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J

Jeanne

Hi Guys...
Does anyone know the answer to this one?
I have dual citizenship, Swiss and U.S. If I make $10,000 in Swiss francs,
in Switzerland, and pay income tax on it in Switzerland, and bring that
money into the U.S., do I have to pay income tax on it in the U.S.?
Many thanks....
Carol
 
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S

sgallagher

Does anyone know the answer to this one?
I have dual citizenship, Swiss and U.S. If I make $10,000 in Swiss francs,
in Switzerland, and pay income tax on it in Switzerland, and bring that
money into the U.S., do I have to pay income tax on it in the U.S.?
As a US citzen your worldwide income is subject to US taxation. It
doesn't
matter whether you live in the US or not, nor dioes it matter whether
the inocme was earned in the US or not.

So, if you have income of $10,000 in Swiss francs, in Switzerland, it
is still expected that you would include that income on a US tax
return that you file for that tax year.

If the income is salary, you may be able to exclude it from US taxes
under the "foreign earned income exclusion". A tax return must be
filed, even if the exclusion can be taken and no tax is due.

Otherwise, if it cannot be excluded, then you can use the "foreign tax
credit" on your US tax return. This will allow you to subtract the
amount of tax you paid to the country where the income was earned
(Swiitzerland) from the tax payable to the US. If the Swiss tax is
more than the US tax, then you would owe no US tax on that income,
although a US return must still be filed showing this. If the Swiss
tax is less than the US tax, then you would only owe the difference in
tax to the US.

So, to summarize, whether you bring the money into the US or not, as a
US citizen, it would still be considered part of your income for that
year in the eyes of the IRS. It should be added that most other
countries do NOT use citizenship as a determining factor for tax
liability. Most other countries use residency (they tax the worldwide
income of their residents), and they also use source (they tax any
income generated within their borders). The US is among a very small
handful of countries that consider the worldwide income of any citizen
to be subject to their tax, simply because the earner is one of their
citizens.
 
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J

Jeanne

Ugh!! Well, many thanks for the advice.


As a US citzen your worldwide income is subject to US taxation. It
doesn't
matter whether you live in the US or not, nor dioes it matter whether
the inocme was earned in the US or not.

So, if you have income of $10,000 in Swiss francs, in Switzerland, it
is still expected that you would include that income on a US tax
return that you file for that tax year.

If the income is salary, you may be able to exclude it from US taxes
under the "foreign earned income exclusion". A tax return must be
filed, even if the exclusion can be taken and no tax is due.

Otherwise, if it cannot be excluded, then you can use the "foreign tax
credit" on your US tax return. This will allow you to subtract the
amount of tax you paid to the country where the income was earned
(Swiitzerland) from the tax payable to the US. If the Swiss tax is
more than the US tax, then you would owe no US tax on that income,
although a US return must still be filed showing this. If the Swiss
tax is less than the US tax, then you would only owe the difference in
tax to the US.

So, to summarize, whether you bring the money into the US or not, as a
US citizen, it would still be considered part of your income for that
year in the eyes of the IRS. It should be added that most other
countries do NOT use citizenship as a determining factor for tax
liability. Most other countries use residency (they tax the worldwide
income of their residents), and they also use source (they tax any
income generated within their borders). The US is among a very small
handful of countries that consider the worldwide income of any citizen
to be subject to their tax, simply because the earner is one of their
citizens.
 

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