Did you know that even though we live in Brazil that US law requires that we pay income taxes to the US government for income earned in Brazil? And yes, we also owe income taxes to the Brazilian government.
Think about that.
This year it is not a drama. We have been living, for the most part, on our savings (and consistent with our planned budget.) So we really have not earned much of anything in relative terms. (Pay no attention to sporadic freelance activities!!)
According to the very polite and helpful IRS representative (number 0212741) I spoke to on the phone the other day – unless and until we earn the equivalent to US$8,950 we are not required to file a tax return. This means we have NO OBLIGATION this year to mail in anything! Although I fully expect a letter in June from the IRS asking if we forgot to file.
The better news is that as we move forward and earn larger sums in Brazil, we will certainly pay taxes in Brazil, but there is a huge deductable for income earned abroad before we have to file for the US. (I don’t have the number handy, but it is more than I ever expect to earn in a single year.) So basically the rich international political class has to pay taxes (and the successful business folks) but us simple folks just getting by will not be paying double taxes.
Of course the flip side is that as non-tax-paying Americans we will not benefit from any future tax giveaways Washington may cook up to stimulate the economy. You only get those checks if you filed taxes in the previous year – or can deduct them from your next return. Fair enough.
We are disappearing from the American bureaucracy (That’s probably a good thing.)