3 ms·
There are actually two exclusions for countries on the treaty list, one is the first ~100k of income, and the other is a tax credit for taxes paid in the other
by wiredfool 6y ago
There are actually two exclusions for countries on the treaty list, one is the first ~100k of income, and the other is a tax credit for taxes paid in the other country.
So, if you happen to be an expat in a higher tax country (which is certainly Europe), then you won't owe taxes in the US. You still have to file, which can cost $500 for an accountant to make sure everything is correct, but owing taxes isn't really an issue.
- kingosticks 6y agoNot always true. Some things may be tax free in your resident country (e.g an ISA in the UK) but pay normal tax rates in the US. Since credits from each income category are separate, you may not have enought credit in the 'bank interest' category to cover what the US demands (I'm simplifying but that's essentially the issue). It may be a small amount but it's still owed tax and I'd imagine it's quite a common situation.
- names_are_hard 6y agoAs a US citizen in Israel, I do owe some money to the US every year even though I pay more to Israel overall than I would if I only paid the US. This is because the FTC is applied to each dollar of income separately, so in the few places where Israeli taxes are lower than the US I get to pay the US. In a sense you get the worst of both tax regimes.