[quote="PsyGuy"]@wrldtrvlr123
Thats why my example of technical and practical. So technically there is a penalty, but if i owe zero taxes then any percentage of zero, is (drum roll): zero. Thats not anywhere near a lot of money, its "no" money.
Yes technically again you owe taxes on your world wide income, but practically that amount is whatever I say it is, if i even acknowledge im working. The IRS isnt getting a W-2 from my IS.
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Possibly, but you ignored the fact that it is not uncommon for the IRS to file for you and assign you income/taxes if you do not file. The onus would then be on you to prove their version is not accurate.
Also, if you do not apply for the foreign exclusion, you owe tax on the entire amount you earn. Maybe the IRS never has a way of finding out, maybe they do.
And, you can still get a refund, depending on whether you have some type of US based income. We got a nice refund this year since we had partial overseas income and partial US based taxable income.
Obviously some people are comfortable taking their chances with the IRS coming after them. We prefer to have one less thing to worry in life if it can be avoided with a few minutes work and very little cost.
UK SLC Repayments - Default Amount by Choice?
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BookshelfAmy
- Posts: 120
- Joined: Sat Jan 21, 2012 4:21 pm
Re: Comment
PsyGuy,
Allow me to respond to some of your points:
"Your source has a "limited" view of the scenario. Their position is entirely domestic (and for the record his long post was only half as long as it needed to be because the posted the same information twice)."
Yes, I am capable of reading and understanding the post. I realize that making a silly mistake (like posting a bulleted list twice) reduces his credibility, but it was still the most concise, thorough explanation I could find in the amount of time I was willing to spend. Also, escapeartist's question was, "There must be implications for not making payments, though, right? Assuming that you do return to your home country." In trying to answer the question fully, I tried to provide information on what might happen in your host country AND when you return home.
"Your social security number and credit history stops at the US border."
My new school, which is DOS-assisted, required us to submit our social security and tax records from the States. They said it was a new policy brought on by a visit from the Tax Revenue authority. The US government seems to be cracking down on financial matters for expats.
"You won't receive any more federal financial aid until you repay the loan in full...
In our example of $150K weve already maxed out our loan eligibility, so there isnt anymore to borrow."
Yes, in the arbitrary example you provided, we've maxed out our loans. However, I haven't maxed out my loans. The average US borrower in 2011 owed $23,300, and only 3% of borrowers owed more than $100,000. So the vast majority of Americans can still borrow money for school, assuming they don't default.
(source: http://www.cbsnews.com/8301-505145_162- ... -subprime/)
"You may not be able to renew a professional license you hold.
This is the only real problem but you provided its effective in 19 states, which means there are 31 its not, and a IT only needs to be certified in one state. park your certificate in one of those states, or like i did move your certificate every 5 years or whenever its up to renewal."
I'm glad you said that. This post is all about helping people make informed, responsible choices, and they need to know that defaulters might need to move their certs every 5 years.
Allow me to respond to some of your points:
"Your source has a "limited" view of the scenario. Their position is entirely domestic (and for the record his long post was only half as long as it needed to be because the posted the same information twice)."
Yes, I am capable of reading and understanding the post. I realize that making a silly mistake (like posting a bulleted list twice) reduces his credibility, but it was still the most concise, thorough explanation I could find in the amount of time I was willing to spend. Also, escapeartist's question was, "There must be implications for not making payments, though, right? Assuming that you do return to your home country." In trying to answer the question fully, I tried to provide information on what might happen in your host country AND when you return home.
"Your social security number and credit history stops at the US border."
My new school, which is DOS-assisted, required us to submit our social security and tax records from the States. They said it was a new policy brought on by a visit from the Tax Revenue authority. The US government seems to be cracking down on financial matters for expats.
"You won't receive any more federal financial aid until you repay the loan in full...
In our example of $150K weve already maxed out our loan eligibility, so there isnt anymore to borrow."
Yes, in the arbitrary example you provided, we've maxed out our loans. However, I haven't maxed out my loans. The average US borrower in 2011 owed $23,300, and only 3% of borrowers owed more than $100,000. So the vast majority of Americans can still borrow money for school, assuming they don't default.
(source: http://www.cbsnews.com/8301-505145_162- ... -subprime/)
"You may not be able to renew a professional license you hold.
