-income residents.
In the US, $10k of that $130k, the health insurance policy, wouldn’t even count as taxable income.
OK yeah that $10k difference would change the normal IRS bill for US residents $2800.
That makes it so the bill you’re paying now living in Switzerland ~$2100 more than a US citizen living in US pays but put state tax on top of that and you’d still likely pay more if living in the US.
Not that its really a consolation but your net tax bill is still less than you’d typically pay if living in the US with the same income.
If you owe tax, then you’re doing it right. But if you’re getting a refund, then you fucked up.