Author Topic: Dual citizenship (U.S. + another country) tax and other considerations  (Read 2113 times)

ObviouslyNotAGolfer

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I will apply for Irish citizenship shortly. I qualify, and after having spent three weeks on vacation there recently, my wife and I are keeping it in mind for a future residence. If this happens, it is likely at least several years in the future, with much time to learn more and plan (and make additional visits). (I have relatives and friends who live there). I lived in Canada for over three years and escaped dual taxation. I am concerned about having to pay income tax to Ireland on income earned in the U.S. while living in the U.S. I do not think this is likely, but will need to find out for sure. Our tax guy is an enrolled agent and is very sharp, so he will be my next person to query.

Aside from/in addition to this, who here has dual citizenship with the U.S. and another country, and what if any comments to you have? Any unexpected tax or other hassles? Benefits (aside from the obvious ones)?
« Last Edit: June 18, 2018, 07:34:27 PM by ObviouslyNotAGolfer »

seattlecyclone

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The US and Eritrea are the only two countries that generally tax its citizens who live elsewhere. Other countries tax non-resident citizens in limited circumstances, but Ireland isn't on Wikipedia's list of countries that ever do so.

Paul der Krake

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The main benefit of your Irish passport is that you can now move wherever you want in the EU without asking permission. It's no small perk.

MMMarbleheader

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I can get Portuguese citizenship but am worried about how Europe treats American tax sheltered accounts like 401k, Ira, Roth, etc

One

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I'm curious if dual US and Canada citizenship would give some protection in a liability lawsuits. If someone had a judgment against you in US could you move your money to Canada for protection?

Paul der Krake

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I can get Portuguese citizenship but am worried about how Europe treats American tax sheltered accounts like 401k, Ira, Roth, etc
Irrelevant until you decide to move there permanently. There is no reason to not get an extra passport if you qualify. The worst thing that can happen is not using it.

"Europe" doesn't treat American accounts in such or such way. Individual member states do. The tax treaty for Portugal is here:
https://www.irs.gov/businesses/international-businesses/portugal-tax-treaty-documents

Good luck though: reading tax treaties is an exercise in patience and ambiguity.

Kepler

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I have dual US/other citizenship.  US tax filings are much more complicated and scarier from overseas (I do my own, as I did when I lived in the US, but the law is much murkier when you're an expat, so it's harder to be sure what you should do, the penalties for getting it wrong are terrifying, and a lot of things are "objectively" murky, meaning that tax professionals won't be able to be sure what to do either). 

Lots of people will advise you to use the earned income exclusion to avoid double taxation.  This is the quick and simple way to deal to wage income earned overseas - and that certainly does simplify some aspects of filing - but if you're going to be living some place with higher taxes than the US, and particularly if you plan on drawing some passive income at some point, it can be worth looking into whether the simple approach is the best one (for me, it isn't - I use foreign tax credits to avoid double taxation - ymmv).  It's also worth looking very, very closely at how US tax law treats retirement vehicles wherever you settle - this can be a surprisingly murky area, and you may not be able to avoid being in a murky situation, depending on whether the country you are moving to has any compulsory retirement funding provisions... 

You should also be aware that informational reporting becomes much more intrusive once you open overseas accounts - make sure you're aware of things you need to file that are not part of a standard tax return, and that wouldn't be required if you were resident in the US.  Again, the penalties can get really scary here if you do the wrong thing, even though the "right" thing isn't always particularly clear...

All of this is perfectly doable - it's just a pita and sort of provides an annual insinuation that, if you've moved overseas, the US government regards you as likely to be engaged in some sort of criminal activity...

 

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