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Posted by Scott Jensen on January 16, 2007, 7:40 pm
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I have been told that if you live outside the US for long
enough each year, you do not have to pay US federal taxes.
True? If so, how long?
Does it have to be a solid block of time? Saying one
doesn't have a physical home in the US, does this go the
same for state and local taxes? Do you have to declare
another country as your residence or can you be a sort of
continuous traveler?
Thanks in advance!
Scott
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Posted by Benjamin Yazersky CPA on January 18, 2007, 3:42 am
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> I have been told that if you live outside the US for long
> enough each year, you do not have to pay US federal taxes.
> True? If so, how long?
>
> Does it have to be a solid block of time? Saying one
> doesn't have a physical home in the US, does this go the
> same for state and local taxes? Do you have to declare
> another country as your residence or can you be a sort of
> continuous traveler?
As long as you are a US citizen or resident you are subject
to US tax. If you live abroad, you are still required to
file a tax return. However, between the foreign earned
income credit & foreign tax credit, there may not be any tax
liability.
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Dick Adams on January 18, 2007, 3:42 am
Please log in for more thread options > I have been told that if you live outside the US for long
> enough each year, you do not have to pay US federal taxes.
> True? If so, how long?
>
> Does it have to be a solid block of time? Saying one
> doesn't have a physical home in the US, does this go the
> same for state and local taxes? Do you have to declare
> another country as your residence or can you be a sort of
> continuous traveler?
It is referred to as "Foreign Source Income" which means
you earned it (read: it is not interest, dividends, or
capital gains) while residing outside the United States.
Establishing a residence is a critical isssue.
Be aware that some States (e.g., California and Maryland)
believe you are a resident of their State until you establish
residency in another U.S. State.
Dick
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Shyster1040 on January 18, 2007, 3:42 am
Please log in for more thread options > I have been told that if you live outside the US for long
> enough each year, you do not have to pay US federal taxes.
> True? If so, how long?
>
> Does it have to be a solid block of time? Saying one
> doesn't have a physical home in the US, does this go the
> same for state and local taxes? Do you have to declare
> another country as your residence or can you be a sort of
> continuous traveler?
Not as a general rule. It depends, first and foremost, on
whether or not you're a U.S. citizen or a non-citizen
permanent resident (i.e., greencard holder). If you are,
you are taxable on your worldwide income regardless of
whether or not you ever set foot in the US again. This rule
applies until you either lose your US citizenship or your
greencard. However, if you give up your citizenship or your
greencard for tax-motivated reasons (which you are presumed
to have done in the absence of evidence otherwise), you will
continue to be taxed as a resident for ten years following
the year in which you give up your citizenship/greencard;
further, if, during that 10-year period you are physically
present in the US for 30 days or more in any one year, that
year does not count. See Code Section 877.
If you're not (i.e., you are a resident alien who is not a
permanent resident), then once you meet the tests for
terminating your US residency for federal tax purposes, see
Code Section 7701(b), which could be as quickly as the year
following your last year of residency, or as long as three
years after that last year (although it's difficult to
stretch it out to three years), then you are no longer taxed
on your worldwide income and instead are only taxed on your
US-source income and certain types of foreign-source income
that is effectively connected with a US trade or business
and is, as a general matter, connected with a US office or
place of business.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by L K Williams on January 18, 2007, 3:42 am
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> I have been told that if you live outside the US for long
> enough each year, you do not have to pay US federal taxes.
> True? If so, how long?
>
> Does it have to be a solid block of time? Saying one
> doesn't have a physical home in the US, does this go the
> same for state and local taxes? Do you have to declare
> another country as your residence or can you be a sort of
> continuous traveler?
The Foreign Earned Income Exclusion may eliminate your taxes
but the actual amount of exclusion depends on a number of
factors unique to each situation. You may exclude some or
all of your earned income if:
1. You are a bona fide resident of a foreitn country. That
means you must live and work there and, if necessary, pay
taxes to that country, or
2. You are physically outside the US for 330 days out of any
12-month period. Only income earned during the period
outside the US may be excluded.
Regardless of the basis for the exclusion, your tax home
must be outside the US. That is, you must earn the money by
providing your services outside the US.
The maximum exclusion is $82,400. The allowable amount is
pro-rated on the number of days that you qualify.
There are other rules but this is the basic summary.
The exclusion is for income tax purposes only. If you are
self-employed or an independent contractor you still have to
pay the self-employment social security tax and, if you work
for a US company or affiliate, you will have the SS taxes
withheld.
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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