• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Fed Tax Avoidance/Cap Gains

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

L

L.Evans

Guest
-Question regarding capital gains.

I have heard/read, in the past, that a US citizen can work abroad & earn up $70K before he has a US Fed. tax liability, (this $70K figure is from my failing recall memory.)

Is this also true for net capital gain on stocks?
Can a person find a country with a smaller tax burden on CGs, set up residents there for a calender year & enjoy the host country's smaller burden.

Thank you in advance.
 


L

loku

Guest
Foreign capital gains

I believe you are speaking of the foreign earned income exclusion. To qualify for the foreign earned income exclusion, income must be attributable to services performed by an expatriate in that foreign country or countries.

Foreign source income that does not qualify for the exclusion is taxed by the US, and a credit (the foreign tax credit) is allowed for income taxes paid to the foreign country on the same income. Capital gains income is included in this category.


 

crager34

Member
Back up!

By researching the Internal Revenue Code, you will discover that only an "individual" is required to file a tax return (26 U.S.C. 6012) and then only under certain circumstances. In looking at section 7701(a)(1) of the code, you will discover that the term "individual" is defined as a "person." Then, in checking under 7701(a)(30), you will discover the definition of a "United States person" as meaning a "citizen of the United States", "resident of the United States", "domestic corporation", "domestic partnership" and a "domestic trust or estate." There is no INDIVIDUAL defined under 7701(a)(30) and therefore you cannot be an "individual" within the meaning of 7701(a)(1) and/or 26 U.S.C. 6012.

Also, you said "US citizen." By looking at IRC 7701(a)(9) The term "United States" when used in a geographical sense includes only the States and the District of Columbia. IRC 7701(a)(10) The term "State" shall be construed to include the District of Columbia,..." IRC 7701(c) The terms "includes" and "including" when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined."

This DOES NOT include the 50 Unites States, but it does include the federal states of Guam, Virgin Islands, Puerto Rico, Etc.

In short: Unless you are a part of the United States as defined above, you can earn as much as you can earn, and not be liable to pay Income tax.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top