General Discussion

The Germans apparently have (or assume) the right to tax it as well for the sole reason that I have a legal German residence. US citizens are taxed on their US income. Period. The woefully outdated Double Taxation Treaty does not consider S-Corp income or the Roth IRA. The only specifics that appear to have been agreed on by both countries for people in my situation are that interest income of US origin (100% in my case) is taxed in the USA, and Social Security payments are 100% taxed in Germany (at 47%, and with no 15% exclusion that Americans in the States get).

For my double whammy tax situation, in return, Germany gives me: nothing. No pension, no health insurance (I’m over 65), zip, nada, nichts. The “everything is free in Europe” is just a myth that some in the States like to repeat for reasons they find convenient. Doctors, teachers, and people who build roads and bridges do not work for zero compensation here. That stuff is just financed differently here. The Germans just come to me with their hands outstretched every quarter and say, “gimme, or else.” The “or else” is not an exaggeration. One time, my quarterly payment got misdirected to the wrong account, and the letter containing the government threat of seizure was in the mailbox within ten days. Heil Honecker.

As for the Roth IRA, as a tax professional, you would know that I paid all taxes due at the time of the conversion, and I was still a full-time legal resident of the USA at the time. But no, the Germans want half of any distribution I take out of it, which so far has been zero. I will donate it to Greenpeace, Planned Parenthood, the American Cancer Society and various foodbanks in the States before I see a re-enactment of 1938-style Enteignung. I don’t have an immense fortune in there anyway, but what there is, I will not let it go to finance the chauffeur-driven limousine of some smug, uncaring useless German bureaucrat.

The USA, as you presumably also know, is one of only two countries on earth that does not recognize residence-based taxation. One of my daughters lives in the States, so the Germans don’t bother her. Both my daughters are dual citizens. My other daughter lives in Germany and makes five times what I do. But she works for a top NY-based international law firm, and they have their own army of accountants for their people. Her income is from worldwide sources, and she doesn’t pay over 50% in taxes, whereas 50% would be a significant reduction for me.