This post is meant for the writer of the One Family One Income so, the rest of you may skip reading this one. If you have any insight to offer on dual citizenship and taxes, please do comment.
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Hi!
I remember you writing about filing tax forms for your sister living in Canada. I am assuming she has dual citizenship.
A friend of mine and her son have dual citizenships too. They have both Turkish and American passports. They both live in Turkey and have always lived here. I understand until recently, they were not responsible for any tax forms or anything like that. Now, they have to file tax forms. So far, they have tried looking for someone to do this in Turkey on their behalf but, they have been unable to do so.
On top of that, the son recently had a job offer. He has to establish his own company and he will probably be billed from the US. He will keep on living in Turkey and pay taxes here. He just doesn't understand why the person offering him the job is not just putting him on his payroll but ,rather asking him to establish his own company. I am assuming it is some kind of tax evasion in Turkey. Doesn't sound illegal.
So, based on your knowledge, do you have any advice to offer? What are the tax ramifications for dual citizens?
They are completely lost and so far haven't been able to find enough information to deal with this new situation. I told them to reach out to the US Consulate. However due to COVID-19, they are kind of slow to respond.
I appreciate if you can make time to provide some insight or point them towards some online resources. Thanks!
Hi, my boys are dual British/American citizens and we live in France, as you know. My understanding is that US citizens (and green card holders) have to file in the US regardless of whether they live there or not. Indeed, until I handed back my green card in 1992 I also had to file. So every year my boys file French AND US taxes, although there is obviously a dual taxation agreement so that they aren't double-taxed. I think if the American citizen applies for a new passport THAT is when the IRS will catch up with them if they haven't filed and I know the penalties can be stiff. I had a couple of colleagues who were born in the US but then their (Spanish) parents moved back to Europe and one guy had a helluva fight with the IRS about being fined. He had to pay them but managed to negotiate the fine down on the grounds that he hadn't lived in the US since he was a baby. Even so, it came as a surprise to my boys when they received the US stimulus check (they weren't expecting anything). There is an association called American Citizens Abroad who may be able to give you more information! Hope this helps.
ReplyDeleteOh, thank you so much! I will tell them about the American Citizens Abroad. How do your boys file the taxes? Is there an accountant they use? Or do they just file the forms on their own?
DeleteMy ex (American) had to file his taxes every year in both France and the US so a couple of times we had them done by an accountant in the States (much cheaper than doing them over here). After my divorce I just looked at what was filled in and managed to do the taxes for my boys pretty easily myself. OK, I just looked. We filled out form 1040 (which is the main form) and form 2555, which is the "foreign earned income exclusion". Last year you were allowed to "exclude" around $180,000 (the figure comes up automatically) as long as you can prove you were paying tax in your country of residence. I don't know how complicated your friends' taxes are (my boys' aren't complex) and since they earn nowhere near $180,000 (I wish), it was less of a hassle. Your friends may want to check with American Citizens Abroad (I'm sure there are other Americans in Turkey who could give them some tips). Good luck!
DeleteDamn, I just lost my entire post! Anyhoo, my ex used to have to file in both France and the US so we had his taxes done a couple of times in the US when we were over there and after that I was able to do my boys' taxes pretty easily. You have to fill out form 1040 (the main form) and then form 2555 (foreign earned income exclusion), which allows you to "exclude" around $108,000 (last year) as long as you can prove you are paying taxes in your country of residence. My boys earn nowhere near that amount (I wish) so it was pretty simple. But your friends might be better off checking with American Citizens Abroad (I'm sure they have a branch in Turkey) and someone can give them more focussed tips. Good luck!
DeleteI got all the info and shared it with my friend already :) Thank you so much!
DeleteI really didn't know anything about it until my half sister mentioned she was behind on filing her US taxes. She didn't know how to do them herself and just couldn't afford the $500 a year or more her tax guy was charging.
ReplyDeleteIt's also my understanding that all US Citizens, even if living abroad must file. As Treaders said, they aren't double taxed on the income, so basically it's just reporting. Also, if you have bank accounts, retirement accounts, etc in a foreign country, you also have to file "FBAR" listing your accounts and how much is in them (in US dollars) at the end of each year.
The IRS form to file is 2555 "Foreign Earned Income", along with the standard 1040. The FBAR is done online. If it were me, and I'd never done them before, I'd probably pay someone to do them the first year, then once I saw the forms and how they are filled out, I'd start filing on my own, if you didn't want to pay to have it done every year.
Thank you so much! I will relay this info to her and her son.
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