Why a non-U.S. citizen may wish to be a U.S. income tax resident (“U.S. person”). Sound like a non-sequitur?

https://twitter.com/USCitizenAbroad/status/562774079246458883
Good post, although I don’t think many would willingly choose this option.

Tax-Expatriation

Why a non-U.S. citizen may wish to be a U.S. income tax resident (“U.S. person”).  Sound like a non-sequitur?

Normally, anyone residing outside the U.S. is far better off if they are NOT a “U.S. income tax resident.”  This is for several reasons:

  • The Bank Secrecy Act (BSA)…

View original post 722 more words

Advertisements

One thought on “Why a non-U.S. citizen may wish to be a U.S. income tax resident (“U.S. person”). Sound like a non-sequitur?

  1. Eric L.

    Yeah, this is a common theme in U.S. international tax law: you can either pay higher taxes but do less paperwork, or you can pay lower taxes by opting in to a lot more paperwork (which will require hiring a professional to complete, meaning it’s only worth it for high-income people). Same tradeoff that self-employed U.S. emigrants face: you can

    1. incorporate in the US and subject yourself to your local CFC laws, but avoid the usually-much-worse US CFC laws and (possibly) not pay local tax on retained earnings
    2. incorporate locally and subject yourself to the US CFC laws, but not pay US tax on retained earnings (as long as you avoid Subpart F income)
    3. use a pass-through (LLC, sole proprietorship, etc.) and avoid all CFC laws but end up paying tax on all earnings, plus double social security taxation

    To summarise this in the fewest words possible: “paperwork defeats progressivity”. Something all the so-called progressives in the U.S. fail to understand when they keep proposing to increase reporting requirements on this and that and everything else.

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s