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Question for the Money Doctors

Question submitted on Dec 16, 2013.

Question

I will move to Switzerland to work for Swiss firm and have US citzenship. If I make CHF 180,000, pay CHF 12,000 in taxes in Switzerland and spend CHF 40,000 in rent. How much would I have to pay in taxes to the US government?

Answer

Since you did not provide any relevant details, I am going to make the following assumptions: I assume you are single, under the age of 65, no dependents, no other income besides this salary such as interest, dividends, and capital gains, and do not own a home. I am assuming the CHF 180,000 is your entire taxable compensation which translates to about $203,000. I am also assuming you will qualify for the earned income exclusion for the entire year. For 2013, the exclusion is $97,600.

Based upon this information, my rough calculation of your US federal tax due is about $6,000. You should consult a knowledgeable tax advisor to help you with this because it is very complicated. Also, you did not mention of your employer will have Tax Equalization. Some companies provide tax equalization so you would be paying taxes as if you were in the US for countries with higher taxes. Also some employers provide other benefits such as education for the children, assistance with renting out the US home, and trips back home.

For more information, please look at IRS Form 2555 and its instructions. Also take a look at Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad. You can get this at your library or at www.irs.gov.


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