This is the only real problem but you provided its effective in 19 states, which means there are 31 its not, and a IT only needs to be certified in one state. park your certificate in one of those states, or like i did move your certificate every 5 years or whenever its up to renewal."
I'm glad you said that. This post is all about helping people make informed, responsible choices, and they need to know that defaulters might need to move their certs every 5 years.
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BookshelfAmy
- Posts: 120
- Joined: Sat Jan 21, 2012 4:21 pm
I'd like to make one final point about social responsibility.
When you borrow money and refuse to repay it, the question is not only whether you can get away with it, but also how it affects other people in your society. It may sound idealistic, but laws in a democracy are simply social contracts made when we all agree that something is harmful to the group as a whole and should be avoided.
When you default on your loans, you place a burden on your loan guarantor (if you have one) or represent a loss to your lender. Your default could result in higher risk assessment on new loans and fewer loan options for new borrowers, particularly those with less-than-stellar credit. It seems to me that by saying "Stick it to the man; the government can absorb the cost of my education," you are paralleling the lack of personal and social responsibility demonstrated by the banks. In fact, here's someone who actually knows what he's talking about, warning of the large-scale risks of mounting student loan debt and default (from an opinion piece posted to the CNN website on December 6, 2012):
"Last week, the Federal Reserve Bank of New York reported that student loan debt increased to $956 billion, more than auto loan debt or credit card debt. More worrisome, the student loan 90-day delinquency rate increased to 11% this past quarter and for the first time exceeds the 'serious delinquency' rate for credit card debt.
"Student loan debt is reaching bubble-bursting levels. By comparison, in October 2007, the start of the subprime mortgage crisis, 16% of subprime mortgages were 90 days delinquent, according to Federal Reserve Chairman Ben Bernanke. By January 2008 it accelerated to 21%. If the economy heads off the fast-approaching fiscal cliff and tax rates spike for lower- and middle-class Americans, it may accelerate student loan defaults to crisis levels. The big banks got their taxpayer bailout; taxpayers may soon be on the hook for another."
(source: http://www.cnn.com/2012/12/06/opinion/b ... udent-debt)
My purpose in replying to this thread was to help people make informed decisions. I hope that, together, PsyGuy and I have demonstrated that defaulting is a complicated issue with potentially far-reaching implications. I hope we've inspired someone to seek out a professional opinion or two before choosing to default on student loan debt.
So, yes, it's fine for you to default on your loans. If you never move back home or draw social security, if park your cert in a state that doesn't care, if you never want to rely on federal aid again, and if you avoid schools that check your credit or ask for your records, then you can probably get away with it. I choose not to.
When you borrow money and refuse to repay it, the question is not only whether you can get away with it, but also how it affects other people in your society. It may sound idealistic, but laws in a democracy are simply social contracts made when we all agree that something is harmful to the group as a whole and should be avoided.
When you default on your loans, you place a burden on your loan guarantor (if you have one) or represent a loss to your lender. Your default could result in higher risk assessment on new loans and fewer loan options for new borrowers, particularly those with less-than-stellar credit. It seems to me that by saying "Stick it to the man; the government can absorb the cost of my education," you are paralleling the lack of personal and social responsibility demonstrated by the banks. In fact, here's someone who actually knows what he's talking about, warning of the large-scale risks of mounting student loan debt and default (from an opinion piece posted to the CNN website on December 6, 2012):
"Last week, the Federal Reserve Bank of New York reported that student loan debt increased to $956 billion, more than auto loan debt or credit card debt. More worrisome, the student loan 90-day delinquency rate increased to 11% this past quarter and for the first time exceeds the 'serious delinquency' rate for credit card debt.
"Student loan debt is reaching bubble-bursting levels. By comparison, in October 2007, the start of the subprime mortgage crisis, 16% of subprime mortgages were 90 days delinquent, according to Federal Reserve Chairman Ben Bernanke. By January 2008 it accelerated to 21%. If the economy heads off the fast-approaching fiscal cliff and tax rates spike for lower- and middle-class Americans, it may accelerate student loan defaults to crisis levels. The big banks got their taxpayer bailout; taxpayers may soon be on the hook for another."
