Individuals can't pretend to be based in Ireland to not pay US taxes. US taxes global individual income, but not global corporate profits.
Always wondered why US citizens do not make a bigger deal out of this. If I understand correctly, if you are a US citizen, but live somewhere else in the world, IRS still expects to be paid tax from your individual income in that foreign country (possibly in addition to the tax you pay in your country of residence) right? I assume there are minimum income thresholds but still...
Are there even any other countries that do this?
The real pain is for people who don’t really think of themselves as US expats, but who have US citizenship through an accident of birth and perhaps haven’t thought of that in years. For them, it is when e.g. a bank in their country suddenly doesn’t want to accept them as a customer due to the onerous reporting requirements, that they are aghast at the situation.
> Are there even any other countries that do this?
Reportedly Eritrea.
I wanted to know this, thank you!
Also because the US government will not allow you to renounce your citizenship if you are doing so for tax reasons.
Does anyone know more about this? Do American pasport holders abroad pay taxes twice?
It affects a relatively small set of people (those with substantial income who live abroad in a lower-tax jurisdiction), and it'd be politically difficult to change.
> I assume there are minimum income thresholds but still...
None other than the normal thresholds for income taxes.
The one ameliorating factor is the foreign tax credit: you get a credit for taxes you've already paid to your local jurisdiction. So, in the likely case that you live somewhere with higher taxes, you won't pay any net US income tax. If you live somewhere with lower taxes, you'll pay the difference to the US.
> None other than the normal thresholds for income taxes.
That's not right. There is a specific foreign earned income exclusion: https://www.irs.gov/individuals/international-taxpayers/fore...
It's around $100k (increasing with inflation) for individuals.
> However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, $107,600 for 2020, and $108,700 for 2021).
That’s false. First $100k of foreign income is exempt.
It costs money to maintain the meaning of a citizenship. I don’t think it’s unreasonable to ask people to pay for it.
The US does have an extremely good network of embassies, and the US is also probably the most effective country on earth at being able to evacuate their citizens from areas that turn hostile.
And of course... a passport is nothing without the state to back it up. That requires more funding than just a passport fee.
Countries turning hostile is a low risk for expats. And whenever major natural disasters have occurred in recent decades, it is often reported that smaller European countries evacuated their citizens better and more kindly than the US.
The only reason most citizens would go to an embassy is to renew their passport, so these embassies are needed once every 5-10 years. Do you really think that US embassies offer such high level of service coverage and quality that it is worth paying through the nose for?
>US is also probably the most effective country on earth at being able to evacuate their citizens from areas that turn hostile.
This is hardly a real benefit if you don't actively travel to unstable areas. How often does the need for evacuation from hostile areas come as a total surprise?
If you live in a country with lower taxes you exempt a bunch of income, deduct housing costs and get credit for any taxes paid in your original country. You end up paying very little US taxes.