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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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if i am a german with investments in europe that produce ...

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if i am a german with investments in europe that produce interest and I start a business in New York with a US green card, will I be paying tax on both the income from my US based company as well as on the interest income from my foreign based investments?
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.

DearCustomer

This depends on how long you have been resident in the U.S. I am assuming it is more than 183 days.

The U.S. assesses taxes on and requires the reporting of world wide income for its citizens and permanent residents.

This means you have to pay taxes in the U.S. on your foreign investment interest,as well as the com;pany taxes for your U.S. based company.

However there are tax treaties between the U.s. and Germany,. and between the U.S. and the countries in which you may have those investments.

You can take advantage of tax treaty benefits between your country and the U.S. by filling out form W8-BEN. This will allow you to take advantage of the more favorable rates and to avoid a larger withholding rate than the general population.

The tax treaties prevent doulbe taxation in the following primary way: IN which ever country where there is a treaty, the U.S. has first crack at the taxing (U.S. german treaty), and then the country in which you have earned the interest has the next chance. The second country gives you credit for paying taxes to the U.S.

 

Ed Johnson and 3 other Tax Specialists are ready to help you
Customer: replied 8 years ago.
Reply to Ed Johnson's Post: So basically, I would pay the U.S. (who has first crack) and then I would pay Germany (second crack), but then Germany would pay the U.S. and the U.S. in turn would refund me the money they received from Germany?
Expert:  Ed Johnson replied 8 years ago.

DearCustomer

No not exactly how it works.

1. When you file u.s. taxes, you pay the U.S. tax.

2. When you file German Taxes, you indicate tax payments to the U.S. and those tax payments are subtracted from the total German Tax due, leaving you to pay the balance, or to pay nothing at all if the german tax is less.