Tax Issues for Expats
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This is a sponsored article. The author is the owner of CFO2GO Central & Eastern Europe Taxation is a difficult subject in any jurisdiction if the taxpayer has taxable activities besides a basic wage. It is many times more complicated for expatriates who struggle not only with two sets of rules for compliance, but usually are challenged by unusual forms of compensation or have investments and do not speak the local language fluently. When Social Security / Medicare Taxes Apply Outside Of U.S.In the course of business I have met many who subscribe to three philosophies of taxation:
The third is the most common, but it is incorrect and opens the tax payer to potential liabilities down the road. Because the system is by and large set up to avoid double-taxation of income, Philosophy 1 does not necessarily need to cost the taxpayer more, but it can involve more administration. Unfortunately, Social Security and Medicare is not automatically excluded from double taxation unless there is a bi-national social security agreement (Totalization Agreement) in place between the U.S. and the second country. There is no such agreement between the U.S. and the Czech Republic. U.S. social security and Medicare taxes continue to apply to wages for services you perform as an employee outside of the United States if you work:
Preventing Double Payment of Social Security Taxes Do I Need to Pay Self-Employment Tax? For example: CONCLUSION ________________________________________ For further information, please refer to our web site at www.cfo2goeurope.com or contact John Mohr directly at john.mohr@cfo2goeurope.com READER'S COMMENTS |
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John Mohr respondes:
"If you are an American citizen you are liable to declare your taxes in the U.S. each year. This is not optional and you can face serious penalties for not filing your taxes or understating your income. The good news is, depending on your particular situation, you are unlikely to pay anything."