 Welcome back to my YouTube channel guys. I'm not going to lie. Not in the best mood for talking about taxes today. I've just done a deep dive and a refresher on some of the US tax laws and man it does not make me happy. So this video is going to overview the differences between paying taxes in New Zealand compared to the US and also a little bit of a deep dive into American expats that live abroad and how to pay your US taxes and some of my thoughts on that and sharing some personal experiences. So even if you are not an expat, I would recommend that you watch this video just to get a sense. It gives you a sense of what it's like for Americans living abroad or just just dealing with American tax law in general. So here we go. So if you are new to my channel, welcome. We are a family of six. I have moved from the US to New Zealand and have been here for seven years and today we're going to talk about paying taxes. This is one of the questions that I get so often from my clients and they've been begging me to do a video. So this is a video. I also want to do a shout out to our sponsor today Bright Tax for sponsoring this video. You guys, if you are moving to another country, you are going to need a tax service and I highly recommend Bright Tax. I will talk about that a little bit later, but they are sponsoring this video. So thank you. Here we go. Okay, this is how we're going to do this video. I'm going to overview doing New Zealand taxes and then I'm going to go into paying your US taxes when you are living abroad and some of the things to watch out for. So let's dive into New Zealand taxes. A couple of things I want to say about this. I have been living in New Zealand for seven years now and have been paying taxes and let me tell you the first thing I want to say is that it's so easy comparatively. Now, if you don't know, the US tax is difficult. So difficult in fact that they have all this. There's whole businesses that thrive because it is difficult and so that's why they keep it difficult, but don't know. So paying taxes in New Zealand, so easy. When I first moved here, I got a like a three fold pamphlet they filled out and it like took a few minutes. I'm like are we being serious? Actually, a Canadian friend of mine and I were like called each other were like, is this for real? Like this is so easy and so straightforward and so reasonable, but now they have developed a whole system through the IRD system where it just automatically does your taxes for you. You heard me like you don't have to do anything. It's automatically done. If there's things that you need to add or changes that happen, you know, within that financial year, then you have to go in and add that. You normally have to just kind of go in and just answer some questions and make sure that everything is the same and then it just prompts you, you know, 15 minutes, right? And you see your taxes. Now, another big difference that I want to highlight about this is that they take taxes out of your paycheck just like they do in the US. The difference is that they don't take too much. Generally, your taxes will even out to being exactly what it is that you owed, you know, because especially if you haven't changed your job within that year, whatever things haven't changed for you, like what? There's a concept in the US. They always take more out and then you have to file your taxes in order to get your money that you earned back at the end of the year. And then they make you feel like the government is giving you a tax return when really it was just your money to begin with. So yeah, that's what we're dealing with over there. But here in New Zealand, they don't do that. They take out legitimately what you owe in taxes and generally not more than that. And if they do, it's they automatically give it back to you. So like it's amazing. Also, like if you are part of like a charity you give during the year, you can go on at any point and put that information in there up to four years past you doing it. You know, because like I always feel like when I'm doing my US taxes, I'm like, okay, I don't want to forget something that I did in the year because I'm filing it this one time. But what's nice about New Zealand taxes is a lot of different features that allow you to just, you know, within the next four years or two years, you know, report it. So you don't feel like this pressure to like remember everything or like, oh, that's right. We gave to that. And you know, we could get 33% back if we, you know, registered that as a charity that we contributed to during the year. So just a lot of great things about that. Also doing business taxes, as you know, I have a business here as well. And pretty straightforward, quite easy. I mean, you just considered a different entity. So it has its own tax return. But again, also very, very simple compared to what you have to do in the US. And I'm not going to go into all of that because it depends on your industry and different things on what you have to pay and how much you make. And so I'm not going to touch on that, but I just wanted to kind of do an overview of how amazing it is to have to pay taxes in New Zealand coming from the US. And so keep in mind that when I lived in the US, I always paid my own taxes, did my own taxes. I own multiple small businesses. And I just felt because tax law changes often, it affects your income dramatically. If you know what's going on and then how you structure your business or how you do things matter. And so that's why I always kept up on it. And so I was very familiar with American tax law and how to do it. And so, so that's why I can speak quite clearly that it is much easier here, because I was always doing it there. And in fact, I, true story, I continued to do my own US taxes when we moved here. And I ended up checking a box wrong, got a $20,000 fine, took me 18 months of working with IRS to get that removed. Like it was an actual mistake. I had to hire a CPA in the US and she had to work it out. She's like, Oh, you literally just checked a box wrong. And I was like, Oh my gosh, but like you can't like call the IRS. You can't like deal with it. It's very stressful. Then they kept sending me letters in the mail saying, Hey, we haven't had a chance to look at it. You're going to have to give us another three months. And, you know, so anyway, it got removed and everything's fine. But yeah, it's just like the IRS is scary and dangerous. And that doesn't go away when you leave the country. And let's get into that right now. Okay, let's talk about paying US taxes. Now, I just want to say that I'm not a professional. This isn't tax advice. I suggest that you talk to bright tax about this, but I'm just going to go through. Like I said, I am familiar with tax law, have paid taxes for my adult life. And so I feel like I can just give you a nice brief overview as a teacher and try to put it in terms that are quite easy to understand. So first off, if you don't know, Americans have to pay US taxes no matter where they live and work in the world for ever, as long as they are citizens, as long as they have a US passport. And so no matter where, there's only one other country in the world that requires this, but the US, yeah, it's interesting. And I'm going to be honest with you because I have just been deep diving into it the last couple of days. And I'm very frustrated because it's like the whole concept of the US was started where people escaped from Britain to, you know, because no taxation without representation, but nobody's representing US expats. There's like millions of us around the world, and we are just taxed like crazy, like you're about to find out. And quite unfairly when you start to see the penalties. And we have no representation and we don't even use the services in the US or in the state that we're from. And so it's, it's very interesting and a little bit frustrating. So here we go. Okay, so if you're an expat that has moved out of the US and have decided, Hey, you know, I'm going to check out life abroad. America doesn't like that. They're not making it easy and you can see it through their tax law. Okay, so it's the greatest country on earth, but they just don't want you to see the way other people do it because it might be better. So yeah, let's talk about this. So there's three things that you need to kind of think about. Now there's a lot more, depending on what country. So this applies to anybody living in any country, any American living in any of any country and have to pay taxes. Do not avoid it. Definitely go and file your tax return with the US government. There's no way around it. If you don't file it, you will have to at some point and pay all the back taxes. There's no way around it or you know, they could keep you from entering the country or worse, like they literally make whatever rules they want around it and they don't value the fact that you've left. I would define myself as a complicated tax individual. I have a small business in the US that's complicated and I have two in New Zealand and I have, I'm a complicated tax person. And so I have had New Zealand accountants, US accounts and I've never gotten that feeling that they really are doing everything correct because they don't always understand the other laws until I met bright tax. And let me tell you, they have saved me. It was the first time that I felt that I was working with a company that really understood because all of their CPAs are expats as well. And they really understand US law and that's what you really need. And then they also understand New Zealand law really well. And I was like, this is fantastic. And so, and I always ask them questions. They're so friendly. They're so responsive. Just anything that kind of comes up in my mind, I just email them. It's great. I would highly recommend you're an American expat, no matter where you live in the world that you work with bright tax because they are really good. They're very friendly and they only do expat taxes. So they really understand because when it comes to doing US taxes, you have to understand the different country agreements and they're really good for that. So definitely go check them out. The link is in my description. Bright tax is where it's at. So I don't know if you've noticed if you're an American that has left the US, everything is difficult. It's not just the tax situation. It's also dealing with stocks and bonds and companies with that, even dealing with your credit card company with your bank. They make everything very difficult. It's like, we don't like that you left, but we have. And so we have to deal with that. So let's talk about foreign-earned income exclusion. So this is number one thing. So most countries, I guess I shouldn't say most countries, I don't actually know a lot of countries. So there's this foreign, there's an agreement between the countries and there's a foreign-earned income exclusion. This is true for New Zealand. And so individually, let me check the number. Hold