Tax on foreign wages?

Question

I am a Belgian citizen en a US resident, greencard holder, and hence have to declare taxes in the USA.
I still have a wages income from Belgium which is taxed in Belgium. I travel back and forth to be able to keep this income. Up to now I have declared this income and gotten an exclusion for it as indicated in the treaty of Den Hague. This year how ever I have heard rumors that the IRS is planning on taxing foreign income if you do not reside in that country or spend there more then 330 days, even though the income has already been (heavely) taxed. Is this correct? How can I avoid from being double taxed? I could take up residency back in my home country but this would probably endager my greencard ...

Answer 1

If you have income that is excluded from taxation in the US by treaty, rest assured that the IRS CANNOT modify a treaty! Only the president can sign treaties and the Congress must ratify them. The IRS only can abide by the law and a signed and ratified treaty has the effect of law.

You are confusing the issue with a long-standing exclusion available to US citizens and residents on foreign earned income. There are time requirements there BUT if you are covered by a treaty you do NOT need to worry about those issues.

If nothing else, you always can claim a credit for the foreign taxes paid against your US tax liability for that income. That would reduce your tax liability to the higher of the two countries -- US or Belgium. I'd be shocked if your Belgian taxes were lower than your US taxes!

Answer 2

I am not very familiar with foreign tax issues, but I can help with the double taxation question. If you are not able to exclude your Belgian income from US taxes then you will qualify for the foreign tax credit, which will offset part of the Belgian taxes you paid.

I suggest talking to a tax accountant that is familiar with International Issues to see what income can be excluded under tax treaties.