Cruisers Forum
 


Join CruisersForum Today

Reply
 
Thread Tools Rate Thread Display Modes
Old 17-06-2010, 08:04   #16
Registered User
 
Doodles's Avatar

Join Date: Nov 2009
Location: Virginia, USA & Krabi, Thailand
Boat: Wauquiez Pretorien 35; Nordica 16
Posts: 2,810
Images: 1
Quote:
Originally Posted by osirissail View Post
With proper planning and lots of foresight you can structure your retirement income from investments to be non-taxable, but if you are in high return investments you will probably be paying some significant Federal taxes which in my case run about 20% of gross. Social Security is only taxable if your other income exceeds a threshold amount. Normally fixed retirement plan income, it you still have such a plan, is treated as normal income since taxes were deferred all the years money was going into the fixed plan.
- - What is important is that you file with the IRS each year continuously even if you qualify for not owing any income tax - unless - your total income drops below the IRS amount for not having to file. The idea is to avoid having to fly back home and spend significant time explaining to an IRS examiner how and why you did not file each year. If you have continuous records of IRS filings then you can normally resolve any questions by mail. It is the old "CYA." principle of avoiding future hassles before they get a chance to ruin your cruising days.
- - With a good bank/financial institution to "park" your retirement income and providing complete internet access, the cruising life is a lot easier. All the IRS forms are available for downloading and you can print them out and fill them in. Without real estate ownership and otherwise getting rid of "complications" back in the home country, you get down to simply taking the "standard deduction" and a one page or at most two page IRS package to mail in each year. My sister (mail handler for me) scans and emails me the 1099's which I print out on board and then attach to the 1040 before mailing.
- - Florida especially, and probably a few other States have no State taxes beyond sales taxes and no "retirement income" taxes, personal property taxes, etc. so you can avoid that whole level of taxation and only be "beholding" to the Fed's.
- - As a side note: there was a recent financial news article about permanent "ex-pats" renouncing their USA citizenship strictly because of the requirement to file IRS forms every year even when they did not have an USA derived income or other income that was USA taxable. Such "renouncing" filings have quadrupled in the last year.
Now if that's true its a pretty stupid thing to do. I can't imagine giving up your US citizenship because you are pissed about having to file forms just to show you don't owe any taxes. Besides, income from non-US sources is still taxable as long as you are a US citizen so I'm not sure what their beef is there. And as for the "other income that was USA taxable" that they had to file to show they didn't owe any taxes, well that's nothing new and has always been the case for everyone whether you live in the US or overseas.

Sorry to rant but I'm a CPA with a lot of tax experience and these excuses make no sense. And renouncing your citizenship is a serious matter not to be taken lightly, especially for frivolous reasons.
__________________

__________________
Mundis Ex Igne Factus Est
Doodles is offline   Reply With Quote
Old 17-06-2010, 17:40   #17
Senior Cruiser
 
osirissail's Avatar

Cruisers Forum Supporter

Join Date: Feb 2009
Location: A real life Zombie from FL
Boat: Gulfstar 53 - Osiris
Posts: 5,416
Images: 2
I agree that renouncing for frivolous reasons is not very smart. But foreign derived income is exempt or offset up to a certain dollar amount which has been known to change from year to year or so. The people renouncing are dual citizenship folks who are permanently living in another major western country and have no need of an American Passport anymore. Their new "home country" passport and privileges are equal or better than their US passport. As the article explained, the hassles of filing returns to a country they do not live in and have no need for any services from causes them to "simplify" their lives by renouncing. Additionally, every years new or different rules are invented or interpreted in the US Tax Code and keeping up with them is time wasted especially if the person has complicated international financial dealings in countries other than the USA.
__________________

__________________
osirissail is offline   Reply With Quote
Old 18-06-2010, 07:52   #18
Registered User
 
UWOA's Avatar

Join Date: Apr 2010
Boat: Hunter Passage 42 - s/v Sensei
Posts: 97
Images: 1
Sagely spoken, osirissail.
__________________
Every day is a holiday and every meal is a banquet!
Location: Jacksonville, FL
UWOA is offline   Reply With Quote
Old 02-07-2010, 12:20   #19
Registered User

Join Date: Nov 2008
Location: Bahamas, US Gulf Coast, and East Coast
Boat: 38' 1983 Pearson 385 - "Zydeco"
Posts: 154
Images: 3
As a recovering former tax attorney, I just want to chime in and and tell the OP (and anyone else who cares) that this thread is full of good advice.

As others have said, you can change your state of residence for tax purposes, but you need as much contact as possible with the new state to make it stick. An address, registering to vote, register your boat and/or cars, serve on jury duty, and so on are all good things. Owning property in the state is good. A power bill, library card, grocery receipts, slip fees, fuel receipts, get your haircut there, a church where the pastor knows you, and anything else that shows as much physical presence in the the state as possible will make it even better. In addition, you need to sever as many ties with the old state as possible. Airline pilots run into trouble with this issue all the time. It all comes down to what state you have the most and best contact with.

