Taxes can be a big issue when living, working, traveling abroad. US is probably the world's worst offender when it comes to tax traps. US citizens are subject to US taxes on ALL income from EVERY source worldwide, whether they reside in the US or not.
US citizens are not the only ones trapped! Tens of millions of foreigners - non-US citizens - get trapped every year. Obviously, the legal permanent resident who holds a green card is trapped just as much as any US citizen, born or naturalized. Green card holders often absent themselves from the US. They're transferred to their employer's office in another country like any other expat, go home to tend to family matters, travel - whatever. They still must file and pay exactly as any citizen must.
Some decide not to return to US, or get caught up in family issues and simply don't make it back to the US. Too bad. The green card is deemed abandoned and revoked one year from date of departure. But if you want to avoid problems with IRS, when you depart the US, go to the US consulate, hand over your green card, and sign the form to revoke your legal permanent residency! It's the only way out of the tax trap!
Work in the US? Turn in that employment visa the minute you depart that job and return home. Stop the tax clock from ticking as of last day of US employment.
Want to stay out of harm's way? Never spend more than 180 days in the US within any one-year period. E.g. if you are a Canadian Snow Bird in Florida for the winter, beware coming down "earlier" next year so you don't hit that 180-mark! Beware coming for a month later in the year for a relative's wedding, road trip through the Rockies, or whatever. Ditto if your boss frequently and/or lengthily ships you off to training, business meetings, sales conventions or what-have-you.
Some people can become subject to US taxes without ever setting foot in the US. Remember Harry Potter and its author, JK Rowling? The Second-Wealthiest Woman in the World earned tons of money in the US - royalties from her books, merchandising fees. At her end of the income market, its pretty safe to assume she had experts to set things up properly, file her taxes, etc. But recording artists, authors, stockholders, those who rent out their winter home or investment property - all kinds of people from around the world - can end up with US tax consequences. They're trapped!
So when we talk here about taxes, especially US taxes, remember: You could be trapped in the IRS Tax Net! Be careful. Do not mess with the IRS. They're broke, they know it, and they can get really, really mean trying to squeeze money out of you.
Keep it absolutely clear that you do not reside in the US, do not earn your income in the US, do not have investments or other US financial considerations. Remain free!
May your road rise to meet you!
Ann
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