Posts by urbanwalker72

Dennis Cooper3 said:Man, you should really look into some local handicraft marketplaces online; you might actually be able to register a shop there to get things moving, at least as a starting point.

Operating a small home-based business is treated similarly to a standard LLC or sole proprietorship under US tax law, which comes with certain limitations and the inevitable responsibility of paying both taxes and self-employment contributions.

Jessica Mitchell said:I can definitely build a website—that's my bread and butter. I was thinking about setting one up to showcase all the handmade stuff my wife makes. She’s been doing this for years and has a massive collection of pieces ready to go. We'd probably focus on hitting the international market.

Building the site isn't the hard part, but honestly, the tax side of things has me stumped. What if she sells one item? Or what if she sells absolutely nothing? It feels pretty silly to go through the hassle of registering an LLC if there's zero sales coming in. It really just comes down to how well the SEO performs.

Isn't there some kind of way to just pay taxes on whatever actually sells? Like, if she moves one product, you just pay tax on that single sale? Or is setting up a formal business a total requirement from the start?

That sounds like a solid plan.

Quincy:

Setting up the site isn't the issue, but I am uncertain about the tax implications. There is a chance she might sell one item, or perhaps nothing at all. It seems counterproductive to register a formal business if there is no initial sales volume; everything hinges on how effective the SEO turns out to be.

It is best to simply launch the site and begin the process of selling so you can gauge the actual results. You won't face any immediate legal repercussions during a trial period; at worst, you would simply report those amounts as miscellaneous foreign income on your tax return.

Quincy:

Isn't there a way to pay taxes specifically on each individual sale? For instance, if only one item sells, could we just pay tax on that single transaction, or is setting up a formal business absolutely mandatory?

If you are referring to federal income tax, you cannot really apply it per item, though you could theoretically report the specific incoming transfers from abroad, even though that path is cumbersome and inefficient.

One approach would be to register a business without immediately commencing full operations. You could launch the shop and, during this experimental phase, treat any international payments received as miscellaneous income. You would calculate the necessary withholdings and pay the appropriate tax, then file the required paperwork with the IRS to report that foreign income.

Once the webshop proves successful—assuming the SEO is effective and the revenue becomes steady—you can then fully activate your small business status.

To be perfectly candid, if you were to receive payments during this testing phase and chose not to report them, treating the items as personal property, the statistical likelihood of being audited for those specific amounts is extremely low. 😁

Jessica Mitchell said:Hey everyone! Quick question for you all.

I’m thinking about setting up a little online shop to sell dried flower arrangements.
Since the prices aren't super high, I'd just run it through my own website.

Here's the thing: is there any way to handle sales tax on individual items without actually forming an LLC or registering a formal business?

Like, if I'm only moving maybe one product a month and making a tiny bit of profit,$17 it honestly doesn't make sense to deal with the headache of opening a full-blown company.

Does anyone know a legal way to sell stuff when the margins are too small to justify the cost of starting a business or a sole proprietorship?

Your business model seems a bit ill-defined.🤔 Running that web shop will likely cost you more in fees and overhead than any actual profit you make.

If you aren't sure about the volume yet, just list a limited number of those items as personal property and see how the market reacts. It is essentially the same as selling old shoes on eBay; it isn't taxable.

However, if you intend to produce and sell these items on a continuous basis, it qualifies as a commercial enterprise, which means you legally need to register as a business or an LLC to operate legitimately.

Nathan Kelly5 said:It should be in the state's interest to fix this to develop the market and attract capital. Because with the current quality of financial reporting here in America, you can't do much with them. From Walmart-sized entities down to small local shops.

But of course, we are still trailing thirty years behind the developed world in almost everything. Here, oversight seems focused solely on ensuring the bureaucrats get their cut, and that's about it.

Don't let it get you down; everyone in the market needs your expertise, even if they don't realize it yet. They are living in a delusion. In the West, more accountants are moving into executive roles for obvious reasons. I believe there was a recent stat showing that the number of people with accounting backgrounds serving as CEO has surpassed 30% among the top X corporations in London. Ultimately, no matter what you want to achieve in business, it all comes down to the numbers. Whether you want to benchmark against industry peers, analyze investment viability, evaluate your own operations, cut costs, or forecast... whatever decision needs to be made, there is simply no one else in the company who can match your level of knowledge. In our neck of the woods, maybe some marketing or sales gurus can sell smoke to owners, but even that won't last long. Plus, with the way people skip foundational experience nowadays—hiring analysts and controllers who have never actually performed accounting—they will never have the full picture. How can someone who has never done the books truly understand what drives the financial indicators? You could let a child compare ratios; numbers are one thing, but understanding the reality behind them is another. I wouldn't advise anyone to invest even three cents based on that kind of shallow analysis. I don't see how anyone can make informed decisions today without the expertise we possess.

Though, what you are saying applies mostly to small businesses and sole proprietorships. To them, professional services are just a burden. They've always viewed it that way and always will; they just want to get paid for their work and survive. Anything beyond that is just a nuisance and an expense.

But honestly, does it even matter? Our leaders have opted for a high-tax model that lacks any real oversight, simply because if we were to implement both heavy taxation and rigorous supervision, no business could possibly survive. The alternative—lower taxes paired with stricter enforcement—is completely off the table, primarily because such a system would demand an immense amount of labor, specialized expertise, and genuine integrity from everyone involved.

Walmart was allowed to keep running right up until the moment a single decisive factor exposed the entire massive fraud: negative cash flow. If that hadn't happened, they could have likely continued operating just like this for another twenty years.

The situation with financial reporting for small businesses and sole proprietorships is much the same, only in reverse; it makes it appear as though these individuals are surviving on just a few thousand dollars a year, if they are making anything at all. It is a greater miracle than when Jesus multiplied the loaves and fish according to the Gospels of John and Mark.

It seems we have once again found ourselves lagging roughly thirty years behind the developed world in nearly every respect. In our current system, regulatory oversight appears solely concerned with ensuring that those looking for political patronage receive their slice of the pie, and nothing more.

It serves no purpose in that regard either. No revenue is generated from oversight, nor does anyone actually perform the accounting for it.

Do not let yourself be discouraged; anyone participating in the market requires your expertise, even if they aren't strictly compelled to seek it, as everyone else is operating under a profound delusion.

Personally, it makes no difference to me. I don't make my living through accounting, financial consulting, or tax advisory services; rather, those fields serve as a secondary interest that I picked up while pursuing a different, more exotic branch of finance.

In the West, we are seeing an increasing number of accountants ascending to executive leadership roles, and the reasoning behind this trend seems quite transparent. I believe I recently came across data indicating that the proportion of CEOs with an accounting background has surpassed 30% among the top largest corporations in London. Ultimately, no matter what one aims to achieve in the business world, everything eventually boils down to the numbers.

I am in complete agreement. In the upper echelons of finance, the precision of numbers carries even greater weight. Since the 1980s, Wall Street has seen a distinct shift toward hiring talent from STEM fields—specifically mathematicians, physicists, statisticians, programmers, and AI specialists—who may lack a traditional background in economics.

The most successful hedge fund in history maintains a hiring policy that excludes economists entirely, opting instead for a workforce comprised almost exclusively of nearly 100 PhDs specializing in pure mathematics, statistics, physics, and artificial intelligence. Their reasoning is quite logical: it is far simpler to teach the fundamentals of accounting to an expert in stochastic calculus who can effortlessly code a valuation model for fixed-income securities, whereas teaching someone steeped in accounting how to develop complex programming for statistical arbitrage on the capital markets is an immensely daunting task.

Ultimately, the discussion we are having hinges entirely upon straightforward economic logic, a firm grasp of accounting principles, and a fundamental understanding of finance and the tax system—all of which essentially boil down to the proficient application of numbers.

For instance, how could someone who has never practiced accounting truly grasp the underlying drivers of financial indicators? In my view, even a child could compare ratios, but there is a vast difference between looking at raw figures and understanding the reality behind them. I wouldn't advise anyone to invest even three cents based solely on that kind of superficial analysis. I fail to see how anyone today can make a meaningful decision without possessing the specialized knowledge we hold.

I cannot say.

While what you're saying applies to small sole proprietorships and similar setups, for them, this is nothing more than a burden. It always has been and always will be; they simply want to get paid for their labor and make a living, viewing everything else as mere nuisance and overhead.

That is an honest way to work, certainly, but basic bookkeeping is the lowest tier where one merely records whatever the client provides. The dilemma lies in the fact that entrepreneurs expect comprehensive financial and tax advisory services from their bookkeepers, yet most accountants operate under fee structures based strictly on volume rather than the quality or complexity of the work provided. One cannot expect sophisticated tax consulting for a couple of pennies per line item in a ledger. 😁

Betty King7 said:You clearly misunderstood my point. If only one person is employed and holds temporary residency while the spouse and children remain in Canada, I don't believe they can access free healthcare in America if they lack local residency. One doesn't just "get" residency on a whim, does one? But their interest isn't in paying premiums; their goal is to secure free healthcare through the employed individual, much like our own domestic employees do.

It seems to me that under these specific circumstances, the spouse would be required to pay for Medicare as a foreign national, and the children would then be covered under her, meaning all associated costs would be billed to her Social Security number. Even if it isn't their preferred outcome, one must simply follow the existing regulations.

Betty King7 said:I’m looking for some clarity here. If an employee from Canada is working for a firm in America—let's say they have their work permit and residency sorted, and they're fully paying into Social Security and Medicare—can his wife and children be covered under his health insurance if they don't hold US residency? I assume the answer is no, based on what I read on the Medicare website, but I'd value your perspective. Also, what about child benefits? Do they actually qualify for those?

It is highly probable that they all hold temporary status rather than permanent residency, which means they fall under the provisions of the Health insurance law for foreigners in America. In practical terms, this typically implies that an adult dependent who isn't otherwise insured through employment would face costs of roughly $450-$167 per month, while children could be covered under that same individual for a slightly higher monthly fee. In these instances, one really ought to examine international social security agreements, as the regulations shift significantly depending on whether the individuals are from the European Union or elsewhere.

Regarding child benefits, a foreign national is generally only eligible if they have maintained permanent residency for more than three years or if they have obtained American citizenship. There is also eligibility for those with asylum seeker status or subsidiary protection. 😁

Michelle Davis15 said:Let's be real: Bitcoin isn't going to see actual mass adoption until governments institutionalize it. We're talking about a scenario where the state finally gets its hands on it and establishes control.

And if that actually happens, we're all screwed. Because once the government has that kind of leverage over an individual, it becomes terrifying. Imagine if you get hit by a clerical error or some malicious bureaucratic move and your digital Blockchain account gets frozen—and there's no physical cash left in circulation to fall back on. That's a fast track to starvation. You can't hack your way out of it or find a loophole because of how the Blockchain works. The potential for state abuse is just immeasurable.

People keep preaching about the benefits of Blockchain in finance and everywhere else, completely oblivious to the fact that they might be advocating for their own downfall.

A government cannot control Bitcoin; while a state might issue its own digital currency, it lacks the mechanism to govern existing decentralized cryptocurrencies.

If that happens, we are all in trouble, because state oversight of an individual would become terrifyingly absolute. Imagine if, through some error or malicious intent, your digital Blockchain account were frozen in a world without physical cash; it would be akin to a death sentence via starvation. Because of the inherent nature of the Blockchain, there is no way to hack your way out or bypass the freeze. The potential for state abuse is immeasurable.

I believe the situation is not quite so dire. To begin with, if a government truly desired that level of total oversight, they wouldn't even need cryptocurrency; simply abolishing cash would achieve their goal.

Furthermore, no one would face starvation due to a lockout, as people possess a natural tendency to establish parallel currencies—whether through stable foreign currencies, other cryptocurrencies, or similar means.

People advocate for the use of Blockchain in finance and other sectors, unaware that they are essentially working against their own interests.

The Blockchain possesses significant financial utility, yet it lacks true monetary application.

When considering the mechanics of money creation and destruction, monetary policy, and the fundamental operations of the clearing system, the Blockchain remains entirely redundant within a monetary framework.

