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Income TaxBack to top Back to main Skip to menu
United States of America (USA) - Income Tax
Income Tax Rules for Expats
Income tax in the US is paid both to the Federal Government and to the local states. Many Americans do complain about taxes and liabilities in that as an American citizen, you have to submit and file a tax return for the rest of your life.
It is worthwhile knowing that as a permanent resident or citizen of the US, you will have to pay taxes on money you earn anywhere in the world and even if you’re taxed directly from your salary, you will still have to file a tax return. In respects of the UK, this does not have to be done unless you are resident in the country for more than 180 days per year. The IRS demands that citizens file a tax return as a US resident or citizen every year wherever you are in the world.
If you’re earning in the US for a US company then your income tax will be taken at source or directly from your salary. You will still have to file every year on or before April 15th. If you’re on a temporary work visa, you will be taxed at source and you will not be required to file an IRS return. You will report your income to your native country or wherever you’re responsible for filing taxes.
In some states there is no income tax. Florida, for example, does not have a state income tax but you will still have to pay some taxes and a tax advisor will be able to advise you on this. It is advisable not to attempt to file your taxes yourself if you are required to in the US. Most people use a tax accountant for the one-off fee for filing of tax returns. If you’re intending to live in the US for a substantial length of time, then it is worthwhile studying the tax laws and an advisor will guide you through the murky waters of the US tax system.
Double Taxation Remedy Relief
The US has a number of double taxation remedy relief treaties in place with other countries and this is to avoid any person who lives and resides in a foreign country from paying tax on the same income twice. If you’re a citizen in the US and live there on a permanent basis then you will have to pay taxes to the US IRS. If you’re a British expat and you visit the UK for less than 180 days per year, then you’re no longer liable for tax on income received in another country. You will pay the tax to one country. If you earn in two countries separately, then you will have to pay tax to both countries.
Here is the double-taxation relief page of the IRS website. All the information is on there for any remedy relief you may be entitled to:
It’s worthwhile sorting out tax concerns as early as possible. There is little negotiation with the IRS in the US and you could soon find yourself facing penalties if you leave it and miss deadlines. You might be able to have a deferral until October 15th which is on offer but trusting this could lead to trouble.
http://www.hmrc.gov.uk/taxtreaties/dta.htm - Her Majesty’s Revenue & Customs, UK
http://www.irs.gov/pub/irs-trty/aus.pdf - Inland Revenue Service – United States – this website explains taxes in detail.
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Our award-winning expatriate business provides health benefits to more than 650,000 members worldwide. In addition, we have helped develop world-class health systems for governments, corporations and providers around the world. We want to be the global leader in delivering world-class health solutions, making quality health care more accessible and empowering people to live healthier lives.
At Bupa we have been helping individuals and families live longer, healthier, happier lives for over 60 years. We are trusted by expats in 190 different countries and have links with healthcare organisations throughout the world. So whether you're moving abroad for a change of career or a change of scene, with our international private health insurance you will always be in safe hands.
Cigna has worked in international health insurance for more than 30 years. Today, Cigna has over 71 million customer relationships around the world. Looking after them is an international workforce of 31,000 people, plus a network of over 1 million hospitals, physicians, clinics and health and wellness specialists worldwide, meaning you have easy access to treatment.