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On the contrary, though you may treat foreign earned income as a deduction instead, taxes paid to a foreign government are usually eligible for the Foreign Tax Credit, which reduces your actual U.S. income tax on a dollar-for-dollar basis. It's generally beneficial to claim the credit instead of the deduction, so for normal people that's exactly how it works -- if you would owe $400 in tax to the U.S. based on your AGI, but you already paid $401 in tax to a foreign country, you owe no U.S. tax.

In USA money earned by blood, sweat, tears and brains (wages, earned income) is taxed at much higher rate than money earned by money (capital gains, carried interest, qualified dividends, etc). This is the root cause of the inequality.

That's not quite true. Look at the individual income tax stats for 2012. Scroll over to column T. That's the actual tax paid as percent of gross income. It neatly sums up the effect of graduated tax brackets, tax credits, and deductions.

4.1% - $15,000 under $20,000
5.2% - $20,000 under $25,000
6.1% - $25,000 under $30,000
6.8% - $30,000 under $40,000
7.4% - $40,000 under $50,000
8.6% - $50,000 under $75,000
9.5% - $75,000 under $100,000
12.7% - $100,000 under $200,000
19.6% - $200,000 under $500,000
24.0% - $500,000 under $1,000,000
24.6% - $1,000,000 under $1,500,000
24.6% - $1,500,000 under $2,000,000
24.3% - $2,000,000 under $5,000,000
23.4% - $5,000,000 under $10,000,000
19.8% - $10,000,000 or more

As you can see, you have to be making about $200,000 or more before the actual average income tax rate exceeds the 15% capital gains tax. That is, on average, people making less than $200,000 pay a smaller percentage of their blood and sweat income as taxes than the 15% capital gains tax. (If you make less than $200,000 and pay more than 15%, you are a statistical anomaly.) The effect you ascribe to the capital gains tax doesn't kick in until about $1.5 million in income, when the actual tax rate begins decreasing. Someone making $10 million or more on average pays roughly the same tax (as a percentage) as someone making $200,000-$500,000.

So what needs to happen is the capital gains tax rate (1) needs to increase if your income is about $1 million or higher, and (2) needs to decrease if your income is less than $200,000. Right now, the 15% capital gains tax rate is so high that it discourages middle- and lower-income people from investing, which is the most direct way to partake in the country's economic growth. And the fruits of the country's economic growth will instead continue to fall mainly in the lap of the wealthy.

The problem is that IRS is not following the law, none of these organizations have any right claiming tax exempt status under the law: From uscode.house.gov 501c (4)(A) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes. But from the IRS pages the wording is changed to To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community (emphasis mine)

The IRS will figure your tax for you if you wish if your case isn't too complex: http://www.irs.gov/publication...

As a fellow Minnesotan this isn't new. She was pushing for the 300k cap before with the auto increase almost exactly 2 years ago. I haven't been very pleased with her even before that as she seemed to make national issues out of things that need not be or be out to lunch when sponsoring a bill that had very obvious unintended consequences that she was even informed of.

Then add in that at a personal level she has been the worst elected official that I have written to in responding to issues. While she does give responses to letters, unlike Franken who has never responded, they are patronizing as hell if you disagree with something or will thank you for supporting her decision when you were clearly against it. The worst was on the Syria chemical weapons issue when that was going on where her letter was about how wonderful it was that she didn't have to decide because thankfully Russia stepped in.

I have written Klobuchar a number of times on this H1-B issue and it seems to fall on deaf ears. The only thing I can figures is that the large medical companies here are telling her they need something in return for their support since both her and Franken voted for the ACA which put a tax on medical device makers' revenue, 2.3% per device,.

I don't know if Kurt Bills would have been any better especially on this issue but at least I knew him and was able to have a discussion with him. Part of that may have been because I was a former student and a part of that was probably because he was my representative to the state house.

If you're comfortable filling out the forms yourself, just use the free fillable forms:
http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free

They say it's for over $60k but in reality anyone can use them. Free e-file, or you can print them, or you can save as PDF. Doesn't require using any toner or cost you a stamp if you e-file.

I only wish I could have something similar at the state level. If they want to require that I have to go to a third party and pay up if I want to e-file, they can deal with my dead tree return, which certainly costs them more money anyway.

the very low long-term Capital Gains rate.

This is a widespread misconception. The Federal income tax is graduated, so being in the 25% bracket doesn't mean you pay 25% income tax. It means you pay 0% on the first $6,200 (standard deduction), 10% on the next $9,075, 15% on the next $27,825, 25% on the next $52,450. This means if you make less than $56,937, even though you're solidly in the 25% tax bracket, your actual tax rate is less than 15%. Meaning the capital gains tax rate is higher than your regular Federal income tax rate.

If you itemize, the threshold income level is even higher. In fact if you look at IRS tax stats (2012, column T), the $100,000-$200,000 bracket pays just 12.7% of their gross income as taxes. The $200,000-$500,000 bracket pays 19.6% of their income as taxes. So on average you need to make somewhere around $200,000/yr to end up paying 15% in income taxes. If you make less than that and are paying more than 15%, you are atypical.

The 15% long-term capital gains tax rate is only "very low" relative to the income tax rate of people in the far upper tax brackets. Basically those making over $500,000 (24% of gross income paid as taxes). You'll see the 15% capital gains rate skewing things for people making $2 million or more. Their actual income tax rate is lower than people in the $1 million bracket-$2 million bracket, steadily declining to 19.8% by the time you're in the $10+ million bracket.

Basically, this says that the capital gains tax rate needs to be graduated just like regular income tax rates. It saves too much money for people making $2+ million, reducing their overall income tax rate to below that of people making $500,000-$2 million. And it actually discourages people making less than about $200,000 from investing - because the capital gains tax rate ends up being higher than their regular income tax rate.

even if you work for a cheap-skate who does't like withholding, you've got a Schedule C

No, you (the worker) probably have a worker classification problem. Because someone calls you an independent contractor/Schedule C doesn't make it so. It's a facts and circumstances test that goes beyond how you're paid and go more to the level of control.
A short discussion regarding who might be an employee vs. independent contractor.

Interesting statement considering that U.S. banks don't allow accounts to be set up with PO Box addresses.

You set them up with the Canadian address. There is absolutely no requirements that you must be a US citizen or resident to set up accounts in US banks.

http://dan.matan.ca/US-Bank-Ac...

When you setup a US bank account, then you may have to either register with IRS (see TIN - http://www.irs.gov/Individuals... or get any interest with 30% interest withheld. But if all you want is no interest account just to spend US$ in US, then this is probably not needed.

US accounts have other requirements than for example Canadian accounts. Even USD accounts in Canada have extra requirements. For example, if you are an Iranian national, you are prohibited from opening USD account even outside US.

Anyway, cheers.

See the above response for full details but briefly...

http://www.irs.gov/taxtopics/t...

(broadly) it looks like if you file for bankruptcy AND a judge agrees to cancel the debt, then you may file a form 982 to avoid it.

As your other responder said, a forgiven debt counts as income for you unless it is discharged under bankruptcy. I can see abuse where a company gives you it's profits as a loan and then forgives the debt and files it as a loss. This would be an easy way to avoid paying taxes every year.

That is great information. The cases I heard of said the the people didn't have a way to discharge the tax. Perhaps they didn't know about the form 982. I've never heard of it before.

Perhaps they didn't file chapter 7?

In any case, good to know!

So looking this up now... here's what I find

http://www.irs.gov/taxtopics/t...

Canceled debts that meet the requirements for any of the following exceptions or exclusions are not taxable.
Debt Cancellations or Reductions that Qualify for EXCEPTION to Inclusion in Gross Income:

        Amounts specifically excluded from income by law such as gifts, bequests, devises or inheritances
        Cancellation of certain qualified student loans
        Canceled debt, that if it were paid by a cash basis taxpayer, would be deductible
        A qualified purchase price reduction given by a seller
        Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program

Canceled Debt that Qualifies for EXCLUSION from Gross Income:

        Debt canceled in a Title 11 bankruptcy case
        Debt canceled during insolvency
        Cancellation of qualified farm indebtedness
        Cancellation of qualified real property business indebtedness
        Cancellation of qualified principal residence indebtedness

  NOTE: The exclusion for cancellation of qualified principal residence indebtedness expired December 31, 2013. You may claim it on your tax year 2013 tax return if you qualify. Under current law, the exclusion is not available for tax years after 2013.

If you meet these, you get to file a form 982.

Generally that's not the case if you earn income as an employee. If you're self-employed you can deduct business expenses from your self-employment income, but if you have a job, you generally pay tax on the gross income from the job, not the income net of expenses. See e.g. these instructions:

Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses.

Most other things aren't deductible either: cost of your work clothes is only deductible if it's a specific uniform required by the employer, and distinct from "normal wear". So if you have to wear a McDonald's uniform at work, you can deduct that cost; but if you have to wear a suit to work, you cannot deduct that cost. You also cannot deduct the cost of a car, even if you only need and use it for commuting. In most cases you cannot deduct the cost of training either: if you pay to get a certification, you can't deduct that from the income you earn using the certification. In all those cases, a business can deduct them as costs.

Contradictions here:

Pay them as sub-contractors

... and ...

Have a senior programmer mentor a low-level programmer that would include code reviews and/or doing some lower level support for the senior programmer.

Even if they normally telecommute, that doesn't make them a sub-contractor. What makes them an employee are things like being mentored, being given detailed instructions on how to complete the task, etc.

Here's what the IRS says:

How do instructions and training affect the employment status of a worker?

Instructions and training provided to a worker are important factors to be considered. If you give the worker detailed instructions on how work is to be done or train the worker to perform tasks in a certain way, the worker may be an employee. A subcontractor does not need or receive detailed instructions or training on how the work should be done.

When I went back to school to learn computer programming at the community college after the dot com bust to change careers, Uncle Sam picked up the tab with a $3,000 USD tax credit. There are several back-to-school tax credits still available today.

You think that having US citizenship makes one somehow bound to the US?

Yes, it does.

And with regard to out of state voting, it's entirely possible to be registered to vote in one state, and then spend the rest of one's life in another state.

Possible but not legal; one is required to vote in the state they're resident in. Residency is defined differently in each of the 50 States you're generally required to actually maintain a residence there (i.e., own or rent some piece of property) and may further be required to spend a plurality or even a majority of your time at that residence.

Publication 17, Part 2 covers the various filing statae.
http://www.irs.gov/publication...

        Considered married. You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests.
        You are married and living together as a married couple.

        You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began.

You said "my girlfriend and I". You did not say "my wife and I". If you do not consider yourself to be married, do not lie on your tax forms and claim that you are. That would be tax fraud. File as married only if you consider yourself to be married, you tell other people you're married, and your state recognizes common-law marriage. (Even at that, if you're married, you may as well take a few minutes to file the paperwork with the state.)

Will you be writing a check Payable to NYC Housing dept ? Will you be writing a check Payable for DemCare Obamacare ? Will you be writing a check Payable for ObamaPhone BidenPhones ?

Not exactly. But close. If you don't want to do the same, revoke your American citizenship and GTFO, friend.

Slashdots "Eat the rich" attitude alive and well.

Yet, under any serious scrutiny, this makes complete sense.

Direct from the IRS:
http://www.irs.gov/Businesses/...

Summary: Most of the value in a sports team is in "intangible" assets. Sure, the stadium can be appraised and valued at X. But what are the players contracts worth? The teams name? How much did the previous owners actions damage that name? Etc... And every owner is going to argue tooth and nail that they lost money on the deal. So much so that the IRS finally just allowed them to claim the sale is worth a flat percentage of the selling price. This way they at least get some money and avoid a decade of legal battles to get it. They do the same sort of thing with dozens of other businesses.

Don't like it? Support a flat use tax. No deductions for loss.

Same here. I've been using that "feature" to check how long the maid stays when she comes by to do weekly housekeeping.

Now I know how she can afford an iPhone, she charges for 3h but stays 2h!

Untill you knew how long it took her, were you happy with the quality of the cleaning and the price you were paying? If so, try not be be bothered by her "profit margin". If not, renegotiate the fee, or find someone else to do the job.

With all that said, are you paying her a "living wage"? For Alameda County, California that comes out to something like $24/hour for a single adult supporting one child or at least $11.50/hour to support just the working adult.

http://livingwage.mit.edu/

Of course people working jobs like house cleaning or computer consulting cannot typically get billable hours for 40 hours per week due to scheduling difficulties and travel time, so the hourly rate needs to be higher to account for that, or as your cleaner may attest, the "billing time" might be longer than the "working time". Other ways of offsetting this it to impose time minimums (at least two hours per job) or charge for travel time or distance. Considering that the IRS has a standard car expense of $0.56/mile, if someone is driving 60 mph they are generating an expense of $33.60/hour. Granted, the IRS is very generous on this expense calculation, but the actual expense for most people is probably close to at least half of that.

http://www.irs.gov/2014-Standa...

There are very few people getting rich cleaning houses.

You are so far off the original point it's tempting to not respond. The original point was that the income tax was 90% in the 1970s, which is correct.

I'm sorry, but no, that is not correct. Income tax in the 1970's was approximately 70% on the top marginal tax bracket, which is net income over about $200,000. During that same period, the bottom marginal tax bracket was 14% on net income up to around $1000. These numbers are clearly defined in the previous document that I posted ( http://www.irs.gov/uac/SOI-Tax... ) on rows 66-75.

So, a person making $250,000 in 1970 would have paid 14% tax on his first $1000 of net income and 71.75% tax on his last $50,000 of net income. That is, by definition, a progressive tax.

A marginal tax system can be either progressive or regressive. In every single case that I've demonstrated thus far it has been progressive. This includes the document I last posted describing the history of tax brackets from 1945 through 2012. Figure 1 in the previously posted document illustrates a top marginal tax rate during the Nixon and Regan eras of around 40-70%. This is in comparison to the lowest marginal tax rate during that period of about 15%. That is less progressive than in the 30's and 40's when the top bracket was taxed at around 80% and the bottom bracket was taxed at around 5%, but it is, by definition, still progressive.

Please see the following document, which details the tax base, brackets, and rates for the top and bottom marginal tax brackets from 1913 - 2012. This is provided directly by the IRS and is thoroughly sourced at the bottom:

http://www.irs.gov/uac/SOI-Tax...

I'm not trying to be insulting by using the word "misinformed", so if I have been I apologize. I'm just trying to convey that historic income taxation in the USA since 1913 has operated using progressive marginal tax brackets. Some periods have been more or less progressive than others, but there has never been a period since 1913 when progressive marginal tax brackets were not used.

You are correct regarding 1913. I am sure that progressive tax was no in place for long, and the system moved to a fixed scale a few years after inception. This is what answers the question for 1913.

I did not check every year, but by 1925 the progressive scale was removed. 1950 backs my statement that it was not progressive for long, but you can go year to year and figure out when it was removed past 1913. I also checked 1968, 1969, 1970, and 1971 and there are no progressive scales there either. The tax rate when Nixon took office was 90% if you made more than 1,000,000/yr without any progression (that you claimed existed).

Your statement that it was progressive is wrong for the majority, and in fact demonstrates that as the misconception. Even if you assume that every year prior to 1925 was using progressive, this makes a very small minority of years and a tax system that was disbanded long before Nixon, let alone Reagan..

You are correct regarding 1913. I am sure that progressive tax was no in place for long, and the system moved to a fixed scale a few years after inception. This is what answers the question for 1913.

I did not check every year, but by 1925 the progressive scale was removed. 1950 backs my statement that it was not progressive for long, but you can go year to year and figure out when it was removed past 1913. I also checked 1968, 1969, 1970, and 1971 and there are no progressive scales there either. The tax rate when Nixon took office was 90% if you made more than 1,000,000/yr without any progression (that you claimed existed).

Your statement that it was progressive is wrong for the majority, and in fact demonstrates that as the misconception. Even if you assume that every year prior to 1925 was using progressive, this makes a very small minority of years and a tax system that was disbanded long before Nixon, let alone Reagan..

You are correct regarding 1913. I am sure that progressive tax was no in place for long, and the system moved to a fixed scale a few years after inception. This is what answers the question for 1913.

I did not check every year, but by 1925 the progressive scale was removed. 1950 backs my statement that it was not progressive for long, but you can go year to year and figure out when it was removed past 1913. I also checked 1968, 1969, 1970, and 1971 and there are no progressive scales there either. The tax rate when Nixon took office was 90% if you made more than 1,000,000/yr without any progression (that you claimed existed).

Your statement that it was progressive is wrong for the majority, and in fact demonstrates that as the misconception. Even if you assume that every year prior to 1925 was using progressive, this makes a very small minority of years and a tax system that was disbanded long before Nixon, let alone Reagan..

Their 15% goes a LOT further than some people's 100%.

is only true if you count the under $50k tax brackets. The vast majority is coming from the upper middle class, not the super rich.

Now to handle those assumptions. The table also shows the effective tax rate and it peaks at $1M-$2M so the balance is actually skewed much more against the capital gains crew.

Other interesting facts: The $10M or more tax bracket's effective rate is less than the $200k-$500k. The lower group paid out well over twice the amount the super high end group did. If the $10M+ bracket paid the same rate as the highest group (28%, an increase of 6%) they would owe an extra $30B. If you put the same 6% increase on poor people (everyone making less than $40k) you'd only get an extra $27B and likely put a shitload of them on the street since at that income you're probably living paycheck to paycheck.

Until the economy runs on percentages and not dollars, the fact that "rich" people pay a smaller percentage is irrelevant.

