Hi, I am non-US citizen and green card holder. My understanding is US green card holder should pay US tax while wokring abroad. thus my question: How on earth then US expats manage to make living, earning local but paying US tax?
Yes that’s one caveat of green card
Yes, that's why people are abandoning US citizenship when they are rich. Uncle Sam wants your tax $
There’s a foreign tax paid credit.
Mostly applicable to investment income, I thought? Foreign income tax paid on earned income was only creditable (pre 2018, not sure of current rules) if there was a tax treaty. OTOH pre 2018 the first $80-something-thousand of earned income if you were living and working abroad was not subject to income tax to begin with so it was mainly only an issue for people with high expat incomes or a lot of investments. IIRC my buddy who taught English abroad for 🥜 s basically just had to mail the forms in every year but only paid tax on his not very large US investments.
“How on earth then US expats manage to make living, earning local but paying US tax?” Simple while they get paid locally their salary is even higher than US and on top of that they company pays for housing, transpo, kids school if any. As long as it’s a true expat job
Here's a trick most people don't know about. Move to Puerto Rico at first before moving outside US. There's an agreement with federal govt to pay a flat 5% tax. Move + work there for 8 months remotely (establish your residency there + file a tax for 1 year to be safe) and then become expat. Now you only pay 5% tax and keep your residency at Puerto Rico
Huge, if true (not sarcasm)
Are you allowed to live/work outside US on green card? I thought green card is revoked if you’re no longer a resident. Also for taxes, you’re exempted from US tax on the first 100k earned outside US (numbers could be off, I checked some time ago)
It is a bit grey area but I can work outside for a limited time (max 2yrs or so).
technically it is be up to a judge to decide. leaving the US for 180+ days might be sufficient to revoke green card