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Old 05-30-2015, 02:22 AM
 
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One does not have to pay double tax by living in a foreign country. Any foreign tax paid is simply credited against US taxes paid. Also those living and working for at least 1 year outside the US get an exemption on Fed tax for the first ~$90K of their income so it can work out to be a good thing. Of course many countries don't tax their citizens at all when they live outside their home country (i.e. the UK) so if their live in a place like the UAE where there is zero income tax they can do quite well.
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Old 05-30-2015, 09:56 PM
 
Location: Table Rock Lake
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Quote:
Originally Posted by Vacanegro View Post
One does not have to pay double tax by living in a foreign country. Any foreign tax paid is simply credited against US taxes paid. Also those living and working for at least 1 year outside the US get an exemption on Fed tax for the first ~$90K of their income so it can work out to be a good thing. Of course many countries don't tax their citizens at all when they live outside their home country (i.e. the UK) so if their live in a place like the UAE where there is zero income tax they can do quite well.
Thank you so much for your information Vacanegro. As you can see I know nothing about US Taxes in foreign countries. I would however appreciate your thoughts on this situation. My daughter was born and raised in Missouri. Attended high school and college. Worked and paid taxes while in college. Did her inturnship on a UK island in the BVI. Went to the UK with a friend, worked and paid taxes in the UK for 6 years. Married her friend there, they returned to the BVI, worked and paid taxes to the UK. Bought their own business and continued taxes to the UK. A g/f of hers from Maine borrowed money from her father and bought a resort. Later selling and paying back her father, received a notice from the IRS that she owed income tax to the US although she had paid her UK taxes. G/F told daughter who checked with attorney on island and was told she also owed income tax to the US + 5 years of penalties. It took my daughter 3 years to pay the total. I can't get it through my feeble mind why my daughter is paying taxes to the US. Any enlightment would be appreciated.
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Old 05-30-2015, 11:58 PM
 
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Originally Posted by Bluff_Dweller View Post
I can't get it through my feeble mind why my daughter is paying taxes to the US. Any enlightment would be appreciated.
US Citizens must file taxes on their world-wide earnings, regardless of where they live or where they earned that money. Your daughter should have been filing taxes all those years she lived in the UK and BVI. She may not have owed anything depending on how much money she made and the source of her income, but she still has to file.

If she files her previous 5 years of taxes and doesn't end up owing any money for those years, then likely the IRS will drop the penalties too.

US Citizens with foreign bank accounts are also required to file extra forms with the US government listing the total value of their foreign assets if they ever surpass US $10,000 in (total) value. Not doing so can result in severe penalties.

Quote:
Originally Posted by Vacanegro View Post
Of course many countries don't tax their citizens at all when they live outside their home country (i.e. the UK).
By many countries, you mean all countries except the USA and Eritrea :-/
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Old 05-31-2015, 12:52 AM
 
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As Strand says - your daughter should have been filing and paying US taxes - one is never exempt from this requirement. Any taxes paid are deductible. If you don't know what your taxes are then you should assume a percentage and pay estimated taxes.

If you fail to do this the IRS can come down hard on you and you may pay fines and can lose the exemption you get of living outside the US.

Its best to file the extension and pay taxes every year by Oct the following year. Oh, Strand there are others like the US, such as Brazil and they require yearly taxes paid on global income - just like the US. Seems strange to be paying for services you are not receiving or using but this is just the way they do it.
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Old 05-31-2015, 04:36 AM
 
Location: Table Rock Lake
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Thank you both for that information. I was concerned the two girls had been scamed. I will continue my search of when and who got the global law passed.

Thank you again so much!
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