Living abroad and getting money from the IRS

Many Americans complain that they have to file US taxes, even though they live abroad, and may have little connection with the US.

However, if you don’t make too much money and you work in a high tax country like Spain, and have kids, the IRS may actually owe YOU money!

How does this work? It’s pretty simple: suppose you make $50,000 a year and have two kids. Normally you would owe around $4,500 in taxes in the US. However, since Spain generally has higher taxes and has a double-taxation treaty with the US, you can use the “foreign tax credit” and wipe that out so your taxes payable in the US are zero.

Now comes the wonders of the “additional child tax credit”, which is around $1,000 per kid. This gets added to the $0 you owe, meaning that you actually get a refund from the IRS for $2,000!

Bonus note: if you are married to a Spaniard with no US Greencard or passport (technically called a non-resident alien), you can consider yourself “single”, or even “single head-of-household” for US tax purposes.

Perhaps there’s hope for Germany after all

Finally, a German politician gets it. Granted, it’s the leader of the opposition, rather than Merkel’s team, but perhaps things are finally changing.

From A fistful of Euros:

THE AUSTERITY measures being imposed on Greece are “mad”, and indicate that Europe learned no lesson from the rise of the Nazi Party, Germany’s main opposition leader said yesterday. Sigmar Gabriel, the chairman of the Social Democratic Party and potential future chancellor, said the measures were “mad” and amounted to an “evil circle”….At a seminar organised by the Institute of International and European Affairs in Dublin yesterday, Mr Gabriel cited the example of Weimar Republic chancellor Heinrich Brüning, who cut successive budgets during the Great Depression. Germany ended up with six million people unemployed. Brüning’s cutbacks contributed to a rise in support for the Nazi Party, which grabbed power in 1933.

He went there. Wham.

Finally someone German is talking about the real history of the rise of the Nazi party in Germany, which really had nothing to do with massive inflation of the Weimar Republic (that was done with ten years earlier).

Germany really needs to understand that the Euro is it’s golden goose, and much of the economic growth of the last ten years has been due to the Euro currencies being misaligned from the beginning, giving Germany a huge competitive advantage. In fact, if you look at the ten years prior to the introduction of the Euro around 2000, it’s quite amazing how “spend thrift” countries such as Italy were running surpluses, and supposedly thrifty Germany was running big current account deficits: