Those Dang Taxes

It’s always the same, isn’t it? The State knows how to best fleece the citizens. And since after all I on the one hand am a German citizen still [more about that below], and on the other hand have moved my place of residence from Germany to the United States, I will be skinned twice, because I am assessed for income tax in Germany as well as in the US.  😦  Actually there is the so-called double taxation agreement, which is supposed to prevent exactly this, but in my case it turns out that I still have to pay about $ 1,500 a year more than if I paid my taxes in Germany only. According to German fiscal law German income tax is levied on my German income. And according to American fiscal law people having their permanent residence in the United States have to pay income tax in the US even for income they have outside of the US. The double taxation agreement does not, as one could assume, prevent this but it only provides for my German income tax to be offset against my taxes in America. But, and that’s the catch, it is not offset to the full amount, but only with a factor of about .8 so that I still have to pay a certain amount of taxes here in the US for my income in Germany. Dang! And to add insult to injury, I got a note from my tax person in Germany a few days ago that it will be worse in the future insofar as I won’t be allowed to deduct any expenses any more in my tax declaration in Germany as from 2012 on I have my permanent residence in the US. Conclusion: the German IRS will happily collect my income tax still, but doesn’t grant me any tax allowances whatsoever.

As to citizenship and residence: I have to remain a German citizen because I would lose my pension as a former civil servant of the federal state of North Rhine-Westphalia totally if I became a US citizen solely, which on the one hand I cannot afford and, on the other hand, I’d be crazy to do if, after a lifetime of working for the state, I would waive my dues. On the other hand, though, I have to relinquish my German residency because even it was my secondary residence only I would have to live in Germany for at least 183 days per year – which I simply can’t do. Therefore, as far as taxes are concerned, I’m sitting between two chairs. Well, not between two chairs actually, but between two states – and each of these two states is fleecing me by every trick in the (tax) book.  😦

Um diesen Beitrag in Deutsch zu lesen, hier klicken.