Just getting a mailing address in Florida won't cut it. Lots of people will tell you that's what they did and it worked. It only worked because they haven't been caught yet. They may never get caught. But if they do, the penalties and interest will eat them alive.

Which brings us to federal taxes. As a US citizen, the bottom line is you are hosed. Other than the foreign earned income exclusion that has already been covered, US citizens are subject to federal income tax regardless of where you live or where the income originated from.

The internet (and yacht club and local tiki bar) is full of people who will tell you that they did X,Y, or Z and don't have to pay federal income tax. Again, the only reason it works for them is that they have not been caught yet. Sure, anyone can cheat and not pay federal income tax. But call it what it is: cheating. There are no legitimate ways to get out of paying federal income tax just because you live on a boat. Believe me, legions of rich folks with highly paid tax lawyers (or poorly paid ones like me) have plowed this ground before you and they have all lost. Some folks never get caught, but the ones who do end up paying huge amounts of penalties and interest on top of the original tax liability.

On the other hand, there are legitimate ways to arrange your finances, particularly related to retirement, that can minimize the federal tax burden. I recommend talking to a CPA or financial planner to get some good advice for your particular situation.
__________________
Zydeco is offline   Reply With Quote
Old 02-07-2010, 13:01   #20
Senior Cruiser
 
Therapy's Avatar

Cruisers Forum Supporter

Join Date: Jul 2007
Location: W Florida
Boat: The Jon boat still, plus a 2007 SeaCat.
Posts: 6,894
Images: 4
Wouldn't it be nice if we adopted the FairTax?

But such a KISS solution would never be accepted by a government would it? Too simple and fair.
__________________
Therapy is offline   Reply With Quote
Old 02-07-2010, 16:25   #21
Registered User

Join Date: Sep 2007
Posts: 298
Another CPA here (although pretty well retired and highly specialized in oil & gas). Check out Puerto Rico. My advice is stale but a few years back they had a tax in lieu of the federal tax that topped out at 7%. You did have to establish yourself as a bonafide resident of PR (drivers license, register your dog, etc.)
__________________
TexSail is offline   Reply With Quote
Old 02-07-2010, 16:40   #22
Registered User
 
speciald@ocens.'s Avatar

Join Date: Apr 2008
Location: On the boat - Carib, Chesapeake
Boat: 58 Taswell AS
Posts: 1,139
Puerto Rico has a sales tax as of last year but havn't yet figured out how to collect it. They also have a property taax but it is minimal. I have a friend living there who is still waiting for his first bill after 3 years of residence.
__________________
speciald@ocens. is offline   Reply With Quote
Old 02-07-2010, 17:13   #23
Registered User

Join Date: May 2008
Location: daytona beach florida
Boat: csy 37
Posts: 2,844
Images: 1
i once thought the fair tax was a good idea. but after much reading on the subject and doing the numbers i'm pretty convinced that it would be the death of the middle class, leaving just the poor and the rich.

it's just another example of the pols giving bad ideas good names (fair tax, patriot act, etc...)
__________________
onestepcsy37 is offline   Reply With Quote
Old 02-07-2010, 17:47   #24
Registered User
 
Doodles's Avatar

Join Date: Nov 2009
Location: Virginia, USA & Krabi, Thailand
Boat: Wauquiez Pretorien 35; Nordica 16
Posts: 2,810
Images: 1
Quote:
Originally Posted by onestepcsy37 View Post
i once thought the fair tax was a good idea. but after much reading on the subject and doing the numbers i'm pretty convinced that it would be the death of the middle class, leaving just the poor and the rich.

it's just another example of the pols giving bad ideas good names (fair tax, patriot act, etc...)
That's right, its just another gimmick. The idea is you pay a flat "x" % on your income .... but what is "income"? Interest, dividends, capital gains, how about the house sale, Social Security, foreign earned income, barter income, trust income, .... you see, now the game starts all over.
__________________
Mundis Ex Igne Factus Est
Doodles is offline   Reply With Quote
Old 02-07-2010, 17:55   #25
Registered User

Join Date: Apr 2010
Posts: 15
what about taking the budget and dividing it by the number of people? send everyone a bill. seems pretty fair to me.

the only way i know to escape US taxes is to put everything on your boat and sail away. but you might as well give away your citizenship. i even question my roth accounts sometimes...
__________________
ronocnikral is offline   Reply With Quote
Old 02-07-2010, 18:17   #26
Senior Cruiser
 
Therapy's Avatar

Cruisers Forum Supporter

Join Date: Jul 2007
Location: W Florida
Boat: The Jon boat still, plus a 2007 SeaCat.
Posts: 6,894
Images: 4
Quote:
Originally Posted by Doodles View Post
That's right, its just another gimmick. The idea is you pay a flat "x" % on your income .... but what is "income"? Interest, dividends, capital gains, how about the house sale, Social Security, foreign earned income, barter income, trust income, .... you see, now the game starts all over.

