Taxation
 
 

This is a complex topic and anybody moving to the United States would be advised to seek professional help.

However, simply stated, one's liability to US tax is determined by whether one is resident or non-resident.

If one is resident, one's entire world-wide income is subject to US taxes. One may have tax liabilities in ones home country. If so and there is an appropriate tax treaty between the US and one's country of origin, then one's liability to home country tax can be offset against one's liability to US tax.

If one is non-resident then only the income arising from a US source is taxable

Whether one is resident or non-resident is determined by either

The Substantial presence test

or

The Green Card test

The substantial presence test is met if the foreign national is:

physically present in the US for 183 days or more in the current calendar year or

is physically present in the US for more than 30 days in the current calendar year and his/her presence in the US over three years equals or exceeds 183 days which is based on the following formula

  • all of the days in the current year
  • plus 1/3 of the days in the previous year
  • plus 1/6 of the days in the second preceding year

The Green Card test means that a lawful permanent resident is classed as resident from the first day he/she enters the US.

Tax treaties were in force on Jan 1st 1996 with the following countries:


Armenia


Hungary


Norway

 

Australia

Iceland

Pakistan

 

Austria

India

Philippines

 

Azerbaijan

Indonesia

Poland

 

Barbados

Ireland

Portugal

 

Belarus

Israel

Romania

 

Belgium

Italy

Russia

 

Canada

Jamaica

Slovak Republic

 

China PRC

Japan

Spain

 

Cyprus

Korea

Sweden

 

Czech Republic

Kyrgyzgstan

Switzerland

 

Denmark

Luxembourg

Tajikistan

 

Egypt

Malta

Trinidad & Tobago

 

Finland

Mexico

Tunisia

 

France

Moldova

Turkmenistan

 

Germany

Morocco

Ukraine

 

Georgia

Netherlands

United Kingdom

 

Greece

New Zealand

Uzbekistan

 
 
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