Demetrius J. Karos, Ltd.

TAX REPRESENTATION FROM A FORMER IRS EMPLOYEE

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Do you have to pay U.S. taxes if you live overseas?

On Behalf of | Dec 22, 2022 | Tax Law

The shift to remote work has changed life dramatically for a lot of people. While there are still plenty of jobs that have to be done in person, many jobs that are done on computers can be handled anywhere. A company could be based in Illinois and hire workers from California or New York.

This has also given workers flexibility. Perhaps you used to work in the United States consistently, but then you started working remotely and you realized you could live anywhere you wanted. You moved overseas, settled down in another country and now you’ve been working there for years. You are still a U.S. citizen, but you haven’t actually used the services that your taxes fund in years because you haven’t been to the United States. Do you still have to pay those taxes?

Taxes are still required of all U.S. citizens

It’s understandable why you may believe that tax payments are no longer necessary since you’re not living in the country at all. But you do still have to pay taxes because you are a U.S. citizen. The official IRS position on this is as follows: “If you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live.”

The IRS does go on to note that there are certain foreign income tax credits that you may be able to use to reduce the amount that you would owe. There are also some foreign earned income exclusions that you may be able to apply to your income. In other words, not all income is always subjected to taxes, and there are tools you can use to get the totals down.

But, at the same time, it’s very important not to assume that you don’t have to pay U.S. taxes just because you don’t live here. Those who live and work overseas still qualify as citizens, and are obligated to follow the laws of the country. This is true for those who live overseas for a short time, such as taking a trip for a few months, or those who have relocated semi-permanently.

Tax laws and adherence are very important, but the process can also be very complex. Be sure you know what steps to take and what options you have.

 

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