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Comment by zabzonk | Hacker News Reader

Don't US citizens have to pay US taxes no matter where the money is earned? Gore Vidal was always banging on about this.

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Yes, the USA is one of the few countries that do this.

There are exclusions for foreign income tax paid, but I believe there is a cap (US$75,000?) on the amount of tax paid. That is, tax paid to another country can reduce your US liability.

Anyone in this situation needs competent advice. That leaves me out as a source of that advice.

There needs to be a tax treaty between the US and the other country.

I first moved to the US in May of 1989. At the end of the year, when preparing my US tax returns, I had to report my UK income and UK taxes. The tax treaty was essentially reciprocal, so the final position was that the the US government treated the taxes I had paid the UK as part of my US taxes. Since the UK taxes at a higher rate, I actually got a refund from the US government!

I figured all this out by going to the library and actually reading the full text of the tax treaty between the US and the UK. It seems that most people wouldn't do this, and would pay "an expert" instead.

Isn't this the other way round from my original post - you are a UK citizen in the US?

Yes, it is reversed in that trivial sense. But when filing taxes in the US in 1990 for the 1989 tax year, I had already become a "US person" for tax purposes, which meant that the treaty applied to me as it would to any other "US person", citizen or otherwise. The fact that I had been a UK citizen working in the UK, and was now a UK citizen working in the US did not change that. As a US person, I owed US taxes under US laws.

Surely it was only a non-refundable credit. The US government is not going to give you back more than you paid them in the first place when recognizing foreign tax?

The check for about $600 showed up shortly. I was amazed, but years later talking to people who actually do this stuff for a living, yes, that's how it (can) work.

Sure, but you must have previously remitted >= $600 to the US government (e.g. automatically as part of pay withholding).

It is to the point that in some country, like France, bank have to ask anybody (even if you are not foreigner) if you are a U.S citizen or have close family who are, before opening a bank account. As far as I know it is to report the creation of the account back to the IRS.

In a lot of banks they straight up refuse to open an account if you're a "US person". Especially online banks that compete on low fees.

> Yes, the USA is one of the few countries that do this.

Along with Eritrea and North Korea.

Yes, the US taxes the worldwide income of all citizens, and all residents. But if you are outside of the US 330+ days a year ~$108k of foreign income is tax free. Beyond that the US has tax treaties with ~70 countries to give you a credit for any foreign taxes paid.

We have to file taxes in the US, and the US has tax treaties with many countries that allow the US citizen to simply make up the difference in the US. This means if you are in a country with a high tax rate, you won't have to pay anything in the US.

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