US citizen. Dual Taxation?

[Irishchappie]

Just a quick question about a US citizen in Ireland. Do they have to pay tax in Ireland and the US?

The person in question is working for a company in Ireland, paying standard rate of tax as normal. however they are not sure if they also have to report their income to the US IRS and if they do this, will they also have to pay an additional tax on this to the US government?

I've been looking at the US IRS website with them and talk about confusing, its all in tax speak and very little plain english..

Can anyone shed some light on this please?

Thanks,

I.C

 

[traderk]

short answer

The US is the only modern society that taxes its people on citizenship (that includes greencard holders). So yes, the IRS wants to tax you as if you were in the US even though you pay tax in Ireland. They allow you to deduct the amount you already paid in Ireland to calculate what you owe the US.

If you renounce your greencard/citizenship and leave, then after 10 years they'll not demand tax from you! (this is believe it or not true)

Some Irish people returning home from the US basically stop filing altogether in the US and just hope for the best. (I'm not advocating this)

/F

 

[Brooklyn]

They allow you to deduct the amount you already paid in Ireland to calculate what you owe the US.

To be strictly accurate, if you earned less than about $80,000 abroad, you don't have to pay anything to the US. You still have to file a return stating what you earned abroad, although they don't generally ask for proof of your foreign salary. The person in question should file a standard 1040 along with a 2555 (2555 EZ if they're only claiming a basic Foreign Earned Income Exclusion, without any foreign expenses etc), both available for download on the IRS website.

From the point of view of preventing people becoming tax exiles it's fairly sensible although IMHO $80,000 is a bit low. The ten-year rule is to prevent people renouncing their citizenship just to avoid tax liability.