There are 33M returns in the under $40k bracket and 17000 in the above $10M. If you were running a country that needed an extra $30B, would you take it from the 33,000,000 that are struggling or from the 17,000 who came out with an average of $24,000,000 after taxes last year? If you're not a psychopath, the fact that the "rich" pay a smaller percentage is quite relevant.

Source: http://www.irs.gov/uac/SOI-Tax...

You could calculate it in precisely the same way that a business does.

And I'd claim it on my taxes the same way that a business does? That's a rhetorical question. No, I wouldn't, since individual taxes don't generally allow for deductions for depreciating assets. Otherwise, TurboTax would be asking people how many Xbox games they bought this year.

that business will probably lease office space from you personally.

My current lease prohibits subletting, so that wouldn't be legal.

You would then deduct the depreciation of that asset (your office) from the rent revenue to figure the income generated your house.

Depreciation of income-generating real estate is in a special category according to the IRS. Note that you can't deduct the depreciation of real estate that you don't rent out or otherwise use for business purposes. As a business, you can write off your office space. As a person, you cannot write off your living space.

A TV in your living room probably does not produce revenue, so you don't calculate the income it generates, meaning there's no need to calculate the depreciation. Depreciation is an element of calculating the _income_ from an activity. Income = revenue - expenses, and deprecation is one of the expenses.

But that's just it, that's my point. A TV in my living room doesn't produce revenue, so there's no "need" to calculate depreciation. A TV that a business buys, even if it gets shoved into a warehouse somewhere, never to see the light of day again, doesn't produce revenue either, but somehow the business can claim deductions from the depreciation for a few years. Depreciation is an element of calculating the _expense_ of capital purchases. Over time, the effect is such that the cost of the TV is subtracted from the business's revenue, and the business only pays taxes on profits, not revenues. This only holds true for businesses, as individuals have no right to claim depreciating assets on their tax forms.

Maybe you don't understand, depreciation is an element of figuring out how much taxes the business has to pay for using that TV. You don't WANT to figure depreciation on the TV in your living room, because that would mean you were paying taxes for watching it. The depreciation would reduce the amount of taxes you pay for watching TV.

My understanding is that depreciation is an element of figuring out how much taxes the business has to pay for the money they made minus the money they spent on the TV (spread over a few years). I do want to figure depreciation on the TV in my living room, since that's money the government taxes me on money I made, and it thinks I made that TV's-worth-of-money even after the TV is in the garbage ten years later. Thus, the $400 I spent on the TV got taxed as though it was income, despite me having spent it (not on the TV when I bought it, but on the TV after it is no longer worth anything, i.e. been fully depreciated). The depreciation would reduce the amount of taxes I pay for earning money that is subsquently spent, which, from a selfish point of view, would be a good thing for me.

Even if you disagree that depreciating assets for the purposes of tax avoidance is a desirable thing (I mean, if it's not desirable, then why does every business in existence seek to claim every expense possible to lower their [taxable] net income?), you at least seem to agree that individuals don't have the same rights as businesses when it comes to tax laws and purchase (and depreciation) of capital assets.

(1) Our tax structure isn't going to change meaningfully anytime soon
(2) The IRS won't allow or enforce any sort of efile for everyone in the short-term
(3) The IRS does allow you to file Form 14039 which puts a flag on your account which will make it harder for someone to cheat you out of your refund because your account will go through extra checks (such as making sure that your address and other information hasn't changed from last year since most information breaches don't contain all of the information necessary to file your tax return) and will reject fraudulent looking returns
http://www.irs.gov/pub/irs-pdf...
(4) The IRS might decide to, upon filing form 14039 or if you have experienced a fraudulent return filed for you, a distinct PIN which is like a PIN for a credit freeze


Morale of the story if you're concerned about not getting your refund
-file form 8822 when you change address and notify your employees and other agencies which file forms on your behalf to have your current address so all filings point to the same physical address
-file form 14039 to have the identify theft flag added to your profile
-always try to arrange so you owe a little money come tax time (but not so much that you owe a penalty) so your refund is not in purgatory in the event of a fraudulent return filed on your behalf
-if you do indeed get a refund, try to file as early as possible to beat out a fraudster

We wouldn't have this problem if we filed our taxes online. Turbotax has prevented that, because they want to charge us for doing what the government could do free, as it does in less corrupt countries.

I have filed my fiance's parents' taxes for free for the past three years, so I don't know what you're on about.

I filed for free too, but that's a link to private services, like Turbotax, which are only free for people with $58,000 or less income (and/or certain other complicated restrictions), and the services are restricted.

Significantly, if you had a problem, for example because the instructions were ambiguous, the IRS help line wasn't allowed to help you, and the third-party providers didn't provide any help.

As I recall, it didn't do my actual calculations. I had to do most of the calculations by hand, with my TI pocket calculator. It was set up to do standard calculations, but wouldn't handle the common exceptions.

I was also annoyed at the inefficiency of it -- I had to go through the calculations, TurboTax had to go through the same calculations, and the IRS had to go through the same calculations again to check my return.

The full discussion of the problems is in the articles I linked to.

We wouldn't have this problem if we filed our taxes online. Turbotax has prevented that, because they want to charge us for doing what the government could do free, as it does in less corrupt countries.

I have filed my fiance's parents' taxes for free for the past three years, so I don't know what you're on about.

A quick check of https://www.irs.gov/ and https://whitehouse.gov/ failed SSL Certificate validation (for different reasons.)

And https://www.healthcare.gov/ is using SHA1

To a certain extent, citizens can using the Foreign Earned Income Exclusion http://www.irs.gov/Individuals.... You basically get a break on the first $97,600 of income...tax free.

Which of course sucks... American individuals have to pay taxes on money they earn living outside the border. Why shouldn't these people? Don't answer, the question is rhetorical. If they want to be an American corporation, they should pay American taxes. But... we will do nothing to elect people that would write the appropriate laws. Therefore this article is meaningless. Nothing will come of it, except some advertising revenue.

Not necessarily, if you live abroad and pay taxes elsewhere you can claim the foreign income tax credit and forego paying up to $97K or so of taxable income in the U.S.

"If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $97,600 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts. See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. "

http://www.irs.gov/Individuals...

http://www.irs.gov/publication...

Which of course sucks... American individuals have to pay taxes on money they earn living outside the border. Why shouldn't these people? Don't answer, the question is rhetorical. If they want to be an American corporation, they should pay American taxes. But... we will do nothing to elect people that would write the appropriate laws. Therefore this article is meaningless. Nothing will come of it, except some advertising revenue.

Not necessarily, if you live abroad and pay taxes elsewhere you can claim the foreign income tax credit and forego paying up to $97K or so of taxable income in the U.S.

"If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $97,600 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts. See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. "

http://www.irs.gov/Individuals...

http://www.irs.gov/publication...

You can deduct it from your income, just the same as if it were a business expense

It's a credit against tax due not a deduction from income. Big difference.

To add to that: generally, personal income is not double taxed either in this respect. Anything one hears to the contrary is usually political FUD.

Quote below from IRS. Heck, they even point out how to give them the least of your money. http://www.irs.gov/Individuals...
--------
If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes.

Taken as a deduction, foreign income taxes reduce your U.S. taxable income.

Taken as a credit, foreign income taxes reduce your U.S. tax liability. In most cases, it is to your advantage to take foreign income taxes as a tax credit.
---------

Citation: http://www.irs.gov/Businesses/... [irs.gov]

Despite the URL, that page only talks about individuals, not companies. Can you show me I'm clearly wrong for companies? Additionally it says the states do their own thing as well and some simply ignore tax treaties.

That said, I might well be wrong! The US tax code is notorious for being amongst the worlds most complicated, in fact it probably is the most complicated tax code in the developed world at least. So if I'm wrong that would not be surprising, although even if your statement is correct for companies too it still amounts to paying tax on the same income twice. Even if it's at a lower rate than US income, this is nonetheless double taxation.

Instead they have double taxation treaties so if money is earned abroad and you pay taxes there, you can spend the money back home at your HQ without it being taxed a second time. America doesn't,

[Citation Needed]

Rebuttal: The US system works by requiring Corporations to pay the difference between the foreign and US taxes.
Citation: http://www.irs.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties---A-to-Z

/Personal income is likely to get double taxed, but that's not what we're talking about.

Do they want to collect taxes form people who work in other countries? Good luck with that.

Actually, that's the law

I've worked at firms that just gave us a per-diem, so I doubt it's an IRS thing. Here, they indicate that receipts are *not* required (from http://www.irs.gov/publication... ):

Documentary evidence is not needed if ... you have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging.

My SUV cost me around $800 a month in replacement costs. Another $200 in maintenance. I was burning through $12,000 a year in gas.

Are you sure you calculated your gas costs right? That's a helluva lot of money to be spending on gas, even for an SUV. At $4/gal, that's 3000 gallons/yr. At 14 MPG, that's 42,000 miles/yr.

The average vehicle is only driven 12,000 miles/yr, the average commute vehicle about 15,000 miles/yr. If your gas cost is accurate, your use case is just so far outside the norm that your anecdote is probably only applicable to about 0.01% of the population. (Your other vehicle costs seem absurdly high too, even if insurance is included in "replacement costs".)

