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  1. Hi Gary,

    Stand by. Answer on Monday. I just arrived home from a long trip. I’m jet lagged. But I will post your answer on Monday after I get some serious sleep. 🙂

    Riyadh to Dubai to Los Angeles. Ouch.


  2. Anna,

    If you have no income, you have no technical requirement to file US tax returns because of income received.

    But you might have to file a tax return for other reasons. E.g., if you have signature power over financial accounts outside the USA there are filing requirements. I am referring of course to the astonishingly execrable FBAR form — TD F 90-22.1. I would guess that you have a bank account in Switzerland. After all, paying normal expenses and living in a place makes that necessary. This means you are at risk for being penalized heavily for not having filed any FBAR forms. The US system of taxes is riddled with these hidden requirements designed to harm you in the option of an auditor’s whim.

    If you receive alimony you will need to determine if it is taxable or not, and make the reporting accordingly in the US for tax purposes. I can’t tell what it will be, but you are correct to be cautious. Note also that even if it is not taxable income it might be that payments you receive are reportable in the USA for other reasons, e.g., as a gift on Form 3520. I can’t give definite feedback until the payment arrangements are defined.


  3. I am a US citizen and a Swiss citizen. I am married to a Swiss and currently living in Switzerland. I have two questions. First, I have not filed a US income tax return since we moved here 8 years ago because I have had no income to report. Was I required to file even though I had no income? Secondly, If I would divorce or separate and have an alimony income of $200,000, after paying the Swiss taxes, what would I have to pay to the IRS?
    Many Thanks,

  4. @Ljerka Miller,

    The way the IRS will tax them is simple. Before the IRA custodian can make a payment to them the custodian has to get a form signed by the recipient. If the recipient indicates that he/she is a nonresident of the USA, then the custodian will deduct some tax from the payment due to your niece/nephew.

    The reason this works so well is that the IRA custodian (Schwab, etc.) is in the United States. If they screw up the withholding of taxes on the payment, the IRS will come after the IRA custodian directly. Your nieces and nephews, of course, are happily outside the long arm of the IRS.


  5. Hi,
    I am a U.S. citizen living in California.
    My IRA beneficiaries are my nieces and nephews ranging in age from 30 to 40 years old and they all live in Croatia.
    How IRS is going to tax the beneficiries?
    Thank you.
    Ljerka Miller

  6. Phil,

    Nothing new here.

    (BTW: Why file a Form 8833? It is for announcing that treaty benefits are being claimed not that you woulda coulda shoulda had ’em but for the Savings Clause.)

    The real issue for US citizens IRA recipients resident in foreign lands with the priority treaty right of taxation is how to explain an IRA to their LOCAL tax guy.

    The US tax side is easy, the local side can be insane – assuming, of course, (ahem!) the US citizen is reporting his IRA investment activity and distributions to the local yokels.

    The problem is not just local taxation of the distributions but taxation of income earned WITHIN the IRA (dividends, interest, gains, etc.).

    On top of that US tax return preparers still have the unenviable task of just explaining the concept of an IRA to disbelieving local tax advisors, much less the ins and outs of contributions, basis, etc. People who have lived in dyed-in-the-wool socialist nanny states for so long that the very notion of personal responsibility and management authority for old-age retirement smacks of unreconstructed capitalist depravity.

    The 2006 protocol to the US-Germany treaty clarified IRA matters wonderfully – but only prospectively. Lord knows what will happen if some bright-eyed college grad in the local tax office decides to ask what about all those years BEFORE the new treaty Article 18 came into effect?

    Just another reason to get out of this business.

    John Nolan
    Frankfurt am Main

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.