on, 112,000 as of 2022, you can exclude. So if I live and I work in New Zealand and I make 112,000, I will not also have to be double-taxed with the US government on that money after anything after that I would. And so if you're filing jointly, then it's 224,000. So as long as you make less than that, you're fine. And so if you make more than that, but then there's also ways around that. So that's when you need the accountant. Okay? So there is a foreign income exclusion. So there is an agreement between New Zealand and the US. So you don't have to pay double taxes on that. But after that, it gets a little bit hairier. And I'm not going to try to tackle everything with that. But that's the first thing you should know. The second thing that you should know about is called FATCA. I'm going to just read this so that I don't do this wrong. Foreign Account Tax Compliance Act of 2010. Now this is, you must report this if you have, and it's a certain form, it's a separate form, but it's pretty high limits. So like I think of it's jointly, it's like $400,000. So if you don't, you know, if you make less than that, or you have, it's just reporting your financial assets. If you have less than that, then I don't think you have to report it. But if you do, but a lot of people do, like if you still have your house in the US or, you know, you have different retirement accounts, it all needs to be reported. And so this is really just used for just making sure that you're compliant to, you know, the foreign tax and financial things. There is a penalty. If you meet these limits and you have not submitted, you have to pay $10,000, it was a $10,000 up to like $50,000 a year for not doing it. So like, don't not do it. So definitely talk to, you know, an accountant or definitely bright tax because it's like really good. I'm like, oh my gosh. And this is recent, you know, 2010. And so it's not great. And so this is where you're seeing a rise in Americans renouncing their citizenship because of all of these new rules. But we'll get to that in a minute. The second thing I want to talk about is called the F bar. Now this one is most likely you will have to file, but it's more in the intent of this one is informational. And I don't know what F bar means. So financial accounts reporting bank account reporting. So it's really, it's reporting your foreign bank account totals to the government. And you just need to do this. And if you don't, you're charged $10,000. I'm like, and I think that there's like a minimum you have to have in the bank account to do this again, but it's definitely something you should know about. Look at the F bar is, you know, you definitely need to do it. And then there's like this law about like, if you're willfully not participating or non willfully penalties, it's like $10,000 penalty or it's like even more in like jail time, if you willfully, um, you know, don't report your F bar to the US government. And it's like, then I like, I did a deep dive. So like what's willful and what's non willful? And there's no, it actually says there's no like actual, um, you know, determination as to what those are. And so it's just kind of left up to the discretion of a court, I believe. And so like, like what, like what's willful not willful? I think it's, you know, sometimes it's associated with criminal activity or, you know, I don't know. But like, if you've been putting off reporting any of this, I would suggest that you, you know, start doing that because I'm like, what the heck? And it's like, wow. And there's, yeah, there's no guidance for willful or unwillful, um, participation in this. And so like, yeah, these are, these are things that consider like, so it's not just that we have to pay taxes to the US government. We actually have to show the US government, all of our assets, all of our bank account totals, so they can make sure that we have paid them their due amount. And if this wasn't enough to make you crazy, this has promoted a lot of people not wanting to be citizens anymore. So they don't have to keep reporting this taxes because it's not just reporting it. You actually have to pay somebody to do it for you every year. And then as you're making more money, there's more craziness and penalties and oh my goodness. And so you're seeing that in the 2010 or 2011, when this went into it, you're seeing like a rise of people renouncing their citizenship. But right now they raise the price of that to $2,350 to hand them your passport. So yeah, per person. So like my family of six through that calculation. Not that we're looking to do that at all at this point, but like, wow, I'm like, okay, so not only do you have to pay the fee, you also have to pay exit taxes. And that's based on your income over the last five years. And it literally says on the government website on the IRS website, get a tax professional to help you with this, because this is complicated. So they're not making it easy. You can't get out of this tax situation very easily. And so I'm like, oh my goodness, every which way you are penalized, penalized, penalized. It's just all I'm seeing. And so I highly recommend that you reach out to Bright Tax. They are so great. This is like the kind of the first company that I felt really comfortable with. And like I really, I feel like they really knew what to do from a US tax perspective and a New Zealand tax perspective. So don't hesitate. Their link is below. And I will see you guys next week. And hopefully you're on a much happier topic.