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Date: Mon, 4 Jun 2007 21:19:07 +0200
X-Mailer: Lotus Notes Release 7.0.1 January 17, 2006
Here is my scoop. We did the same move 2005, same situation.
Taxes: first year is a bit complicated since you will go through some
hoops to calculate how much taxes you have to pay. Basically you do the
exclusion and anything above will be calculated on how long you worked
abroad (in this case Switzerland :-)). I personally recommend a tax
specialist only if you have complicated tax situation, e.g. you own a
property, stock options, etc. The next years, assuming you reside the
whole time in Switzerland, you have to list your Swiss income as 'Income',
but subsequently deduct your entire income generated in Switzerland on the
1040 form following the instructions on form 2555 (again assuming your tax
situation in the US is simple, little income through stocks, dividends
etc. but no property etc.). Therefore you do not pay taxes on the Swiss
income but only on income generated in the US. All details can be found in
the respective tax guides:
Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
Publication 514, Foreign Tax Credit for Individuals
Form 2555 (PDF), Foreign Earned Income
Form 2555EZ (PDF), Foreign Earned Income Exclusion
Form 1116 (PDF), Foreign Tax Credit
Tax Topic 853, Foreign Earned Income Exclusion - General
Giving up the Green Card: As mentioned before be careful in the first
year(s). If you do not plan to return to the US, give it back. If you
frequently travel to the US, keep it, it saves you the lines at the
immigration counters (ever travelled through JFK ???). In this case file
taxes every year otherwise you loose the green card and might be subject
to prosecution for tax evasion.
401(k): You have a few options: leave it there and do nothing, it is your
money, no one can take it from you and most employers allow leaving the
money in their 401(k). Ask your employer, depending on the investment
options offered in the 401(k) it might be your best move (was for
me.......). Second option is to transfer it to an IRA and invest from
there. Ask the specialists at your employer on how to do that, sounds easy
but if they make a mistake you're screwed....and finally take all the
money out, pay the associated taxes and penalties and move the little
money that's left to Switzerland (usually the worst option). I suggest
leaving it there. Starting at the age of 57 you start withdrawing the
money and live on it. Swiss pension plans pay roughly 3% return if you are
lucky, but in the US you put the money in the stock market and (if you
chose the investment wisely) get 10% return. Hope you get my drift......
Swiss military taxes: have to be paid for the service missed up until the
year 1999 (or 2000, I do not remember). No chance to avoid it, but mostly
you pay based on your last tax forms before you moved (in my case I was a
student and so I had no income).
Good luck with the move
______________________________________
Michael P. Rudolf, PhD
Chief Scientific Officer
Received on Mon Jun 04 2007 - 19:37:00 PDT
