That $126,500 number refers to the Foreign Earned Income Exclusion (FEIE), but it’s not a hard threshold below which you’re totally off the hook. U.S. citizens abroad still have to file a tax return if their income exceeds the standard filing requirement (around $14k+ for single filers). And the FEIE only applies to earned income, not investment income or retirement income. It’s not automatic, you have to qualify under the bona fide residence or physical presence test, and file the right forms (like Form 2555) to claim it.
Even if you’re making well under $126k, you still have to file, and you might owe something depending on your situation.
Maximumbird@lemm.ee 2 weeks ago
This is news to me and so fucked up for a country that considers itself “land of the free”. I hate it here.
futatorius@lemm.ee 2 weeks ago
If you want to renounce your US citizenship to get away from that onerous requirement, you have to pay a fee (about $2k) and also get screwed on a lot of US taxes on investments (forcing you to treat all capital gains as realized, for example). Part of my definition of freedom is that you don’t have to pay someone money for permission to leave.