Here are the magic Tax Treaty words for your tax CPA for these lucky citizens of The UK, Sweden, Belgium, Canada, Luxembourg, Austria, Thailand and Tunisia:
“An individual who is a United States citizen or an alien admitted to the United States for permanent residence (a “green card” holder) is a resident of the United States only if the individual has a substantial presence, permanent home or habitual abode in the United States and if that individual is not a resident of a State other than the name for other country for the purposes of a double taxation convention between that State and the name for other country.”
Tax Treaties with these words allow U.S. resident aliens to legally not pay U.S. income taxes on their foreign income. For example, Mr. Bond, a U.K. citizen has a substantial presence in the U.S. He does not have a green card. He is in the U.S. on an investor visa. Mr. Bond only pays U.S. income tax on his U.S. income. The income from his U.K. business and all other foreign companies or investments is U.S.
Mr. Bond only pays U.S. income tax on his U.S. income. The income from his U.K. business and all other foreign companies or investments is U.S. tax free.
IRS Publication 519 “states that the U.S. domestic rules that determine if a non-U.S. citizen is a U.S. resident do not override tax treaty definitions of residency.”
Below is our e-book of IRS Publication 519 explaining international tax planning for Sam, a U.K. citizen living in the U.S.
The example applies to citizens of other countries with a tax treaty containing these magic words. If you have overpaid your American taxes or just need help, then call me, Brian Dooley, CPA, MBT at 949-939-3414.