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
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