It seems the Great American Dream is losing its charm. The phenomena of the US attracting some of the best minds in the world (including India) continues, however, when it comes to the tax laws, many Indians are giving a second thought on whether or not to settle down in the United States.
This is being clearly projected with more number of Indians intending to give up their green cards or even their citizenship after the heavy budgetary deficit. Along with this, there has been a drive to identify incomes that have not been reported. This is being done with the help of more stringent laws pertaining to tax and other disclosure norms.
The Internal Revenue Service (IRS) which is the apex body for the tax administration in the United States is empowered by the tax laws in the nation. This permits the IRS to tax global incomes of those who either have a green card or are the citizens of the United States. This has led to many Indians rethinking their decision of living in the United States as their incomes which are being generated in India. At the same time, the Indian businesses operating over there do not have any form of territorial nexus with the nation.
Even though many Indians send money back home to be invested in the stock market for instance, they would still have to pay taxes in the US for their salaries being generated in India. As per the reports which have been published internationally, more than five hundred citizens in the United States have let go of their citizenship in the last quarter of 2009. The same was almost double in 2008.
On the other hand, even if a person is not residing in the US but holds a green card or is a US citizen, it is mandatory for him to pay taxes. However, when it comes to other nations such as India, a person would have to pay taxes only if he lives in the nation for more than 182 days in a year. Although, when it comes to taxation in the US, period of residence is more or less irrelevant. All that matters is whether the person is a permanent resident or a citizen.
These laws have been in place for a while but strict enforcement has come about only two years back. This came about when the US government discovered accounts that were unreported. These accounts belonged to US citizens in UBS and Swiss Bank. Since then, a project was initiated by the US government to collect data on the incomes that were not being reported to the IRS.
Above all, if the US is still an attractive destination for you, it is best to be aware and compliance with the laws is very important to avoid any mishaps or brushes with the law enforcement agencies.
