Originally posted by ToppDog
Originally posted by Angelicdefender2012
reply to post by Doomsday 2029
...You will still have to pay taxes to the United States for up to 15 years or something like that...
I have not heard this before. How can they justify that if you have zero ties to the US anymore & your income is earned completely outside of the US
I'm not clear H they justify it. But every US Citizen that leaves this country MUST pay taxes after they leave. It is a federal and in some
instances state law.
Taxes on World Wide Income
U.S. Permanent Residents (green card holders) as well as U.S. Citizens must report each year their income earned anywhere in the world. That means
your U.S. income tax return must include:
■Rental Income Earned Abroad
■Foreign pension income
■Foreign capital gains or losses on stocks, bonds, real estate
■All other foreign income
Due Date of Tax Return
If you have your personal permanent residence is abroad on April 15th of any year, you get an automatic extension to file your tax return for the
previous calendar year until June 15th. If you need more time, you can file several further extension requests which can extend the due date of your
tax return until October 15th. If you owe taxes, and fail to pay the estimated taxes in by April 15th, you will be subject to interest and penalties
for that underpayment. However, those penalties are not as severe as those imposed for failing to file your tax return in a timely manner. It is
therefore wise to always file an extension if you are going to file your return later than April 15th, even though you do not have the money to pay
your estimated taxes at that time.
Avoiding U.S. State Taxes
Do not assume just because you moved out of the U.S. that your previous state of residence has no claim on taxing your income. Many states such as
California, Virginia, New Mexico and South Carolina make it very difficult to give up your "tax domicile" in the state and require that you file
state income tax returns (and pay the tax) even if you do not move back until years later. Some of the criteria that a state looks at to determine if
you are a resident for state income tax purposes includes your driver license, if you register to vote there, if you maintain an address there, the
location of your bank accounts, if you own or rent real property there, the license plates on your cars, and if you still receive utility bills in
that state. There are many other factors used by state taxing agencies to determine if you are a resident, but they are too numerous to mention here.
You must be careful to reduce or eliminate all indices of residency or your previous state of residency in the U.S. will come after you for state
income taxes. You must carefully plan your departure from your previous home state both reviewing the laws and taking the actual steps necessary to
prove to that state you no longer have a "tax domicile" there after you move abroad. If you do not, the taxes, penalties and interest later assessed
by that state can be huge.
You do have to continue to pay taxes in a state if you receive rental income there or receive income from a trade or business located there, even if
you are no longer a resident. Investment income such as from stock sales, dividends, and interest are not subject to state tax unless you live there.
Pensions are no longer taxable in the state in which you earned the pension if you permanently leave that state.
What About Returns Which Were not Filed for Years You Lived Abroad?
Though not required to by law, the IRS currently allows an expatriate to file past tax returns which were erroneously not previously filed and claim
the foreign earned income exclusion and foreign tax credits as if the returns had been filed on a timely basis. That usually means most delinquent
expatriates who file past returns owe little taxes or interest after claiming those benefits. It can easily be determined if returns are owed for past
years by ordering a transcript from the IRS. This can be done by a tax professional without triggering any inquiry from the IRS concerning the
Offers in Compromises and Payment Plans
If one of the reasons you are living abroad is that you owe the IRS or state taxing agencies Offer in Compromise programs which may allow you to
settle the balance owed for pennies on the dollar. When you do owe back taxes, the amount owed increases at a fast pace due to interest and penalties
and therefore can get very large compared with the original amount of tax owed. In order to make an offer in compromise you must file returns for all
of your past tax years
Many delinquent taxpayers have through the use of an offer in compromise settled with payments of anywhere from 10% to 50% of the total amount owed.
The IRS statistics show that in the past 25 percent of the Offers in Compromise have been accepted and that the average compromise was 18 percent of
the total amount due. The entire process usually takes three to six months and requires filing financial information with the IRS and the required
forms. You can make an offer which allows you to pay off the amount agreed over a period of time. The IRS very recently released new regulations which
will increase the number of offers in compromise its accepts and allows taxpayers to claim hardship as a reason for the Offer.
Here is the link: