(VitalNews.org) – Americans who are living abroad still have to file their taxes with the IRS, and this can sometimes even be an addition to the taxes they need to pay in their place of residence. Although thinking about giving up their American citizenship has probably been an idea, experts are saying not to do this.
Italy-based Alex Ingrim, a financial advisor at Chase Buchanan Wealth Management, said, “It typically doesn’t make financial sense, and there’s a few reasons why.”
Ingrim said that Americans are very rarely double taxed and that citizenship renunciation isn’t easy, and it can be difficult if you decide to change your mind.
Many have recommended for American taxpayers to look into what their income situation will be so they can prepare for how their taxes will be set up.
“The U.S. and the country of residence might have an income tax treaty, it might have an estate tax treaty [or] it might have a normalization agreement, which deals with retirement income like Social Security,” said Jude Bourdreaux, a CNBC FA Council member.
Experts have said it’s situational and depends on where you are living. In some cases, the United States can use the credit from what’s paid in another country to put towards their tax liability in the States.
Ingrim said that many people who move to other places as Americans eventually give up their citizenship because they still have to pay U.S. tax liability if they don’t
This kind of situation can also make investing difficult and cause a whole slew of issues as they deal with tax liability in the United States while living abroad.
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