Quote:
Originally Posted by mariav1
I am moving to Italy in August. I am a dual citizen of the U.S. and Italy. Do I have to pay income taxes in both countries for the income made in Italy?
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You must file US tax returns. However, you have an exemption of up to around $85,000-$90,000 on wage/business income (form 2555).
On top of that deduction, you will have other deductions allowed by US tax law, so chances are that, though you must file, you will not wind up paying any income tax unless your gross income is well into six figures.
As for social security taxes, there is a double-taxation treaty between the US and Italy. You pay into one system or the other, but not both. I am not sure how it works as to whether you can choose one over the other, but the contribution rate in Italy is around 29%, in the US around 15%. On this aspect of it, you probably need to contact an expert to be sure of your options and obligations for your particular situation.
You will have to pay health insurance contribution tax in Italy, either through your employer if you are employed or through a separate regional tax if you are self-employed (IREP). This tax in Italy is around 4%-5%, but the rules for eligibility and calculating the base are controversial and complex.
You will probably need two tax-preparers, one for the US, one for Italy. As mentioned, if you need advice, make sure that the tax-preparer in the US is a CPA with experience in Form 2555 and double-taxation issues, especially regarding social security contributions, and in Italy a
commercialista, also with some knowledge about double-taxation treaties and social security contributions.
Good Luck!
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