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Ot _23 countries where money can buy you a second passport or 'elite residency'
I hold US and Ireland passports. Wish I'd thought years ago of earning enough in Ireland to be eligible for their retirement scheme, whatever it may be. A friend is a dual US and Canada citizen and now draws US SS plus the Canada pension. AND, he's still working, too. Gravy train.
Did your friend have to pay income tax to each country on the money earned in *both* countries? A friend who worked for an international news service was stationed in Canada for a few years. He had citizenship only in the US. He had to pay the Canadian government income tax on his Canadian earnings but he also had to pay income tax to the American IRS for that same money he earned in Canada that had been taxed by Canada.
I hold US and Ireland passports. Wish I'd thought years ago of earning enough in Ireland to be eligible for their retirement scheme, whatever it may be. A friend is a dual US and Canada citizen and now draws US SS plus the Canada pension. AND, he's still working, too. Gravy train.
All US citizens regardless of where they live have to pay taxes to Uncle Sam. I work in Europe so I pay taxes to the country where I live, and to the US. Even though there are tax agreements between the two countries, I still pay taxes on my US investments to the Euopean country, since the rate of taxation is higher in Europe. I pay the difference between those rates. Not to mention a "wealth tax" that I pay here. Did I mention inheritance tax? I won't get a passport here since when, and if I leave, I won't have any more tax liabilities in Europe. Investigate thoroughly before obtaining a second passport.
It sounds like Ben was asking about double taxation, e.g. do you pay tax on cap gains to the US plus tax on the same gains to your country of residence? At least in some situations, the answer is not exactly. You don't pay the sum of the two, you're not double taxed. For Soupkitchen, because of a tax treaty, and because of the way Soupkitchen chooses to file tax returns, the tax due is just the higher of the two amounts. Though that one amount may be split between the two countries.
Not dissimilar to living in one state and working in another. Say you live in NY but work in NJ. You'll owe NJ income tax on your NJ wages, and NY will also tax your wages as a NY "citizen". But NY, with its higher taxes, gives you credit for the tax you paid to NJ. So all you pay to NY is the difference. As far as total tax dollars go, it's as if you lived and worked in NY. It's just that NJ takes a cut of that total amount.
Of course nothing is ever quite that simple, given how percentages and credits are calculated, and whether there is a tax treaty. Also, ex pats may be able to exclude six figures of wages from US taxation. Sometimes taking advantage of that exclusion comes out better, sometimes not, because of the different calculations.
When all is said and done, depending on form of income, treaties, and arithmetic, It is possible for some US citizens living abroad to pay no tax at all to the Uncle Sam. "Income tax treaties are in effect ... between the United States and many other countries that reduce or eliminate a U.S. citizen’s tax liability in the United States." Emphasis added. https://www.investopedia.com/articles/personal-finance/031315/advantages-disadvantages-dual-citizenship.asp
That's not to say they don't have to file income tax returns, just that they may not have to pay taxes.
Just to clarify, I don't want to have another passport because of laws that could change in the future. The US taxes its' citizens wherever they have their fiscal residency. In Europe they don't do that. In fact, only the US and maybe a few other countries do it. Citizenship doesn't matter. For now. Fiscal residency is what.obligates you to pay tax outside of the US. Unless other countries decide to follow the US example( my own paranoia ) in which case you'd be taxed in two countries regardless of your fiscal residency. If I were poor, then I wouldn't think twice about getting another passport.
Another disadvantage of living abroad is that Uncle Sam is happy to collect your taxes, but unless you have worked for your money in the US for 10 years, then no medicare when you turn 65.
Did your friend have to pay income tax to each country on the money earned in *both* countries? A friend who worked for an international news service was stationed in Canada for a few years. He had citizenship only in the US. He had to pay the Canadian government income tax on his Canadian earnings but he also had to pay income tax to the American IRS for that same money he earned in Canada that had been taxed by Canada.
I hold US and Ireland passports. Wish I'd thought years ago of earning enough in Ireland to be eligible for their retirement scheme, whatever it may be. A friend is a dual US and Canada citizen and now draws US SS plus the Canada pension. AND, he's still working, too. Gravy train.
His earned income is all Canadian. Has been for 30 years. I suppose he can't hide the US S.S. from the IRS, but of course, he lives in Canada now, and simply doesn't tell the IRS he has earned income from Canada. He's paying taxes in Canada, anyhow. Taxes are higher and the cost of living up there is nuts. But they have healthcare. He likes to say the US healrgcare is great, if you can afford it. In Canada, it's really good, if you can afford to wait. He waited to collect US SS, in order to max-out the monthly SS cheque. If he's supposed to tell the IRS about his EARNED income in Canada, I suppose he's not declaring everything to the IRS, then. He mentioned something else: SS Admin. wants him to prove that he's had, and still has medical coverage. Of course, he does have coverage, living in Canada, a Canadian citizen, too, now--- since 2 or 3 years ago. Been living there since 1987. If he fails to jump through the stupid flaming hoops to prove he has coverage, I suppose they will deduct X dollars, just because they have the power to do it. When I asked him about whether he had satisfied the SS Admin about it, his response was indirect: "The US doesn't need to know I have earned income up here." So, either no action has been taken to deduct from his SS cheque or they have indeed done so. Sometimes, that's what a conversation is like, with him! Apparently it is worth it to him, if the SS Admin does hold back a chunk.
You are allowed to earn up to around 100k abroad without being liable for US taxes, if there is a double taxation agreement between the US and the other country. It might make more sense to file, but without having filed, then there isn't any statute of limitations. There are also laws about declaring money held in foreign banks over 10k. You just need to declare it. It is perfectly legal to hold money in foreign banks, as long as the IRS knows about it.
Comments
Not dissimilar to living in one state and working in another. Say you live in NY but work in NJ. You'll owe NJ income tax on your NJ wages, and NY will also tax your wages as a NY "citizen". But NY, with its higher taxes, gives you credit for the tax you paid to NJ. So all you pay to NY is the difference. As far as total tax dollars go, it's as if you lived and worked in NY. It's just that NJ takes a cut of that total amount.
Of course nothing is ever quite that simple, given how percentages and credits are calculated, and whether there is a tax treaty. Also, ex pats may be able to exclude six figures of wages from US taxation. Sometimes taking advantage of that exclusion comes out better, sometimes not, because of the different calculations.
When all is said and done, depending on form of income, treaties, and arithmetic, It is possible for some US citizens living abroad to pay no tax at all to the Uncle Sam. "Income tax treaties are in effect ... between the United States and many other countries that reduce or eliminate a U.S. citizen’s tax liability in the United States." Emphasis added.
https://www.investopedia.com/articles/personal-finance/031315/advantages-disadvantages-dual-citizenship.asp
That's not to say they don't have to file income tax returns, just that they may not have to pay taxes.
Another disadvantage of living abroad is that Uncle Sam is happy to collect your taxes, but unless you have worked for your money in the US for 10 years, then no medicare when you turn 65.
https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11196423/51-countries-sign-up-to-share-tax-data.html