I spent an average of 1000 hours a year in the car, for work, for groceries, for fun.

Consider my annual total: about $25,000 + 1000 hours of my time. For the "privilege" to sit in Chicago traffic.

Which translates into an average speed of 42 MPH, which is unusually high. You must've lived ~70 miles away from your workplace and spent most of your driving on the freeway to (1) rack up that many miles, and (2) have such a high average MPH.

I spent about $5000 a year on UberX. $100 a week
[...]
I figure I'm $20,000 ahead in vehicle costs

UberX lists their Chicago rates as $2.40 + $0.24/min + $1/mile. There is absolutely no way you're replacing your 42,000 miles/yr commute with fewer than 5000 UberX miles. At 42,000 miles/yr @ 42 MPH and 500 commutes/yr (250 workdays, 2 commutes per day), completely replacing your SUV with UberX would cost you:

($2.40)*(500) + [ (1 mile / 42 MPH)*(60 min/hour)*($0.24/min) + $1/mile ] * (42000 miles) =
$1200 + [ ($0.343/mile) + ($1/mile) ] * (42000 miles) =
$1200 + $56,406 = $68,406/yr

I mean think about it. It's effectively a taxi service. There's no way it can be cheaper than driving your own car (unless it's an UberX carpool) because that would mean the UberX driver would be losing money. Any reduction in your commute costs now that you got rid of the SUV is because you're taking public transportation. Any solo rides you're taking on UberX are costing you more than it took you to drive your SUV.

The IRS places the standard deductible cost for mileage at $0.56/mile. That's probably a good average to use for a commute vehicle's cost per mile nationwide. UberX costs nearly 3x that.

The IRS has ZERO jurisdiction over digital "currency."

Yeah? Well the IRS disagrees with you.

"And pre-1913 we had no income taxes". No. pre-1799. When you get your facts straight, let us know.

OK, Pre-1913 we had no PERMANANT income taxes.
http://www.irs.gov/uac/Brief-H...
Feel better now?

Except that train has ALREADY left town. Foreign Banks are submitting, well, being FORCED to submit to FATCA or face seizure of 30% of assets transferred to and from the US.

So, as a result, foreign banks are generally shedding American depositors.

Because Washington thinks it IS WorldCop. . . .

Except the IRS has declared that bitcoin is property, not currency.

Q-1: How is virtual currency treated for federal tax purposes?
A-1: For federal tax purposes, virtual currency is treated as property. General tax
principles applicable to property transactions apply to transactions using virtual
currency.

and

http://www.irs.gov/uac/Newsroo...

The money laundering statute applies to the below:

(4) the term âoefinancial transactionâ means
(A) a transaction which in any way or degree affects interstate or foreign commerce involving
(i) the movement of funds by wire or other means or
(ii) one or more monetary instruments, or
(iii) the transfer of title to any real property, vehicle, vessel, or aircraft, or
(B) a transaction involving the use of a financial institution...
http://www.law.cornell.edu/usc...

Note that "real property," is real estate, not any personal property whatsoever, and the term "monetary instrument" is likewise defined by the FDIC:

Monetary instruments.
(1) Monetary instruments include:
(i) Currency;
(ii) Traveler's checks in any form;
(iii) All negotiable instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee (for the purposes of Sec. 1010.340), or otherwise in such form that title thereto passes upon delivery;
(iv) Incomplete instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) signed but with the payee's name omitted; and
(v) Securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery.
http://www.fdic.gov/regulation...

So yes, there are very different regulations depending on whether bitcoin is or is not currency. Absent legislation specifically addressing "virtual currency," the courts will have to hash out this disagreement, which is what will happen here, I'm sure, but I think it's regrettable that someone can be punished for law that isn't yet decided. If I drive 55, should I be punished for skirting speeding laws? Are racetracks circumventing legislation against street racing? The problem with calling this money laundering isn't that this guy is punished (if he's guilty of running the Silk Road); it's that it opens up a whole other class of individuals for prosecution just because they were using bitcoin to conduct transactions -- namely everyone who conducts transactions in bitcoin.

suddenly cannot recover anything following a series of six separate 'hard drive crashes' on RAID-7 systems, so that the IRS' evidence can no longer prove criminal intent by leaders of the government.

I read the sections of The Internal Revenue Manual pertaining to Emails as criminal records.

