Tax Day, At Home and Abroad

by Peter Spiro

The checks and refund requests won’t only be coming in by domestic mail. The US is one of only a handful of states that subject nonresident citizens to income tax. All nonresident citizens abroad have to file; and those earning more than $85,700 may have to pony up. It can complicate pay packages, as detailed in this WSJ column, which may lead corporations to prefer non-US executives.

In individual cases, the extra cost of US taxes may present the best reason to renounce US citizenship, although if the IRS thinks you’re doing it for tax purposes you can forget about visiting the grandchildren in Peoria. Nonresident noncitizens are also subject to tax on US-connected income, so it’s not only US citizens abroad who will be filing today.

On this side of the water, noncitizens present in the US are subject to income tax. Permanent resident aliens are treated the same as citizens are for these purposes (and most others). (Imagine a world in which LPR’s were exempt from taxes — who would naturalize?) So are undocumented aliens, who pay taxes in a magnitude that would surprise the typical restrictionist. Under some analyses, undocumented immigrants are propping up the social security system, to the extent they don’t claim back what they pay in, turning on its head the trope that illegal immigrants are a drain on the public fisc.

3 Responses

  1. A couple of additions: US citizens in countries with which the US has tax treaties generally should not be subject to double taxation (depending on the details of individual treaties).

    And US citizens living outside the US are granted an automatic two-month extension to file (IRS Pub 54), as long as we are outside the US on April 15, and our job is outside the US or we are in the military. So tax day is June 15 for us expats.

  2. Thanks for the extra info. For that matter, tax day for academics is generally October 15, as many of us file automatic extensions so that we don’t have to deal with it during the semester!

  3. This is kind of off the cuff, but isn’t the US one of the few countries that actually taxes the overseas income of its citizens? I was of the impression such taxation was uncommon among other countries.

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