Patrick Thomas29 said:They tried to wiggle out of the contribution side of things, but you can't dodge ownership requirements since every company needs an owner.😉

Under these new rules, the base salary for a board member, CEO, or manager used to calculate full-time contributions can't drop below $1677.

Basically, directors can still pay themselves the minimum wage, which sits at $1.00 gross, but they’ll have to shell out at least $624 monthly for Social Security and Medicare.

This levels the playing field between corporate directors and small business owners who pay taxes on the same base amount.

Even directors who aren't technically employees (like in companies without staff) have to pay up if they aren't working somewhere else. Their contribution base is actually even higher. It's set at the average salary level, which for 2017 was $2.50 gross.

The bottom line is that it actually makes more sense for a business owner to hire a director now, because it lowers their overall tax burden to the government.

Still, these legal tweaks left enough loopholes for entrepreneurs to sidestep the higher contribution rates. They can just register the director as part-time, which means they only pay half the contributions.

Also, if the person in charge holds the status of an authorized representative, they aren't stuck paying that mandated monthly base rate.

Tax contributions are distinct from equity and bear no relation to one's ownership stake in a firm; it is simply standard practice to pay these taxes as a director unless you are already covered elsewhere. One could easily maintain ownership of ten different LLCs while paying into the system through a domestic worker role if they chose to; there is no law against such a thing. This entire regulatory headache arose because certain directors, lacking other insurance, were registering for part-time roles just to pay roughly $17 in monthly contributions.

crimsonseal15 said:Perhaps the person behind a system like this isn't actually chasing a paycheck. They might just be looking to establish an international service that simply doesn't exist yet. It could be about creating jobs—both for themselves and for everyone else.

Broadly speaking, Bitcoin and certain segments of the cryptocurrency market were conceived with the noble intention of forging parallel, decentralized currencies that operate without a central corporate entity; however, what we have witnessed thus far is primarily a financial innovation driven by speculative interests.

crimsonseal15 said:Thanks for the response,
So, you're saying it's impossible to have a legitimate corporation without an actual owner behind it.

I suppose it’s unlikely we'll see a total global shift toward Blockchain overnight, but I can definitely see certain sectors building out these specific economic models. Honestly, isn't that essentially the core mission behind almost every coin out there right now?

Indeed, there must be an owner, regardless of the specific corporate structure employed.

I don't believe a total global transition to Blockchain is feasible, but it seems plausible that certain specialized economic systems will emerge for specific uses. Isn't that essentially the core ambition behind most coins?

What we have already witnessed is the rise of cryptocurrencies, which serve as effective parallel means of exchange, yet they lack the capacity to assume the monetary role traditionally held by fiat at a macroeconomic scale. As for broader Blockchain applications, it appears that smart contracts have hit a plateau, while scalability remains the primary hurdle for global adoption. To date, none of these projects have fully delivered on the promises laid out in their original whitepapers, and that remains a significant issue.

crimsonseal15 said:Are there actually such things as companies without owners? When I search on Google, I keep seeing mentions of "ownerless companies" or even "algorithmic companies" being touted as the future. I also recall reading somewhere that there are already firms operating without traditional ownership in the USA. Does anyone here have any deeper insight into how this works?

Such an entity simply cannot exist.

Google mentions "ownerless" or algorithmic companies as the future, and I believe I read somewhere that there are actually ownerless companies in the USA. Does anyone know more about this?

When considering almost any corporation traded on a regulated public exchange, one could argue they are effectively "ownerless." This is because most investors do not purchase shares to exercise voting rights or maintain long-term stewardship; rather, they trade based on speculation, seeking to buy low and sell high, or simply to diversify risk. In this sense, the term is occasionally applied to publicly traded firms.

However, the second concept you mentioned pertains to theoretical projections regarding a potential Blockchain economy. This involves the use of smart contracts to create economic environments where ownership of a foundationally structured company becomes neither clear nor transparent, leading people to describe them as "ownerless."

Again, this notion of being "ownerless" must be understood conditionally; it is impossible to incorporate a company without a known owner, at least within the jurisdiction where it is officially registered.

For instance, many tax havens guarantee anonymity. If you establish a firm in such a location, it remains "ownerless" to the rest of the world—its operations are visible, yet the identity of those behind it remains obscured.

It seems several distinct concepts have been conflated here, though your post appears to focus primarily on a envisioned future economy built upon Blockchain, smart contracts, and various cryptocurrencies.

I would suggest this is a profound subject, yet we must avoid being naive by assuming such a structure is easily achievable on a global scale, whether from a technological standpoint or an economic one.

Douglas Reed3 said:Based on my experience in auditing and accounting, the implementation of HSFI is incredibly poor in small and medium enterprises, and frankly criminal in some large corporations that should be following MSFi. There are countless reasons for this. In America, bookkeeping dominates rather than true accounting. Most people just "record entries," largely because they don't sign off on their work or hold themselves accountable to a professional association or the state for what they've certified. Even the regulatory bodies aren't much better. In America, accounting isn't treated as a profession; it’s treated as a trade. You can practically walk off the street, grab a manual, and $167 start booking entries every month. Generally speaking, there is zero accountability here, which I suspect is a byproduct of fifty years of communism where individual responsibility simply didn't exist. All I hear is people claiming they didn't know, weren't informed, or never saw anything. I believe the CFO of Walmart once mentioned he only saw reports after they were published in the public registry or something similar. While it's good that people are organizing, this doesn't feel like the kind of organization seen with the AICPA, ACA, or CPA, where professionals unite to advance the field and establish ethical standards and expectations. I fear this current movement is more like a union—just a group fighting against anything that disturbs the swamp and the status quo...

That is all quite accurate, though I think the issue isn't just about the "hairdressers"—as Nathan Kelly5 puts it—but rather that almost nobody actually feels the need for a legitimate accountant, auditor, or tax advisor.

The reason is simple: there is zero oversight. For most, basic "record-keeping" is sufficient. If the IRS were a serious institution, similar to how they operate in other developed nations, everyone would be forced to seek out professional accounting, financial, and tax advisory services.

Until that changes, anyone can keep the books with very little risk. Occasionally, a good bookkeeper is helpful, but the odds of being hit by a tax audit or an inspector who actually knows what they are doing are about the same as being struck by lightning.

