US expats facing tax ‘sticker shock’
Reading articles like this one from the International Herald Tribune make me consider giving up my US citizenship one-day. I gave up preparing my own tax filings several years ago and now have the privilege of having to pay a lot of money to have someone prepare my return for me so I can ensure I get all possible deductions. The US is the only country that does this…France, Germany, Japan, the UK, etc. don’t tax on income earned overseas. Why does the US government do this? It doesn’t hurt many expats who have tax equalization packages from their company, but it does hurt people locally hired overseas (like me) who have to work this out themselves.
Well, I’m down to my last 7 days of living in Shanghai. I still have a number of farewell parties to go and it is difficult and sad sometimes to realize that most of the people I’ve met here I will probably never see again. With tools like Skype and of course email it is easier to keep in touch, but without face-to-face contact it is hard to keep up with everyone.
I’ve always enjoyed living in new and different places and making friends in so many different countries. But it also means that I’ve had to say a lot of goodbyes along the way. I hope I have the chance to see a lot of my friends from Shanghai again but realistically it’s going to be difficult. Perhaps one or two I’ll have the chance to meet here or in Tokyo again. I certainly hope so.
The moving company is coming tomorrow to give a quote to ship my stuff from China to Japan. So today I decided I should sort through some of my stuff and get rid of whatever I could. So it was goodbye to things like old VHS tapes, books that I’ve already read, old shoes that I thought I might use someday and haven’t, and a lot of other assorted crap.
As I don’t have any kind of home base in the USA or anywhere, each time I move I have to take everything with me. Fortunately I don’t have furniture or electrical appliances to worry about, but still, after living overseas for so long I have accumulated a lot of stuff.
My company has an allowance for moving expenses but I’m afraid I’ll go over that. It was made years ago with a single Japanese person in mind who would go overseas for a few years without taking much and come back to Japan eventually. On the other hand I have been moving around the world for 13 or 14 years now and I don’t fit that profile. Everything has to come and go with me wherever I go. No place to leave a pile of stuff for a couple of years.
Anyway, I’ll be very happy when this move is over. I’m excited to go back to Tokyo. I am not excited to deal with an international move (again).
Well, it’s basically official now. I’m in the process of switching jobs and countries. In fact I’m headed from China to Japan. Right now I am working on finding a place to live in Japan. I think I’ve settled on a place and am now just waiting for the owner to approve me. Renting an apartment in Japan involves jumping through quite a few hoops when done privately (as opposed to your company making the rental contract) and is very expensive.
First I have to have a guarantor. And not just any guarantor but one with a certain level of income, work history, etc. Now if the owner didn’t take a big deposit I might understand but the standard in Japan is two months rent as a deposit in advance. And the owner can set whatever standards they want for the guarantor. In my case a monthly income of at least 3 times the rent. I understand this kind of standard for the renter, but for both the renter and also the guarantor plus taking a fat deposit seems a little much to me. So in my case I ended up having to use a private guarantor company since my friends are either foreigners (owners don’t like that) or aren’t up to snuff in terms of income.
Next is the initial cash investment involved. For the privilege of renting an apartment it is quite common in Japan that you have to pay 2 months of rent up front as “key money”. This is basically just profit for the owner for allowing you the privilege of paying them rent every month for years to come. You’re welcome!
In total, just to get the keys to a new place in Tokyo, I have to pay in cash 2 months rent as deposit, 2 months rent as “key money”, 1 month rent fee to the real estate agent, 1 month rent in advance and 1/2 month rent for the guarantor company. In my case that’s well over the $10,000 mark – cold cash. Ouch! (And no, I am not living in some kind of fancy palace – it’s a nice modern place but half of the size of my current place.)
Fortunately there are places now a days that don’t require “key money” but from my search this time I learned that basically the standard hasn’t changed in many, many places. I really think this is a silly system. I guess in tight markets like Tokyo and New York owners can get away with having high demands because basically people (including myself) end up just paying. I understand from a recent NY Times article that in New York most owners require a person to have an annual income 40 times the monthly rent. As the average rent is over $2,500 you can see that the “average” renter has have a much above average paying job.
If you then think about buying furniture and appliances (see my earlier post) then I’m talking about an initial investment of easily over $20,000 just to rent and place to live and furnish it. Makes me wish on I was on the corporate expat gravy train still. Welcome back to reality and welcome back to Tokyo!
For a change I decided to get my lazy *ss out of the house today and do something different. I decided to go to the Shanghai Expat Sunday Coffee Brunch @ Coffee Bean. The Coffee Bean, where this gathering is held, is in Xintiandi, a redeveloped section of old Shanghai.
There were about 20 to 30 people there and I talked to people from Singapore, Malaysia, England, Australia, New Zealand and Ohio. Some had been around for a couple of years. Some just a couple of days. It was an interesting way to spend a couple of hours. I might go back again in a couple of weeks.
As the weather today is perfect for being outside, I decided to linger a little while in the Xintiandi area and took a few pictures.
As I was walking I overhead a group of ladies commenting on how this could just as easily be L.A. They’re probably right. The Xintiandi area is very cosmopolitan and the buildings are basically western looking. The big difference is that the first National Congress of the Communist Party, with Mao Zedong in attendance, was held here in 1921. I doubt Chairman Mao could have imagined this area would develop into what it is today – a mecca for designer boutiques, nightclubs, and expensive restaurants.