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Question for the Money Doctors

Question submitted on Jun 25, 2013.

Question

I''m a Kuwaiti citizen and I was born in Colorado and I have an American passport, and I live in Kuwait and work in Kuwait, and I don''t own anything in the U.S, do I have to pay any taxes ?

Answer

The United States have the peculiarity to require U.S. citizens to file a U.S. income tax return no matter where they live, whether they''re liable for U.S. taxes or not. The rules applicable to U.S. citizens living abroad vary according to each country''s tax treaty with the United States (if any). Generally, U.S citizens spare taxed based on their worldwide income. However, there is an foreign earned income exclusion, a foreign housing exclusion or deduction and a foreign tax credit to be aware of. So, it gets complicated. In a nutshell, you do have to file a U.S. tax return, but you may or may not owe any U.S. taxes depending on your specific circumstances. A great resource to find out how these rules apply to you is IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.


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