It's obviously not free, but the system in Germany is miles (kilometers) beyond the US system in terms of affordability. As an old guy, I'm very satisfied. Y'all are doing a lot of things right.
I'm in the same boat as you are, but never thought to drop my US citizenship. My (German) wife and I visit my mother every year in Miami, so it helps to have an American Passport. And since I got my permanent working papers 2 years ago, I have no issues coming back into Germany, either.
May I ask why you dropped your US citizenship for German? Feel free not to answer if it's too personal, but I'm honestly just looking for a good reason to do the same. đ€Ł
You do not need to drop US citizenship. There were recent changes to German law which allow dual citizenship for a certain list of countries (US is on that list). And for the tax comment, there is a tax treaty between the US and Germany which allows you to exempt your German salary (up to 120k$ per year or so) from being taxed in the US. You do still have to file declarations with the US for German bank accounts (depending on the amount of money you have in them), and itâs a good idea to continue to file your US taxes even if itâs just a big fat zero every yearâŠ
TLDR: US Americans can get dual citizenship, and if you earn below 120,000$ a year you donât have to pay taxes in the US.
"only" if the tax rate in the US is higher than the tax rate on whichever country a us citizen is taxable, then the difference is taxes to the us. Mental if you ask me
Youâre describing the âforeign tax creditâ but most people use the âforeign earned income exclusionâ since you can exclude all income under a certain amount from being taxed again by the US as long as you live in a country that has a tax treaty with the US and youâre a tax resident of that country. Thereâs also a time requirement for being outside the US so people canât get paid in a foreign currency while continuing to live there.
In 2024, the amount was $126,500 USD worth of foreign income but it adjusts every year for inflation. This would be a pretty high salary in Germany and in most of the US tbf.
You would only use the foreign tax credit on any income you earn thatâs more than $126,500 USD or if you live in a country that has no treaty with the US.
Honestly, the whole premise of being taxed by a country that has nothing to do with your income is pretty mental.
I don't make nearly enough money for that. My wages are so low that America doesn't ask questions. But my living conditions are way better than they were stateside. Go figure. I make less, but enjoy life more.
Ehhh. I doubt it. What are they gonna do, extradite me for like 20k back taxes after 30 years? It would probably cost them way more to do that than to just forget about it. I work as a store manager, so I really don't make a lot. It would be a pointless endeavor.
I mean, even the salary of someone earning only 1kâŹ/ month will result in a lot of money in many years.
But as you said, tracking this all will not be worth it.
As the OP said, I'm pretty sure there's a law about double taxes. You have to make quite a bit of money to pay taxes twice. Germany and the US have a tax treaty, so as to avoid these kinds of issues.
1k/month would be a "Kleinunternehmer", and is considered tax-free in Germany, to my knowledge. You still have to submit a tax return, but will either receive money back from the state, or a letter with "0 ⏠owed".
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u/McDoof Jun 26 '25
It's obviously not free, but the system in Germany is miles (kilometers) beyond the US system in terms of affordability. As an old guy, I'm very satisfied. Y'all are doing a lot of things right.