NO.
You are talking about a "flat" tax.

FairTax is no taxes on income, interest, capital gains etc.

It is a tax levied when you buy something and only then. All the infrastructure is there to collect it already. It would require repeal of the 16th amendment though - the one that created the IRS.

Google it up and check it out so you don't get it confused with the flat tax idea.

It would make cruising a lot easier too, among other things in life here.
__________________
Therapy is offline   Reply With Quote
Old 02-07-2010, 18:22   #27
Senior Cruiser
 
Therapy's Avatar

Cruisers Forum Supporter

Join Date: Jul 2007
Location: W Florida
Boat: The Jon boat still, plus a 2007 SeaCat.
Posts: 6,894
Images: 4
Quote:
Originally Posted by onestepcsy37 View Post
i once thought the fair tax was a good idea. but after much reading on the subject and doing the numbers i'm pretty convinced that it would be the death of the middle class, leaving just the poor and the rich.

it's just another example of the pols giving bad ideas good names (fair tax, patriot act, etc...)

You may be mixing up flat tax with fair tax.

The pols have not given it a name.

In fact the legislature has tried to ignore it for a long time and will not convene hearings on it because if passed it will be a big thorn in the "business as usual" side of the federal government.

Look it up.
__________________
Therapy is offline   Reply With Quote
Old 02-07-2010, 20:05   #28
Senior Cruiser
 
osirissail's Avatar

Cruisers Forum Supporter

Join Date: Feb 2009
Location: A real life Zombie from FL
Boat: Gulfstar 53 - Osiris
Posts: 5,416
Images: 2
Rather than get too far off the OP subject of how to handle your taxes and into a political discussion of taxation - let's simply things.
- - Sure things in this life - 1. death; 2. taxes - you cannot escape one without the other. Think about it.
- - Establishing a "domicile" and "tax domicile" is not difficult or complicated for the average "retired" cruiser. Thousands are using the Florida system. You only raise "official" eyebrows (get inquiries) if you have things that do not "match." Different addresses for different assets, (boats, cars, homes) can be difficult to explain.
- - The idea is not to get into a position where you have to explain. So pick one State with one address and tie all your financial and political records to that address. A relative is the best as they definitely have a "residential" address. The mail services were "tested" several years ago when the Fed's tried to outlaw using PMB services for addresses. Fortunately, the Congress nixed that regulation as they too maintain different addresses for tax/political purposes. So all the "extras" mentioned are not really necessary since we are not trying to "evade" taxes but simply trying to simplify out social responsibilities and pay what is appropriate. (* except California)
- - Things you need to have as ties to your home country are bank/financial accounts/credit cards tied to one address; various licenses such as boat, car, etc. tied to the same address; and voting registration tied to that same address.
- - If for political reasons you want to cut your ties to your home country and its requirements for taxation, etc. then move to another country, get residence and citizenship, then "renounce." Simple. In fact, K.I.S.S. really works.
__________________
osirissail is offline   Reply With Quote
Old 02-07-2010, 21:01   #29
Registered User

Join Date: Jul 2010
Posts: 6
Non Profit status, trusts, and treasure hunting...?

I'm interest in how many people make cruising their business? 2 tax attorneys and 4 accountants should be able to at least reduce your tax liability while you're studying plankton and looking for treasure?
__________________
Goofy Foot is offline   Reply With Quote
Old 03-07-2010, 05:17   #30
Registered User
 
surfingminniwinni's Avatar

Join Date: Feb 2008
Location: Lake Tabourie Australia
Boat: Oceanic 46 (Jack Savage)
Posts: 452
Images: 1
Hi Goofy, you wouldn't happen to be a surfer by any chance. Cause if are just keep that right foot forward!!!!!
__________________

__________________
Glenn

http://trekkingthesea.blogspot.com.au/
surfingminniwinni is offline   Reply With Quote
Reply

Tags
retirement, taxes

Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Retirement Boat twinkles Multihull Sailboats 58 03-11-2010 11:03
Retirement in My Early 40s ? ZuiQuan Dollars & Cents 89 27-08-2010 05:31
Retirement Sailing jpswoope Multihull Sailboats 31 12-05-2010 08:34
Retirement Cruiser JCF Multihull Sailboats 43 14-03-2010 12:42



Copyright 2002- Social Knowledge, LLC All Rights Reserved.

All times are GMT -7. The time now is 03:10.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.

ShowCase vBulletin Plugins by Drive Thru Online, Inc.