(source: http://www.cnn.com/2012/12/06/opinion/b ... udent-debt)
My purpose in replying to this thread was to help people make informed decisions. I hope that, together, PsyGuy and I have demonstrated that defaulting is a complicated issue with potentially far-reaching implications. I hope we've inspired someone to seek out a professional opinion or two before choosing to default on student loan debt.
So, yes, it's fine for you to default on your loans. If you never move back home or draw social security, if park your cert in a state that doesn't care, if you never want to rely on federal aid again, and if you avoid schools that check your credit or ask for your records, then you can probably get away with it. I choose not to.
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BookshelfAmy
- Posts: 120
- Joined: Sat Jan 21, 2012 4:21 pm
Here's one more article about the large-scale affects of student loan debt and default rates. It's written in lovely, simple language.
http://www.usnews.com/education/blogs/s ... edit-risks
Sorry, Bossman, for hijacking your thread. :)
http://www.usnews.com/education/blogs/s ... edit-risks
Sorry, Bossman, for hijacking your thread. :)
Comment
@wrldtrvlr123
Yes the IRS does file income tax statement on behalf of those who dont file, BUT and this is a big but they only do so when they have W2 and 1099 information reported to them. Overseas, no 1099 no W2, no IRS filed return.
I suppose the IRS could be developing ways of securing earning outside the US, its possible.
Yes you got a refund, you worked in the USA for part of the year and your employer collected a W4, and provided you and the IRS with a W2. The IRS knew how much you made.
Though I would have claimed exempt, why loan the IRS your money for free?
This issue though is focused on ITs that work overseas all year in foreign countries.
I dont worry about it.
@BookshelfAmy
Yes, and i work for the DODEA in a DoDDS school, though i live overseas im subject to US tax law because my school is part of the US government. Your school is a DOS assisted school, it has a relationship with the actual us government. The local tax authority is playing nice with the DOS. Your school is only one of a SMALL handful of schools that have that kind of relationship.
In reality though your SS information was more likely used for a criminal background check. Embassies/Consulates do this all the time for DOS schools (other countries do it for their schools as well).
The IRS doesnt care one bit about overseas teachers, and doesnt have time, manpower or resources to chase down returns and filers that generate zero revenue for the treasury. They know tht at only a handful of schools would you make enough to owe any taxes, and even then when teachers are over, the tax on the DIFFERENCE between the deduction and income, all but maybe (literally) a couple teachers wouldnt have further deductions and or credits that would leave any significant tax owed. Were talking a couple people (amongst all ITs) owing double digit taxes, meaning less then $100.
You may also qualify for loan forgiveness working for a DOS assisted school. Your not supposed too be able to but a couple people got the forms stamped by the right people at the consulate and got loan forgiveness anyway.
I agree 23,000 isnt a lot of money to run from. Are you going back to school soon? If not you can default on your loan, and then rehabilitate when you are looking to go back to school. Much cheaper then paying for years on a student loan.
However in this example such as mathmans, there is no further financial aid incentive to paying off student loans. Graduate students arent eligible for pell grants, supplementary education/equalization grants. It would just be scholarships and loans.
I really liked your soapbox speech. I actually agree with you in principal. There are a LOT of other principals i agree with too. Such as making education affordable. Were the only country in the world that REALLY tries to profit off of students backs. Its nearly impossible to get a 4 year degree from anywhere without borrowing money, and even modest public colleges and universities are beyond. Even a student who qualified for the max pell grant of $5,500/year couldnt afford anything accept a community college on that, and that wont get you a bachelors degree needed to be a teacher. Which also brings me to "degree creed" weve gotten to the point where in many business even jobs like receptionist, clerks, telephone support are requiring a bachlors degree. It wont be long until the masters is the new bachelors, and schools are already coming up with new post masters degrees that arent doctorates but entry level professional degrees. Meanwhile tutition is spiraling upwards higher and higher, more high school graduates are unable to afford even local 4 year colleges. The 2 years at community college and transfer has become the mantra of many recent high school graduates. Most of them will still be unable to afford those last two years when they graduate with out borrowing the max (which is limited to $31K, of which only $23K may be subsidized) for undergraduates.
