Re:Detecting Money Laundering
by morgante on Sunday June 26, 2016 @06:38PM
(#11983126)
Tell that to the IRS, which insists that even if you're working in a foreign country, for a foreign company, on foreign projects that they still deserve their cut.
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This might sound like a pedantic correction, but IRS people I've spoken to are quite adamant about this: the people of the United States have, through their Congressional representatives, decided that they deserve a share of fellow citizens' foreign-sourced income.
The IRS has no discretion in this matter; they just deliver the bill.
Re:Detecting Money Laundering
by dandermotj on Sunday June 26, 2016 @07:51PM
(#11983428)
The US is one of the only countries on earth that follow this practice.
So does Canada.
Taxing a non-resident citizen's foreign income? No it doesn't. Once you declare yourself a non-resident, you don't even have to file a return anymore.
If the US doesn't acknowledge non-resident status, then you're right, Canada isn't like the US. However, as a Canadian who was "working in a foreign country, for a foreign company, on foreign projects" (in the US) for half a year, I can guarantee you that I had to pay both US and Canadian taxes on that income, and I very thoroughly investigated the case because in spite of all the treaties, I ended up double-taxed for a few thousand dollars' worth.
for half a year
That's the key part. I don't know the exact legalese, but you probably still qualified as a Canadian resident.
Once you're no longer regarded as a Canadian resident, you no longer owe Revenue Canada anything. It's a clean break.
In the US, no matter how long you live outside the country, as a citizen you still need to file a return and pay taxes on foreign income.
Yep. But it's not just time, to be a "non-resident for tax purposes", you have to close all of your Canadian bank accounts, renounce your government-provided health insurance, etc. I suppose it's not an unreasonable system.
Yes, the special case in the US tax code is that non-residency does not excuse you from paying taxes to the IRS (although I believe there is a non-residency tax deduction on the first $80k or so).