And I am personally convinced, that the IRS objective is malicious compliance; instead of creating a searchable permanent digital record of all employee e-mail, it seems they go out of their way to say "Preserve digital versions only for limited periods", and it's up to each employee to manually print the approximate hardcopy of the data and have the printout, of anything to be deemed "a record":

1. 1.10.3.2.3 (07-08-2011) Emails as Possible Federal Records - Advises Employees - To save emails and attachments that meet the definition of a federal record be added to the organization’s files by printing them and filing them with related paper records.
2. They are using Microsoft Exchange. This is an e-mail server application that has a feature called personal archive, which they apparently choose not to use, even though a few thousand terabytes of cloud storage is much cheaper than the equivalent pieces of paper and filing procedures.. In addition, there are many archiving applications available for Exchange, and there is a Journaling feature in Exchange which can be used to support permanent archiving of all mail.
3. They impose a 500 megabyte limit on their users' mailboxes. The Exchange software default is 2 Gigabytes, in other words: they are going out of their way to coerce employees towards deleting mail, and intentionally making the system 100% reliant on the employee ---- so that any error on the employee's part results in no record generate.
   
   Note: Their employee manual specifically advises employees to delete mail: Delete some mail from your mailbox or contact your system administrator to adjust your storage limit. (Consider whether any of the items you want to delete may be a federal record. IRM 1.10.3.3.2 above.)

My read of this is that they applied as a charity, but the IRS's definition of a charity requires that you be serving a distinct, disadvantaged group of people. A quick look at the software that Yorba produces (http://yorba.org), does not lead me to believe that their software would particularly benefit any specific disadvantaged groups more than other people.

So by the rules that the IRS is working on, it does appear that they do not qualify as a charity. And to be honest, this is a correct definition, they are not running a charity. Now there is a valid question about whether there should be a method for them to run a non-profit without being taxes, but they are not a charity.

There are many kinds of Charitable organizations. But 501(c)3 does not necessarily mean a Charity as you describe, though it does allow you to take donations. Most of the 501(c) organizations are pretty specific in what they may serve; 501(c)3 is the exception in that it is a lot more general.
The Wikipedia Article on 501(c) organizations is actually pretty good. Of course, you can also go directly to the IRS information too, but I find the Wikipedia article to be easier to read.

Seriously, what 'Wiki' are you quoting? Why not quote actual IRS regulations?

http://www.irs.gov/pub/irs-pdf...

http://www.irs.gov/pub/irs-pdf...

Seriously, what 'Wiki' are you quoting? Why not quote actual IRS regulations?

http://www.irs.gov/pub/irs-pdf...

http://www.irs.gov/pub/irs-pdf...

The notion of a closely held corporation is well defined. Under this decision, Walmart could be considered a closely held corporation. According to (the oh so reliable) Wikipedia, the Waltons currently own more than 50% of Walmart.

IRM (IRS Manual) 1.15.6 Managing Electronic Records Found here
-------------
1.15.6.6
Standards for Managing Electronic Mail Records ...
3. IRS offices will not store the official recordkeeping copy of e-mail messages that are federal records ONLY on the electronic mail system, unless the system has all of the features of an electronic recordkeeping system, some of which are specified in paragraph 2 above. If the electronic mail system is not designed to be a recordkeeping system, ask an E-Mail/System Administrator to instruct you on how to copy the information from the electronic mail system to a recordkeeping system or produce a hard copy[emphasis mine] for recordkeeping purposes.

4. IRS offices that maintain their e-mail records electronically will move or copy them to a separate electronic recordkeeping system unless their system has the features specified in IRM 1.15.6.6.2 above. Backup tapes are not to be used for recordkeeping purposes.[emphasis mine] ...

6. Offices that maintain paper files as their recordkeeping systems will print their e-mail records[emphasis mine] and the related transmission and receipt data. ...

Exhibit 1.15.6-1
Common Questions about E-Mail

Are there special requirements for retaining e-mail messages as records
The basic requirements applicable to all records apply to e-mail records as well. If they are not in an approved electronic recordkeeping system, then the e-mail messages identified as records must be printed out and placed in the appropriate record system[emphasis mine]. However, there are some specific elements for records sent or received through e-mail which also must be captured in addition to the message to satisfy recordkeeping requirements. You should ensure that...

--------------------
There are a bunch of other IRS manuals that discuss printing, filing and retaining records. The issue here is that there is a requirement, formalized by statute and regulation, that all government agencies retain records.

Now about your guarantee; it doesn't say that each and every email has to be printed. It says that if there isn't a suitable electronic recordkeeping system then it has to be printed.