My second main issue in principal is the unfairness and double standard. We let big companies out of their commitments by being able to file bankruptcy, reduce their pension bennefits, fire employees, ignoire and renegotiate contracts, not pay vendors and suppliers. What about the social contract to THOSE people? Well we believe in letting someone start over, and that part of the cost of doing business is losing business. I can accept that, i think its a good thing, but student loans are in all but a small handful of cases not dischargeable in bankruptcy. How does the nature of the debt make someone any less or more "broke". Thats why its called bankruptcy. It used to be said that everything is negotiable but death and taxes? Well even taxes can be discharged under certain conditions,a nd in most cases someone in bankruptcy can make an offer in compromise with the IRS to get a signifigant amount of their taxes cut.
Yes the IRS does file income tax statement on behalf of those who dont file, BUT and this is a big but they only do so when they have W2 and 1099 information reported to them. Overseas, no 1099 no W2, no IRS filed return.
I suppose the IRS could be developing ways of securing earning outside the US, its possible.
Yes you got a refund, you worked in the USA for part of the year and your employer collected a W4, and provided you and the IRS with a W2. The IRS knew how much you made.
Though I would have claimed exempt, why loan the IRS your money for free?
This issue though is focused on ITs that work overseas all year in foreign countries.
I dont worry about it.
@BookshelfAmy
Yes, and i work for the DODEA in a DoDDS school, though i live overseas im subject to US tax law because my school is part of the US government. Your school is a DOS assisted school, it has a relationship with the actual us government. The local tax authority is playing nice with the DOS. Your school is only one of a SMALL handful of schools that have that kind of relationship.
In reality though your SS information was more likely used for a criminal background check. Embassies/Consulates do this all the time for DOS schools (other countries do it for their schools as well).
The IRS doesnt care one bit about overseas teachers, and doesnt have time, manpower or resources to chase down returns and filers that generate zero revenue for the treasury. They know tht at only a handful of schools would you make enough to owe any taxes, and even then when teachers are over, the tax on the DIFFERENCE between the deduction and income, all but maybe (literally) a couple teachers wouldnt have further deductions and or credits that would leave any significant tax owed. Were talking a couple people (amongst all ITs) owing double digit taxes, meaning less then $100.
You may also qualify for loan forgiveness working for a DOS assisted school. Your not supposed too be able to but a couple people got the forms stamped by the right people at the consulate and got loan forgiveness anyway.
I agree 23,000 isnt a lot of money to run from. Are you going back to school soon? If not you can default on your loan, and then rehabilitate when you are looking to go back to school. Much cheaper then paying for years on a student loan.
However in this example such as mathmans, there is no further financial aid incentive to paying off student loans. Graduate students arent eligible for pell grants, supplementary education/equalization grants. It would just be scholarships and loans.
I really liked your soapbox speech. I actually agree with you in principal. There are a LOT of other principals i agree with too. Such as making education affordable. Were the only country in the world that REALLY tries to profit off of students backs. Its nearly impossible to get a 4 year degree from anywhere without borrowing money, and even modest public colleges and universities are beyond. Even a student who qualified for the max pell grant of $5,500/year couldnt afford anything accept a community college on that, and that wont get you a bachelors degree needed to be a teacher. Which also brings me to "degree creed" weve gotten to the point where in many business even jobs like receptionist, clerks, telephone support are requiring a bachlors degree. It wont be long until the masters is the new bachelors, and schools are already coming up with new post masters degrees that arent doctorates but entry level professional degrees. Meanwhile tutition is spiraling upwards higher and higher, more high school graduates are unable to afford even local 4 year colleges. The 2 years at community college and transfer has become the mantra of many recent high school graduates. Most of them will still be unable to afford those last two years when they graduate with out borrowing the max (which is limited to $31K, of which only $23K may be subsidized) for undergraduates.
My second main issue in principal is the unfairness and double standard. We let big companies out of their commitments by being able to file bankruptcy, reduce their pension bennefits, fire employees, ignoire and renegotiate contracts, not pay vendors and suppliers. What about the social contract to THOSE people? Well we believe in letting someone start over, and that part of the cost of doing business is losing business. I can accept that, i think its a good thing, but student loans are in all but a small handful of cases not dischargeable in bankruptcy. How does the nature of the debt make someone any less or more "broke". Thats why its called bankruptcy. It used to be said that everything is negotiable but death and taxes? Well even taxes can be discharged under certain conditions,a nd in most cases someone in bankruptcy can make an offer in compromise with the IRS to get a signifigant amount of their taxes cut.