Originally Posted by
Braniff DC8
There are two different tests. People do try to trick the system and get caught. It then puts the spotlight on everyone. I know passport holders who do not file U.S. taxes and use a second, or foreign passport, as their id. I keep telling them they will get caught but they are convinced they won't.
In addition, I know people that say they work for a foreign company and use the exclusion. They then say to the foreign tax department that they are in the U.S. thus double dipping. Imagine that!
Northwest pilots were caught years ago using, I believe, a Tokyo P.O. box as an address. Yes, this is still going on!
They, the IRS, are after the scammers not those that are completely honest.
A UAL F/A trying, it seems, to use a loophole or is trying a fast one, Is Lucky she's not going to jail Mrs. Snipes!
Funny, if you tell people from other countries, ie; Canada, Australia and England, that it's coming to their country they say NEVER! Guess what, it is! Governments are up turning rocks to find all sorts of bugs hiding.
You would be shocked at what some get away with and have for years.
Happy Holidays
The difference between the U.S. and other countries is that the U.S. is one of only two countries in the world that practices citizenship based taxation. The only other country is Eritrea in Africa. That means the U.S. taxes all of its citizens, regardless of place of residence, on their worldwide income. Yes there are some exclusions such as the Foreign Earned Income exclusion, and tax treaties that reduce some (but most definitely not all) double taxation. But the fact is if you are a U.S. citizen you are required to file a tax return to the IRS every year, regardless of where you live or where you earn your money.
Every other developed nation practices what is known as residence based taxation, meaning they only tax their established residents on their global income. Citizens who reside in other countries are not responsible to file income tax returns, or pay taxes to, their home country if they do not reside there. That is why places like Monaco and the UAE are so attractive to so many people. If the citizens of most countries take up residence in those places, all of their income becomes tax free. But the key is they have to be official and practical residents of those countries. Tennis star Boris Becker got caught cheating the German tax authorities by claiming he resided in Monaco, meaning he did not have to pay German taxes. But the German authorities were able to prove he spent more than 180 days per year at his residence in Munich, thus making him officially resident in Germany and responsible to pay German taxes.
So many of the methods the United States is using to go after tax cheats who hide money overseas (FATCA, FBAR, etc) are not really applicable to citizens of other countries because the way they practice taxation is different.
As a side note, the United States has criticised Eritrea's 2% citizenship based taxation system in its human rights reports. Meanwhile the United States hypocritically practices the same system with a significantly higher tax rate.