The market share held by these "hairdressers" would shrink drastically if there were actual scrutiny regarding the legality and logic of financial statements—ranging from legal compliance and standards down to checking reported turnovers to see if they are even realistic enough to support a living.

So, why would anyone pay for professional services that nobody seems to require?

Jason Morgan4 said:

In my view, yes.

The sole exception would be a merchant mariner on international waters, which is governed by specific legislation, exempting them from income tax.

Otherwise, one must weigh whether it is more economical to pay our taxes or simply move the entire family to Dubai.

There are other avenues as well. If I were working in Dubai while my wife and children remained here, I might establish a shell company in Dubai—much like the hundreds of thousands that exist there—and instead of receiving a traditional salary, I would invoice my employer for the same amount.

Subsequently, I would transfer the profits from Dubai to America, paying the 12% tax on foreign capital income, and then dutifully file the necessary paperwork with the IRS to settle the obligation.
Kuzis, tell me how insane this is and how backward our government really is.
I wouldn't say it's quite that extreme. This is a global phenomenon; unfortunately, taxes tend to be a burden borne primarily by the working class and those without specialized financial guidance, who make up the vast majority of the population.

By coincidence, my professional background is in tax optimization, and if I found myself in a similar position, I wouldn't even bother debating the ethics of it. Even though I could navigate the system to pay virtually nothing, I would likely choose to pay the minimum required here in the States, simply because I hold the conviction that doing so is the right thing to do.

Years ago, I worked somewhat similarly to a consultant for the IRS regarding information systems and risk assessment, but I quickly realized that such efforts were largely futile.

In short, tax codes are inherently flawed and perpetually struggle to keep pace with economic reality. Consequently, there has always existed a parallel offshore ecosystem utilized by the wealthy, the powerful, and the well-informed. If tax systems were truly equitable and effectively served the needs of society, people wouldn't feel such a strong impulse to resist paying them.

Roughly 10% of the world's total net wealth is currently tucked away in offshore tax havens.

Jason Morgan4 said:

You mentioned that he pays a flat-rate income tax—but I find myself wondering, what kind of flat-rate tax would one be paying if they aren't even renting out a property?

As I recall, an agreement was signed with the Emirates back in 2017. If an individual is already paying their taxes in Dubai, how would they then be expected to pay them here in the States?

How exactly does the IRS get wind of income generated in Dubai if the individual hasn't reported it themselves?

Unless your friend specifically obtained a certificate of residency from the US and presented it to the authorities in Dubai, they should certainly be fulfilling their tax obligations here in America.

"Quote:"

They refused to remove him from the tax rolls because he still owns property there, effectively keeping him tethered to the American tax system.

The fact that he hasn't been removed from the IRS taxpayer registry doesn't inherently prove anything. What truly matters is the specific legal instrument used to determine tax liability. In this particular instance, we are looking at a formal ruling regarding income tax on wages from non-self-employed employment.

The only logical move would be for her to register her own home here in the States as a vacation rental property, effectively getting everyone off her back regarding the Quartz account. She could essentially "rent" the place to herself for those two weeks every six months, creating a closed loop that keeps things strictly private.

One possibility is that he registered the property as a vacation rental, which subjects him to property taxes calculated based on total square footage. This remains independent of whether he actually rents the place out. Honestly, I am not even entirely certain if that specific tax code is still being enforced.

Alternatively, there is a proposal from the government administration to establish a dedicated system for managing short-term rentals for travelers and tourists, which would necessitate the payment of a flat-rate income tax.

It truly matters little whether they actually rent anything out or even possess such assets in the first place. $3.25 Whether you earn that amount or $300,000, the tax remains exactly the same under the flat tax system. That is quite literally why it is called a flat tax.

It seems the IRS remains obstinate regardless of the circumstances; despite him officially deregistering from his address in Los Angeles and presenting his passport along with permanent residency papers from Dubai, they simply refused to remove him from the tax registry.

The reason the IRS refused to strike that from the record is simply because they wanted to maintain their internal tracking capabilities to monitor him moving forward.

By choosing not to delete those records, he hasn't actually triggered any obligation to pay income tax on the earnings he pulls from the Dubai emirate.

Let’s clear the air on this one—is he actually liable for income tax on earnings generated while working in Dubai, or does he walk away without paying anything to the IRS?
No, you misunderstood. He pays a flat tax on his vacation home, which comes out to $100 per bed annually.

You mentioned that he pays a flat-rate income tax—but I find myself wondering, what kind of flat-rate tax would one be paying if they aren't even renting out a property?

As I recall, an agreement was signed with the Emirates back in 2017. If an individual is already paying their taxes in Dubai, how would they then be expected to pay them here in the States?

How exactly does the IRS get wind of income generated in Dubai if the individual hasn't reported it themselves?

Unless your friend specifically obtained a certificate of residency from the US and presented it to the authorities in Dubai, they should certainly be fulfilling their tax obligations here in America.

"Quote:"

They refused to remove him from the tax rolls because he still owns property there, effectively keeping him tethered to the American tax system.

The fact that he hasn't been removed from the IRS taxpayer registry doesn't inherently prove anything. What truly matters is the specific legal instrument used to determine tax liability. In this particular instance, we are looking at a formal ruling regarding income tax on wages from non-self-employed employment.

The only logical move would be for her to register her own home here in the States as a vacation rental property, effectively getting everyone off her back regarding the Quartz account. She could essentially "rent" the place to herself for those two weeks every six months, creating a closed loop that keeps things strictly private.

One possibility is that he registered the property as a vacation rental, which subjects him to property taxes calculated based on total square footage. This remains independent of whether he actually rents the place out. Honestly, I am not even entirely certain if that specific tax code is still being enforced.

Alternatively, there is a proposal from the government administration to establish a dedicated system for managing short-term rentals for travelers and tourists, which would necessitate the payment of a flat-rate income tax.

It truly matters little whether they actually rent anything out or even possess such assets in the first place. $3.25 Whether you earn that amount or $300,000, the tax remains exactly the same under the flat tax system. That is quite literally why it is called a flat tax.

It seems the IRS remains obstinate regardless of the circumstances; despite him officially deregistering from his address in Los Angeles and presenting his passport along with permanent residency papers from Dubai, they simply refused to remove him from the tax registry.

The reason the IRS refused to strike that from the record is simply because they wanted to maintain their internal tracking capabilities to monitor him moving forward.

By choosing not to delete those records, he hasn't actually triggered any obligation to pay income tax on the earnings he pulls from the Dubai emirate.

Let’s clear the air on this one—is he actually liable for income tax on earnings generated while working in Dubai, or does he walk away without paying anything to the IRS?
He’s not paying anything in the US; he hasn't lost his mind. The guy plans to move back to the States in maybe five years, once he's tired of the desert heat. And honestly, he wants to come back smoothly, legally, without any shady business. He just wanted to make sure the money he brings back is clean. He doesn't pay taxes here; the IRS has no clue what he earns or which accounts the money hits.

So, he tried to fix his status legally. He attempted to de-register from the taxpayer rolls so the government wouldn't come after him when he returns, trying to hit him with back taxes for the last several years until the statute of limitations runs out. Everything I'm telling you is based on what he knows from his emails and his own talks with the IRS. The whole thing took maybe two weeks, and they eventually concluded he has to sever all ties with America. The only way to break that "property tie" is to either sell the house or list it as a vacation property, for which he pays an annual tax.

After that whole circus, they still refused to take him off the taxpayer registry, so he basically told them where to go. He’s just going to do his own thing. If he does come back, he’ll just act like a returning resident who fulfilled all his tax obligations in the country where he lived... and he'll fight back if they try to mess with him.
Look, I have already pointed out that the property tax on a vacation home is one matter, whereas the flat income tax for renting out beds to travelers and tourists is an entirely different beast.

And once again, your friend has opted for the less favorable 😁

In my view, this presents a far more significant hurdle than his situation in Dubai, because non-residents aren't permitted to use the flat tax system for rentals here in the States; they are required to maintain full business books, which is significantly more burdensome.

Yet we are sitting here acting as if he is a non-resident.

He doesn't pay taxes in the US—he hasn't lost his mind. The man plans to move back to the States in about five years, once he's had enough of the desert heat. He genuinely wants to return in peace, legally and without any shady dealings, so he wanted to ensure that the money he brings back with him is completely clean. He doesn't pay taxes in the US; the government has no idea how much he earns or which accounts the money lands in.

One of my acquaintances would describe this as a "madman chasing a confused man" type of situation. Neither he nor the IRS knows what is actually happening.

This needs to be cleared up before he makes his return.

So, he wanted to resolve his status legally and attempted to deregister from the tax rolls so the IRS wouldn't come after him when he returns, trying to retroactively apply income tax for the last several years. What I am telling you is based on his own findings, gathered through email correspondence and personal visits to the IRS office. The whole process took maybe two weeks, and they eventually reached the joint conclusion that he must sever all ties with America. The only way to break that "property connection" is to either sell it or designate it as a vacation rental, for which he pays an annual tax.

It is pure madness. If you ask me, you could fight this, but a legal battle would likely drag on for at least two or three years.

As is often the case, negative selection has taken hold, and the IRS seems to be staffed mostly by incompetent people.

Now they will try to force him into performing hollow legal maneuvers—like fictitiously selling the property to you or gifting it to his mother—only for him to reacquire it upon his return just so they can officially deregister him.

Like I said, it's a total mess.

Just read the actual law that I pasted in italics. By operation of law, he is not a tax resident in the US; it states that clearly. He has personal and business interests in the Emirates and his primary residence is there. I provided the specific section intended for disputed cases, which doesn't even apply to his situation.

Jason Morgan4 said:I'm not even stirring the pot here; you just aren't reading what I'm actually saying.

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Look, he isn't even renting out property in America. The reason they wouldn't take him off the taxpayer rolls is because he owns a place here, so technically, he’s "tied" to the US. All he really had to do was report his own house as a vacation rental just to get them all off Quartz. He’s basically "renting" it to himself for those two weeks he shows up every six months.

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So, the IRS wouldn't budge. They refused to strike him from the taxpayer registry, even though he officially moved out of his place in Seattle and showed up in Dubai with his US passport and permanent residency permit. No luck.

Single guy, no family. The IRS decided that since he still owns an apartment in San Diego he didn't sell after moving away, his "center of life" is still officially right here. Yeah, okay. You're in the money, I'm in the gutter.

I don't have access to their tax returns, so I couldn't tell you for sure. But let's be real—we're talking about the big fish here. They’ve got high-priced lawyers to handle all that. It’s much easier for the IRS to just squeeze the average person.

In a functional country, sure, maybe that’s how it works. Around here? Nothing ever works the way it’s supposed to.

On what grounds? How exactly can you see that from an airplane? What, like someone shoots two kids in Dubai, and then there’s still two more back in the States? Where does this guy even find his center of gravity?

Exactly. You decide you’re going to pay it abroad, telling them, "Look, I’ll pay my full zero percent tax in Dubai, just like the law says." And then the IRS hits you with: "Nice try, but you own property in the States and this is clearly where your life is centered. Doesn't matter if you don't live here or if you've officially moved out—you still owe us."

Could you give me the legal definition of "life interests"? Or maybe just explain this logic to me.

Person A: single, lives and works in Dubai, stays there 11 months out of the year, takes one month of vacation, and spends that entire month back home in the States. He's a total player, and sends half his paycheck to his parents whom he supports. His center of life interests isn't in the US, and he pays zero percent tax in Dubai.

Person B: married, two kids, lives and works in Dubai, stays there 11 months out of the year, spends his vacation back home in the States, and sees his wife during summer breaks when she visits. He funds everything from Dubai and sends half his salary home. Despite living and working in Dubai, his center of life interests is considered to be in the US, and the IRS hits him with a 40% income tax.

Did I grasp the law and tax justice correctly?

In my view, yes.

The sole exception would be a merchant mariner on international waters, which is governed by specific legislation, exempting them from income tax.

Otherwise, one must weigh whether it is more economical to pay our taxes or simply move the entire family to Dubai.

There are other avenues as well. If I were working in Dubai while my wife and children remained here, I might establish a shell company in Dubai—much like the hundreds of thousands that exist there—and instead of receiving a traditional salary, I would invoice my employer for the same amount.

Subsequently, I would transfer the profits from Dubai to America, paying the 12% tax on foreign capital income, and then dutifully file the necessary paperwork with the IRS to settle the obligation.

Jason Morgan4 said:I'm not even stirring the pot here; you just aren't reading what I'm actually saying.

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Look, he isn't even renting out property in America. The reason they wouldn't take him off the taxpayer rolls is because he owns a place here, so technically, he’s "tied" to the US. All he really had to do was report his own house as a vacation rental just to get them all off Quartz. He’s basically "renting" it to himself for those two weeks he shows up every six months.

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So, the IRS wouldn't budge. They refused to strike him from the taxpayer registry, even though he officially moved out of his place in Seattle and showed up in Dubai with his US passport and permanent residency permit. No luck.

Single guy, no family. The IRS decided that since he still owns an apartment in San Diego he didn't sell after moving away, his "center of life" is still officially right here. Yeah, okay. You're in the money, I'm in the gutter.

I don't have access to their tax returns, so I couldn't tell you for sure. But let's be real—we're talking about the big fish here. They’ve got high-priced lawyers to handle all that. It’s much easier for the IRS to just squeeze the average person.

In a functional country, sure, maybe that’s how it works. Around here? Nothing ever works the way it’s supposed to.

On what grounds? How exactly can you see that from an airplane? What, like someone shoots two kids in Dubai, and then there’s still two more back in the States? Where does this guy even find his center of gravity?

Exactly. You decide you’re going to pay it abroad, telling them, "Look, I’ll pay my full zero percent tax in Dubai, just like the law says." And then the IRS hits you with: "Nice try, but you own property in the States and this is clearly where your life is centered. Doesn't matter if you don't live here or if you've officially moved out—you still owe us."

Could you give me the legal definition of "life interests"? Or maybe just explain this logic to me.

Person A: single, lives and works in Dubai, stays there 11 months out of the year, takes one month of vacation, and spends that entire month back home in the States. He's a total player, and sends half his paycheck to his parents whom he supports. His center of life interests isn't in the US, and he pays zero percent tax in Dubai.

Person B: married, two kids, lives and works in Dubai, stays there 11 months out of the year, spends his vacation back home in the States, and sees his wife during summer breaks when she visits. He funds everything from Dubai and sends half his salary home. Despite living and working in Dubai, his center of life interests is considered to be in the US, and the IRS hits him with a 40% income tax.

Did I grasp the law and tax justice correctly?

You mentioned that he pays a flat-rate income tax—but I find myself wondering, what kind of flat-rate tax would one be paying if they aren't even renting out a property?

As I recall, an agreement was signed with the Emirates back in 2017. If an individual is already paying their taxes in Dubai, how would they then be expected to pay them here in the States?

How exactly does the IRS get wind of income generated in Dubai if the individual hasn't reported it themselves?

Unless your friend specifically obtained a certificate of residency from the US and presented it to the authorities in Dubai, they should certainly be fulfilling their tax obligations here in America.

"Quote:"

They refused to remove him from the tax rolls because he still owns property there, effectively keeping him tethered to the American tax system.

The fact that he hasn't been removed from the IRS taxpayer registry doesn't inherently prove anything. What truly matters is the specific legal instrument used to determine tax liability. In this particular instance, we are looking at a formal ruling regarding income tax on wages from non-self-employed employment.

The only logical move would be for her to register her own home here in the States as a vacation rental property, effectively getting everyone off her back regarding the Quartz account. She could essentially "rent" the place to herself for those two weeks every six months, creating a closed loop that keeps things strictly private.

One possibility is that he registered the property as a vacation rental, which subjects him to property taxes calculated based on total square footage. This remains independent of whether he actually rents the place out. Honestly, I am not even entirely certain if that specific tax code is still being enforced.

Alternatively, there is a proposal from the government administration to establish a dedicated system for managing short-term rentals for travelers and tourists, which would necessitate the payment of a flat-rate income tax.

It truly matters little whether they actually rent anything out or even possess such assets in the first place. $3.25 Whether you earn that amount or $300,000, the tax remains exactly the same under the flat tax system. That is quite literally why it is called a flat tax.

It seems the IRS remains obstinate regardless of the circumstances; despite him officially deregistering from his address in Los Angeles and presenting his passport along with permanent residency papers from Dubai, they simply refused to remove him from the tax registry.

The reason the IRS refused to strike that from the record is simply because they wanted to maintain their internal tracking capabilities to monitor him moving forward.

By choosing not to delete those records, he hasn't actually triggered any obligation to pay income tax on the earnings he pulls from the Dubai emirate.

Let’s clear the air on this one—is he actually liable for income tax on earnings generated while working in Dubai, or does he walk away without paying anything to the IRS?

Imagine being a single individual with no family ties, only to find that the IRS has decided you still reside here simply because you haven't sold an apartment in a city like Seattle. It is much like one person holding onto Coors while another clings to their SPADES cards; everyone seems to have their own peculiar way of clinging to the past.

Did he participate in the proceedings? Did he complete the TI form, and if so, what specific details did he provide there?

Where exactly did they document that his center of vital interests is located here in America?

There must be a formal ruling issued regarding this matter, one that provides a clear legal remedy; if the justification isn't thoroughly articulated, the decision will likely be overturned on appeal or in court.

They evaluate all relevant facts cumulatively. For instance, if he were to own a single property in every country, you would argue he'd be liable for taxes in every single one of them.

Based on your reasoning, the mere fact that he owns real estate cannot outweigh the reality that he is a single man living and working in Dubai.

The only way he could possibly owe income tax in the US is if he proactively applied for an American certificate of residency, effectively declaring himself a US taxpayer regardless of where his actual life and work are situated.

I don't have access to their individual tax filings, so I couldn't say for certain. To reiterate, we are talking about major players here who employ high-end attorneys to handle these matters. It is much easier for the IRS to target the average citizen than it is to go after people like this.

Honestly, if you aren't equipped to represent yourself in a specific legal matter, it is far more cost-effective to hire an attorney or a tax professional than to attempt to navigate the complexities alone and risk making mistakes.

