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Why would I not have to pay US tax on foreign income?


There are many options available in the US tax code to avoid double taxation on foreign income, but you have to file a return to claim them. The most common exception is when Americans move to a low-tax jurisdiction. In these cases, taxpayers will pay the higher tax rate of the two jurisdictions, but not more than they would have if they had remained in the US. The penalties associated with failing to report foreign assets are generally more problematic than the potential tax liability.