My_question_is: US-specific Subject: Non-Residents required to pay US income tax? Expert: taxman at centa.com Date: Sunday April 30, 2006 Time: 10:17 PM -0700 QUESTION: I am a U.S. citizen, but a resident of Costa Rica. All work performed is out of the U.S. I have two questions regarding filing U.S. income tax: 1. Must I always file a U.S. income tax return if I make over the minimum income requirement. Are there any conditions where I would NOT be required to file a U.S. tax return, assuming I earn over the minimum income amount? 2. Is whether I have to file or not dependent upon if my income 'comes' from the U.S.? If so, how is that determined, and does U.S. bank account interest count as U.S. income in this case? 3. Is paying the 15.3% social security/medicare tax obligatory, regardless of where income comes from? Is it different in either of the following conditions: a) Self-employed out of the U.S. but paid from a U.S. institution, b) Paid by a foreign institution (no U.S. involvement)? Thank you! ------------------------------------------------------ david ingram replies: 1. All US citizens must file a US return no matter where they live and no matter where their income comes from. If they have more than $10,000 US combined in non-US accounts, then they must file a form T DF 90-22.1 to report the foreign accounts. Failure to file this form can result in a fine of up to $500,000 PLUS 5 years in jail. 2. As stated above, it does not matter where the income comes from. However, if you are in your home country for a series of 330 out of 365 consecutive days or you have a bone fide residence in the country for an entire calendar year, you can exempt up to $80,000 US from US taxation by filing form 2555 with your 1040. However, if you are self employed, the form 2555 does NOT stop the necessity of paying US Social Security. If you are an employee in Cost Rica, there is no US social security requirement. David Ingram's US / Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists My Home office is at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. 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