In a highly organized nation, that might be the case, but here, nothing seems to function according to the rules.

That is why I am asking: is he actually paying income tax from Dubai to the US, or has he simply not been removed from the registry?

It seems to me that in your friend's situation, there is a lot of noise being made, but he likely isn't paying anything to us at all, aside from perhaps property taxes on vacation homes or flat taxes on rentals—which he would have to pay regardless.

On what basis? How can you determine that just by looking? Is it because someone has two children in Dubai and another two in America? Where is his actual center of vital interests?

Exactly. You decide to pay your taxes abroad, telling them, "I will pay my taxes in Dubai," which, under the law, means paying zero percent. And then the IRS responds, "No, you own property in the US, so that is your center of vital interests; regardless of where you live or that you've deregistered, you still owe us taxes."

Those are probably just rumors. I get the impression that both your friend and the tax officials are talking quite a bit, but it all feels disconnected from any actual substance—much like idle chatter at a local farmer's market.

Could you provide me with the legal definition of "vital interests"?

It states the following:

2. If, under the provisions of paragraph 1, an individual is considered a resident of both contracting states, their status shall be determined as follows:

a) they shall be deemed a resident of the state in which they have a permanent home; if they have a permanent home in both states, they shall be deemed a resident of the state with which they have closer personal and economic relations (the center of vital interests);

b) if the center of vital interests cannot be determined in either state, or if the individual has no permanent home in either state, they shall be deemed a resident of the state in which they have their habitual abode;

c) if the individual has a habitual abode in both states or in neither, they shall be deemed a resident of the state of which they are a national;

d) In cases where an individual holds citizenship in both nations or holds none at all, the competent authorities of the contracting states shall resolve the matter through mutual agreement.

The concept of "center of vital interests" encompasses one's intimate personal life—essentially where they primarily reside, work, and whether they live alone or with family—as well as their economic ties, specifically the location of their primary income source.

Furthermore, physical presence is the deciding factor here. Since he spends 300 days a year in Dubai (regardless of the fact that he maintains residency in both the US and Dubai), he simply cannot be considered a tax resident of the US. This is a matter of law.

Based on these principles, it is perfectly clear that the government cannot force your friend to be a US tax resident.

It is a dispute that is virtually impossible to lose.

However, it might be unnecessary to pursue this at all, as I suspect he isn't actually paying US taxes on his salary earned in Dubai.

Jason Morgan4 said:Since joining the European Union, the IRS has been part of an information exchange program with all member states regarding income earned by citizens abroad. This means data on the new wave of expats eventually makes its way to Washington, D.C., and if they want to avoid being taxed twice, they need to sort out their tax status. Tax advisor Lucia Turković points out that anyone moving away from America permanently or for a long stretch needs to request to be removed from the US tax registry if they don't want to keep paying American taxes.

For those who don't take care of it, the IRS can still come knocking for income tax here, regardless of where that money was actually earned. Under current rules, all US residents—that's the official term for anyone living here—are required to report foreign income based on the global income principle, though that doesn't automatically mean you'll owe anything.

Turković explains that income earned in Ireland, Germany, or anywhere else is calculated using US tax laws, but you get a credit for any taxes already paid to that foreign country, taxing only the difference if one exists. Since foreign salaries usually outpace what people make back home, those differences happen. Once you're officially removed from the US tax registry, you're off the hook for filing annual returns. Lucia Turković notes that the US allows taxpayers to be removed from the registry if they can prove they've lived outside the country for more than 183 days in a single or two-year period.

Citizens who still own property in the US or have families staying behind often find it harder to get removed from the registry and usually end up remaining US taxpayers.

Read more at: - www.vecernji.hr

I wouldn't suggest relying on newspapers for information regarding these matters.

Furthermore, this article merely reiterates what I have already stated, albeit with significantly less precision.

Please review my previous response.

And by the way, there is no need for excessive capitalization; we are still able to read.

Jason Morgan4 said:I’m not trying to lecture you; I’m speaking from experience. A close friend of mine moved to Dubai five years ago, and he had a massive headache with the IRS. Even though he officially changed his residency, they still flagged his place as rental property, so he ended up paying a flat tax. They wouldn't leave him alone because apparently, they weren't happy that he was paying taxes where he actually lives and works (the fact that tax is 0% in Dubai didn't change their attitude).

Of course you can.

And politicians promised we’d be as wealthy as Switzerland.

It’s obvious if you actually bother to look. You just have to put in the effort.

Ivan Rakitić never actually lived in America, never paid taxes to the US, and never will. He's completely off their radar.

Oh sure, they'll slap a "tax resident" label on you and then you get to spend your life arguing to prove them wrong. My advice to the OP? Don't mention anything. Don't ask anything. If they decide to come looking, then you can start trying to prove something else.

You are conflating two different issues.

Your friend does have to pay taxes, but only regarding the rental income from the property in America, because under European Union legal frameworks and various "directives," sales tax and income tax are tied to the physical location of the real estate.

It is the exact same principle if a Francuz buys a house here and rents it out.

If he lives and works in Dubai, there is absolutely no legal basis for the US to tax his income earned in Dubai.

The only exception would be if he has his immediate family—meaning a spouse and children, not just parents—living here along with property, in which case the US might argue his center of life is actually here, implying he is bringing or sending money back to this country.

That is why I suggest looking closely at the questionnaire used to determine one's center of vital interests.

It becomes obvious if someone is actually looking; one simply needs to put in the effort.

Ultimately, this all flows through automatic data exchange via spreadsheets, but then the work lies in following through on that data.

Rakitic never had residency in the US, nor did he ever pay any taxes here, nor will he ever, so they stay under the radar.

Did Modrić ever have residency in the US? What about Ivanišević? Or Čilić?

They can easily label you a tax resident, and then you're stuck fighting to prove them wrong.

There is no such thing as being arbitrarily "labeled." For every measure the IRS takes that contradicts what a taxpayer has declared, there is an appeal process available as a legal remedy, which stays the execution of the decision. Furthermore, when it comes to increasing a tax liability, the burden of proof rests entirely on the taxing authority.

