Taxes on Foreign Income

[azer_2000 1]

Hi

I hope this is the right place to post. I am a permanent resident since October 2009. Due to no job in the US i currently work in my home country. But try to visit the US every 3-4 months.

Well to maintain permanent residency we all know that we have to file taxes. Taxes for 2009 I just filed about a month ago. Also I was sure since i paid taxes in my home country I would not have to pay anything in the US. But after filing Alabama taxes as the Alabama full-time resident I end up paying almost 800 dollars (with some penalties) on 18000$ foreign income.

So my question is that correct? the income that was taxes in other country still has to be taxed one more time in the US? In 2010 I made about 3 times more, and I have a feeling i will have to pay additional 2k on something I already paid taxes on.

I am sure there are some of you who have been in similar situation. Any input is very appreciated.

Thanks you guys.

[Penguin_ie 5,993]

If you declare yourself as resident in the USA, you will be taxed here. If you are resident in the other country, you should not have been taxed.

[nickbits 43]

N/m

Edited December 26, 2010 by nickbits

[azer_2000 1]

Well I did declare myself as the resident of Alabama since I am a green card holder, but I only lived like 2 months out of the year. I was a full resident in my home country where i did pay taxes. So if I file this year as a part time resident, could that have a bad effect on my permanent resident status and then applying for citizenship in future?

[portal2012 0]

Yes.

[DJbcn 0]

I am dealing with the same thing, as I have been living in Spain for the last few years. If you only earned 18000 dollars you should have been exempt from the federal taxes (I think anyone who earns under 70000 dollars abroad is exempt) but they can still get you on the state taxes. It depends on the state, but some will consider you a resident simply becuase you own a house or car there, even if you don´t live there at all (which was my case).

[azer_2000 1]

I am dealing with the same thing, as I have been living in Spain for the last few years. If you only earned 18000 dollars you should have been exempt from the federal taxes (I think anyone who earns under 70000 dollars abroad is exempt) but they can still get you on the state taxes. It depends on the state, but some will consider you a resident simply because you own a house or car there, even if you don´t live there at all (which was my case).

Yeah I was exempt from federal tax. It's just the state tax I had to pay.

[vonxeric 0]

Well I did declare myself as the resident of Alabama since I am a green card holder, but I only lived like 2 months out of the year. I was a full resident in my home country where i did pay taxes. So if I file this year as a part time resident, could that have a bad effect on my permanent resident status and then applying for citizenship in future?

If I am reading your timeline correctly, you became a Alabama resident in late 2009, so for 2009 you should have filed a part-year resident Alabama tax return with your spouse. Normally income earned BEFORE becoming a resident of a state is exempt, but some states, as I know California does, do not exempt "foreign earned" income even if you have not actually resided there yet because you are filing a joint return (you would need to check with Alabama taxing authority on this). But you and your wife are getting the benefit of "married" tax rates and exemptions/deductions. And on your Federal Income Tax return you are definitely entitled to exempt your income up to the stated limit (around $80,000) before any is tax.

So yes..it is definitely possible you have to pay tax on the state level on your foreign earnings...and being a green card holder you have no way around it.

Hope this helps.

[azer_2000 1]

If I am reading your timeline correctly, you became a Alabama resident in late 2009, so for 2009 you should have filed a part-year resident Alabama tax return with your spouse. Normally income earned BEFORE becoming a resident of a state is exempt, but some states, as I know California does, do not exempt "foreign earned" income even if you have not actually resided there yet because you are filing a joint return (you would need to check with Alabama taxing authority on this). But you and your wife are getting the benefit of "married" tax rates and exemptions/deductions. And on your Federal Income Tax return you are definitely entitled to exempt your income up to the stated limit (around $80,000) before any is tax.

So yes..it is definitely possible you have to pay tax on the state level on your foreign earnings...and being a green card holder you have no way around it.

Hope this helps.

ok. thank you guys. I think it's clear now.