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The subject of expatriate taxation is a very commonly misunderstood. Many people believe that if you leave the country, you are no longer required to file a tax return or pay taxes. However, that is simply not the case. Here are the basics of expatriate taxation and how it works.
Statute of Limitations
The statute of limitations that comes with income taxes never runs out. Therefore, for each year that you do not pay taxes and avoid the IRS, your tax liability continues to grow. It will never go away until you pay it off, or die.
Income Exclusion
While you will have to file a return, a good percentage of your income can be excluded from tax liability. If you earn foreign income, up to $87,600 of it can be excluded from paying United States income taxes on it. In order to qualify for this exemption, you must have a permanent residence in the foreign country for at least 12 consecutive months. If you pay a foreign Social Security tax, you can also avoid paying that to the United States as well.
