Do I Still Need To Pay Taxes In The Usa?

[jonkeyes]

As I pay Taxes here in Thailand (quite a bit!), and I am an American, I do know about the double Taxation, and that I would most likely be liable to pay taxes on anything over the alotted US $80,000 or so...

But I have read something that wasn't clear, about if you are outside of the USA for more than 330 days per year then I might not be liable for any tax to the USA?

Please pass on any easy to understand info on the 330 day rule... The IRS website is a bit difficult to understand.

Appreciated.

[lanny]

All US citizens and permanent residents (greencard holders) who have income (from any source) above the minimum must file a tax return with IRS. It doesn't matter, 330 days or 33 years, you still have to file!

If you are outside the US for at least 330 days during any 12-month period (it does not have to be a calendar year) you may exclude up to $84,500 from taxable income. However, only income from salaries and wages or the earnings of a business can be excluded. You still must pay any tax on dividends, interest, capital gains, rents, etc. Any tax on non-excluded income is taxed at the highest applicable rates, too!

You can also qualify for the exclusion using the bona fide resident rule. This may be more favorable because you don't need to worry about the 330 day rule.

In addition, if you have foreign source income that is not excluded, you may be able to take a credit for any applicable Thai taxes against the US tax on that income.

The rules regarding the exclusion seem rather simple, when you read them. In practice, however, there are many complexities and potential traps. I've been preparing expat returns for many years and have seen more than a few done by CPAs, etc. that got it wrong. If you are not sure you understand those rules, I suggest you consult a professional who does.

The rules are designed to be sure that you do not pay both US and Thai taxes on the same income. They are also designed to be sure that you do pay either US or Thai taxes!

[backflip]

Actually, I've found the opposite to be true. I found all of the explanations to be confusing but, after I read the applicable IRS booklet, it all became clear. I worked in China for two years - spread over 3 tax years. I paid China taxes, and didn't pay US taxes. Simple.