I am not a tax person, but selling a house can cause you to owe tax in the US even if you did not owe any tax in the country you are living in (and sold the house in).
Famously one of the reasons Boris Johnson tried to give up his US citizenship (https://www.bbc.com/news/uk-politics-30932891).
> Unlike the UK, the US levies capital gains tax on proceeds from the sale of a main residence.
I understand why it can feel unfair but by definition this is not "double taxing". The gains on the house were not taxed by the UK which is why he had to pay US taxes.
But you’re not being double taxed.
There's a lot of VAT (value added tax, aka sales tax) that gets paid when buying goods. If this was higher than the US's in the expat's country, they don't get a credit (but conversely, if it was cheaper, then they also don't have to backpay...).
You can then take that to the country you reside, IF they have a tax treaty with the US, and apply for a credit which may or may not be accepted.
On top of this, if you’ve worked hard in the US and saved in a Roth IRA (effectively part of the US pension system), any capital gains/dividends accrued are yearly subject to taxation in your country of residence since most tax treaties pre-date the Roth vehicle. Meanwhile, you’re also obligated to pay tax to the national pension system of your country of residence resulting in a double tax, simply because US pensions are mostly private non-governmental savings.
When Europeans move to the US, the IRS doesn’t say “let’s see how much gains you’ve accrued in your national pension fund and tax them yearly.”
Yes, if you have a bad accountant. If you're getting double-taxed on your global income as an American expat, your tax preparer is committing malpractice and you should immediately find a new one.
When Europeans move to the US, the IRS doesn’t say “let’s see how much gains you’ve accrued in your national pension fund and tax them yearly.”
Because we have tax treaties that address this with over 100 countries (including Protocols (updates to treaties) that address older treaties which were ambiguous on the issue of retirement income).
You can then take that to the country you reside, IF they have a tax treaty with the US, and apply for a credit which may or may not be accepted
This is false. If the treaty applies, you don't get a tax credit...because you aren't being taxed. Conversely, if you are taxed, you will get a tax credit regardless of whether there is a treaty because all major countries have a foreign tax credit regime.
Always humorous to see people who don't know anything about tax opine like they do just because they read a few things on reddit or HN and suddenly decided they were experts.
Just one example: the Net Investment Income Tax (1), which has been ruled in court to not qualify for the foreign tax credit.
https://www.thetaxadviser.com/issues/2021/nov/tax-treaties-f...
You have to then take that money paid to the US back to your country of residence and hope that their tax officials have any understanding of the situation, and will apply it as a credit against your tax owed.
News flash: Not all countries tax officials know all the rules either. And going to appeals court over $923.65 doesn't really make sense.
That's news to me and I've been doing international tax for 15 years. Please, tell me what types of income earned by a U.S. expat isn't covered by a tax treaty?
It is not uncommon to pay more taxes in aggregate as an expat than you would pay in either country separately.
This is objectively false. For an expat, income taxes paid to a resident country are a dollar-for-dollar credit against your U.S. income taxes, and that's on top of the inclusion threshold that doesn't subject the first $X of foreign income to any U.S. taxation at all.