However, residency is rarely a point of contention. In many instances, it is quite easy to see from a distance where a person's true center of life is located.

I gave the author some friendly advice: don't mention anything and don't ask anything. If they remember him, then he can start proving other things.

In my view, that approach is fundamentally flawed. Whenever I face any ambiguity, I prefer to submit a formal written inquiry and secure a written response before any issues arise—ensuring, naturally, that no specific names or exact dollar amounts are mentioned.

Jason Morgan4 said:What if you spend four months of the year in America just lying on your back doing absolutely nothing—basically one long vacation—then head out for three months to work a season in Austria or Italy, then pop back home for a bit, then decide you feel like spending another three months in Greenland?

You don't actually reside in America; you're just visiting. You definitely aren't earning anything here. You have citizenship and you own property. So, are you a taxpayer or not?

This is a scenario that occurs quite frequently. As I understand it, the situation unfolds like this:

If there is a tax treaty in place between those countries, they will request proof of residency from the US. Once you provide that documentation, they grant you tax relief, based on the assumption that you will report your entire income to the American authorities.

If you fail to provide that certificate of residency, they will simply withhold and collect taxes according to their own local laws.

Of course, the moment you request a residency certificate from the US, you are effectively notifying the government that you are working abroad and intend to report that foreign income.

However, at the outset, if you intend to work overseas, you should visit the IRS, complete the necessary exit paperwork, and outline your intentions. If you declare that you are single without dependents (or that your family is moving abroad with you) and that you will be stationed overseas for more than six months of the year, the US won't tax you, but you automatically lose the ability to obtain a residency certificate, meaning you'll have to pay taxes in the foreign country instead.

Ultimately, the choice is yours, but you cannot escape taxation entirely; you will owe it either here or abroad.

I don't actually live in the US responsibly; I am just here on vacation and certainly don't earn anything here. I hold citizenship and own property. Am I still considered a taxpayer?

As I have noted, it all depends on how you define the center of your life interests. You could technically stay abroad 365 days a year, but if your spouse, children, and real estate are all located here, you remain a US taxpayer.

If your wife and children are with you abroad, or if you are single, then the center of your life interests is wherever you are living and working, regardless of your citizenship or property ownership.

Karen Morales said:Thanks for all the input so far.

The real question is—am I actually an American taxpayer? Since I left the States when I was just a kid, I’m assuming the answer is no.

I hold American citizenship, I don't own any property in the US, I don't live here, and my income comes from the US.

But here's the catch—it was only a few years ago that I finally updated my address with the FBI to a US one instead of my old one. I'm guessing the FBI and the IRS don't talk to each other constantly, so there's a chance I'm still stuck in their system somewhere.

Which would be a total nightmare—would basically mean getting hit with double taxation.

I'm planning to hit up the IRS directly—but until then, any advice is appreciated.

Thanks a ton.

Of course you aren't. It isn't really a matter of when you left; what truly matters is where you currently reside, where you work, and where you earn your income. If you aren't living and working in the States, you aren't an American taxpayer.

I hold American citizenship, yet I possess no real estate within the United States, and my contributions are sourced entirely from the US.

Then everything is in order.

Just a few years ago, I went through the process of updating my residency with the FBI to reflect my US address instead of my former one. My concern is that since the FBI and the IRS don't always synchronize their databases, there remains a distinct possibility that my old information is still being used for my tax filings.

It really doesn't matter when you officially changed your residency. As long as you are doing well, that is what truly counts. Regardless, the IRS has access to all that information because the FBI is required to record every one of those changes within the Social Security database, ensuring that any agency with public authority has immediate access to those details.

If that were the case, it would essentially mean we’d be facing the absurdity of double taxation here in the States.

In my view, there is simply no basis to discuss paying taxes in the US under the specific conditions you are describing.

I am planning to reach out to the IRS for clarification; until then, I would truly value any insights or perspectives you might be willing to share.

Be cautious about whom you approach for information. It would be most prudent to submit a formal written inquiry, as that ensures you receive a response from someone truly qualified to answer.

Jason Morgan4 said:Well, in the first post he used terms like "returning" and "if I move back."

If you're a citizen, own property here, and have ties to the homeland—which deregistering your residence won't hide, trust me—you'll be paying taxes on income earned in Greenland...

There is no double taxation treaty between America and the USA..

Maybe actually read what the guy is saying if you want to join the conversation.

If he's completely crazy, then fine, let him pay. Smarter to just stay quiet and pay nothing.

If you have citizenship and own property in the US, the IRS considers you a tax resident. Your only real way out is to register that property as a vacation rental, pay the flat tax, show up occasionally as a guest, and call it a day. Otherwise, they can fine you whenever they feel like it.

I was specifically addressing your previous point where you claimed: "if you buy property in America, they can come after you for taxes even if you continue living in the USA."

That is simply incorrect. You cannot be held liable for income tax in America if you reside and earn your income abroad, regardless of any perceived "ties to the US."

I fail to understand how anyone could imagine the IRS possesses jurisdiction over Americans who live and work overseas. Does Luka Modrić pay income tax here? What about professional tennis players? No. One only pays our income tax if one resides in America and/or generates income within its borders.

If you hold citizenship, own property, and maintain a connection to the homeland—and don't be fooled, deregistering your residence won't save you if you still own real estate—you are required to pay taxes on income earned in Greenland...

🤔 Once again, the fundamental question is: where do you live and where is your income generated? If you are living and working in Greenland, it is irrelevant how much property you own in America; you are not subject to taxation here.

There is no double taxation treaty between America and the USA...

That is true, though every year they claim they are on the verge of signing one...

If he is completely foolish, then he should pay it. It would be wiser for him to remain silent and pay nothing at all.

That tactic might have worked in the past, but nowadays everything is transparent, particularly with countries in the EU or those with which we have established treaties and avoidance agreements.

If you have citizenship and property in America, the IRS considers you a tax resident.

That is not accurate. For instance, would Ivan Rakitić be paying income tax here simply because he holds citizenship and owns property? Of course not.

My colleague provided a link above to the questionnaire I mentioned earlier. Determining tax residency is not such a straightforward matter. There are even questions regarding something as trivial as where you keep your pet. 🤣