Q: If an EU citizen works for an EU company - paid to their EU bank - while living in the US, do they have to pay US taxes?
I'm a US citizen, but my wife is from the EU. We are moving back to the US, but she wants to keep her job from an EU company and work for them from home in the US. Does she have to pay US taxes? The money is going from a foreign company to a foreign bank, in €, and to a foreign citizen. Nothing about it "touches" the US except that she would live in the US while working on her computer. On top of this, how do I deal with her income on my taxes? Is it ignored as if she has no income, can a count her as a dependent, etc?
Thank you for all the help in advance.
A: If your wife is going to be in the US for enough of the year that she is treated as a US tax resident (which can be based solely on time spent in the country rather than citizenship) then she would need to declare her EU income on a US tax return. In addition, she would be subject to US income tax on all of her worldwide income so this could take into account things like retirement accounts, bank account earnings, capital gains, rental income, etc. There is likely a US tax treaty with her home country which may impact how these types of income are taxed in the US but they would still need to be reported in some fashion on a US tax return (either Married Filing Separately or Married Filing Joint). In addition, there are various reporting forms that she would need to file to declare her interests in any bank accounts, investment accounts, retirement accounts, etc., outside the US and each reporting form has its own rules and thresholds for when it needs to be filed. I strongly recommend seeking the advice of a tax planner who is experienced in US taxation of foreign income and assets as there are several issues you need to consider before she moves to the US and various planning techniques that may be helpful but that can only be used before coming to the US. I have seen too many people who did not consider these issues before moving to the US who ended up paying far more in taxes than they would have if they had sought advice prior to their move.
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