Paying Italian Taxes while living in the US

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Paying Italian Taxes while living in the US

Postby SusanCV » Mon Dec 15, 2008 3:38 pm

I am in the process of obtaining Italian dual citizenship and was asked a question that I can't seem to find an answer to. If we have dual citizenship with the US and Italy and live (and earn all income) in the US do we pay any taxes to Italy? I know that the US does tax all citizens, regardless of where they reside.

Thanks
Susan
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Postby Tiffany » Mon Dec 15, 2008 3:54 pm

The US is one of only three countries that do this. Most countries do not tax its citizens abroad, Italy included. So no.
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Postby David_ » Mon Dec 15, 2008 5:09 pm

Tiffany wrote:The US is one of only three countries that do this. Most countries do not tax its citizens abroad, Italy included. So no.

Could you please say the other 2 countries to satisfy my curiosity?
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Re: Paying Italian Taxes while living in the US

Postby matta » Mon Dec 15, 2008 5:17 pm

SusanCV wrote:I am in the process of obtaining Italian dual citizenship and was asked a question that I can't seem to find an answer to. If we have dual citizenship with the US and Italy and live (and earn all income) in the US do we pay any taxes to Italy? I know that the US does tax all citizens, regardless of where they reside.

Thanks
Susan


While Tiffany is right that no income taxes are paid to Italy if the income is earned outside of Italy, there are some taxes Italian citizens do have to pay related to their passport. Specifically, the passport renewal fee (when your passport expires) and a marco di bollo each year in which you wish to use your Italian passport. When you amortize it, it's 10's of dollars per year, which isn't a big deal right now.

Now if Italy decided to exploit the hundreds of thousands of non-resident Italians, that amount could increase substantially.
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Postby matta » Mon Dec 15, 2008 5:31 pm

David_ wrote:
Tiffany wrote:The US is one of only three countries that do this. Most countries do not tax its citizens abroad, Italy included. So no.

Could you please say the other 2 countries to satisfy my curiosity?


I know India requires non-resident citizens to file a tax return. I'm not sure if they have to pay taxes, though.

Also, keep in mind that to owe taxes to the US, you have to make more than $80,000 per year, and the country in which you live has to tax less than the US (as long as the US has a tax treaty with that country, which the US generally does for most of the developed world). That basically means that only those living in Tax Havens pay taxes, since the US has one of the lowest tax rates in the developed world.

The people who really get into issues are those who are retired.
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Postby Tiffany » Mon Dec 15, 2008 7:13 pm

Can't remember exactly what the other two countries are, but neither of them are in the big 8 Western countries as the US is. Think it might be India and the Phillipines, but I can't remember exactly. I will try to look it up after work!
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Postby zagnut » Tue Dec 16, 2008 3:20 am

Also, keep in mind that to owe taxes to the US, you have to make more than $80,000 per year

Note- that's foreign earned income. If you live in Italy (or elsewhere) and have US earned income below $80,000, you still must pay US income taxes on it.

And if you're living in Italy and the income below $80,000 is Italian earned income, you pay Italian taxes on it (at higher rates than US taxes).
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Postby matta » Tue Dec 16, 2008 11:54 am

zagnut wrote:Note- that's foreign earned income. If you live in Italy (or elsewhere) and have US earned income below $80,000, you still must pay US income taxes on it.


I wish the individual exemption in the US was $80,000! (actually, I don't because if that was the case, the tax rate would be near 100% above that)
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Postby zagnut » Tue Dec 16, 2008 1:09 pm

Also, if you have foreign-earned income less tan $80,000 you still must file a US return showing the income. Any non-foreign earned income (US investment income for example) will still be taxed by the US.
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USA Taxes?

Postby Davide » Sun Dec 21, 2008 4:00 pm

Of course, the best way not to pay USA taxes for those who have Italian citizenship and are living in Italy is to give up American citizenship. Why should you have to pay taxes to a country you are not living in? Just a thought :)
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Postby zagnut » Sun Dec 21, 2008 5:50 pm

That's not a decision I'd make lightly.

Also, US law prevents you from avoiding taxes via renunciation of citizenship.
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Postby David_ » Sun Dec 21, 2008 5:58 pm

zagnut wrote:That's not a decision I'd make lightly.

Also, US law prevents you from avoiding taxes via renunciation of citizenship.

If you have your taxes up to date, I don't think they can refuse.

In any case, I do support your decision of not making such a huge decision lightly. People should consider the benefits of being an American Citizen abroad as well as other emotional/cultural/etc. effects of maintaining citizenship.
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Postby Pagliari » Sun Dec 21, 2008 6:12 pm

I know that the Phillipines is one of those countries cause a friend of mine from work is from there and told me her Dad has dual citizenship and has to pay taxes there as well as here. This is the reason she gave up her Phillipino citizenship and also due to the fact that she can't see herself moving back there ever.

I also have an Indian coworker and he said India doesn't allow dual citizenship. Not sure about the taxes though for those who are still citizens of that country.
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