General Question

Taciturnu's avatar

If you pay taxes abroad, do you pay them here?

Asked by Taciturnu (6040points) April 26th, 2010

Just curious, and wondering if anyone else knows.

If I had a company in another country and paid income tax there, would I have to pay it in the US? What if I don’t pay income tax there? Do I still pay it in the US?

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9 Answers

CaptainHarley's avatar

Although there are many exceptions, generally speaking, no.

Taciturnu's avatar

Thanks, @CaptainHarley! :)

I thought that was why many companies did outsourcing, but wasn’t sure if it was that or the workers’ wages or a combination.

john65pennington's avatar

In the other country, are you still a citizen of the United States? this will make a difference.

cazzie's avatar

Reciprocal Tax Agreements. Go see an accountant.

Taciturnu's avatar

@john65pennington Yes, you would still be a US citizen.

cazzie's avatar

If it was a company, it’s a separate entity to the individual. Many countries do not allow non resident tax payers to have over 50% share in a company registered in their country. If you were a resident of that country, you would be allowed to have a company there, and you would pay taxes to that country. You would still need to file a tax return in the US, declaring your income and provide a tax certificate from the country you paid taxes to. IF there is a reciprocal agreement with that country, chances are, you will not be liable for any payment to the IRS, but you still need to file, personally, with them. Your company return will be done ONLY for the government with which it is registered. (wow… I remember a few things…) BUT, you should still see an accountant… just to make sure all your obligations are fulfilled and you’re taking advantage of rules that are in your favour. (I was SUCH a capitalist in my former life…)

YARNLADY's avatar

Some states have tax regulations that result in the worker paying taxes in his home state and in the work state/country.

Taciturnu's avatar

@cazzie @YARNLADY Thanks. Sounds like there’s a lot of variables!

saservp's avatar

Not sure where you are, but I am in the UK. I filed US taxes stating my income and then deducting it b/c I was out of the US for 365 days of the year, all my income was abroad, and I paid taxes abroad.

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