US tax treaties Americans Overseas

US tax treaties

Many countries have treaties with the US to reduce the effects of double taxation for its citizens and companies (Double Tax Avoidance Agreement). This will prevent a person from paying tax twice on for example income from labor (i.e.; both in your home country and in the USA).

However, paying tax in your home country does not necessarily mean that you will not be taxed in the US. In some events the tax laws differ between the country of residence and the US. What is not taxed in one country can be taxable in the U.S. Example: In your country of residence profit from a sale of a house might not be taxed but in the US it is taxed. This means you would have to pay tax to the US.

A tax treaty, also if fully applicable, doesn’t dismiss you in any event from your tax-filing obligation.

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Source 4 IRS