Tax Question

[Jon Miller]

So as some of you know, I now am in Chile with a junior position.

One of the benefits of the position is that I have a generous travel grant and only need to be in Chile 6 months of the year.

Assuming an income of 50-80 k USD (depending on bonuses and exchange rate), how many months a year can I spend in the US before the amount I pay in taxes gets unreasonable?

In the past with no dependents and a much smaller income (european postdoc), 2 months did not complicate the tax situation. This time, however, it is more complicated.

JM
(It might be important that Chilean taxes are low and mostly go to a private (but required) pension fund and a private (but required) heath insurance, european taxes were never important to me before but it is a new situation.)

[Jon Miller]

Maybe this is inappropriate and should be deleted? I thought it was similar to KH's question or other advice.

JM

[Sava]

Why do you say that?


I don't have any helpful advice... but I can shoot the **** with you until someone more helpful does have some for you!

How's the food in Chile?

[Jon Miller]

Pretty poor. That doesn't mean that there isn't good Chilean food. Even in Latin America though, most people agree that Peru and Argentina has better food than Chile.

The overall situation is better than it was in the past though, 5 years ago you couldn't find coffee which wasn't instant nescafe.

JM
(Also the food in not very international.)

[Sava]

Whereabouts are you?

Is the weather nice?

[pchang]

Are you still a US Citizen? If that is the case, then as long as you spend more than 1/2 the year in Chile, you pay taxes as an expat. The US demands taxes on your income regardless of where it is earned. However, the treaty allows you to deduct whatever taxes you pay Chile from your US tax. Travel to the US as much as you want up to 180 days (just to be safe) and your tax obligation will not change. Since Chile taxes are low, you will need to save up some money to pay the US Treasury the extra that they will demand.

[Jon Miller]

Whereabouts are you?

Is the weather nice?

Valparaiso.

Winter gets down to 45 F, summer gets up to 80 F, and there are only a few days a year where it rains.

JM

[Jon Miller]

Are you still a US Citizen? If that is the case, then as long as you spend more than 1/2 the year in Chile, you pay taxes as an expat. The US demands taxes on your income regardless of where it is earned. However, the treaty allows you to deduct whatever taxes you pay Chile from your US tax. Travel to the US as much as you want up to 180 days (just to be safe) and your tax obligation will not change. Since Chile taxes are low, you will need to save up some money to pay the US Treasury the extra that they will demand.

Thanks.

Yes, I am still a US citizen.

Taxes here are ~20% (6% pension, 7% health insurance, 7% for the government) so should I be keeping the difference between the Chilean rate and the US rate only for an amount depending on the period I am in the US or for the full year?

JM

[pchang]

The full year. Because of the Chile pension, you might get out of paying the Social Security tax. But, then it counts as $0 for your eventual Social Security benefits if you decide to remain a US citizen.

[pchang]

The good news, is that you can ignore any state taxes since you won't be a resident of any state. The way things are going here, I might be tempted to just stay in Chile for good.