Category: International; Individuals Copyright 1998, The Tax Resource Group. All rights reserved. Telephone 800-578-3498. Internet: www.taxresourcegroup.com U.S. citizens and residents are taxed on their worldwide income. There is really no code section citation for this principle; rather, this is a jurisdictional issue. Section 61 says gross income for tax purposes includes income from whatever source derived. Thus, if the U.S. has jurisdiction, income from "whatever source derived" covers income earned both within and without the United States. The U.S. asserts that the privileges that go along with having a so-called green card (i.e., the ability to enter the U.S. at will) also carry some burdens, one of which is worldwide taxation. Accordingly, Sec. Section 301.7701(b)-1(b)(1) provides that an alien is a resident alien (and hence subject to taxation on worldwide income) with respect to any calendar year in which the alien has lawful permanent resident status (a green card). This status continues until the alien surrenders the green card, the green card is rescinded, or the it is administratively or judicially determined that the green card has been abandoned. Under these circumstances, it seems that your green-card-holding Chilean citizen/resident is taxable on the sale of his home in Chile. Having said that, there is an additional issue of whether there is a tax treaty between the U.S. and Chile. If so, how does that affect the answer. You suggested in your letter that this is a simple, one hour issue. I have invested slightly more than one hour at this point. I want your approval to address the remaining issue. |
