US citizens living abroad have to file a US tax federal tax return and pay US taxes no matter where they live.

Question

BlackTom AI · Accepted Answer

Question restatement:
- Statement: 'US citizens living abroad have to file a US tax federal tax return and pay US taxes no matter where they live.'
- Answer options: ["True", "False"]

Analysis of each option:
Option 1: True
- This statement aligns with the core principle that US citizens are taxed on their worldwide income and generally have a filing requirement with the IRS regardless of where they reside. The United States taxes citizens on their global income, and most expatriates must file Form 1040 to report that income.
- The phrase 'pay US taxes no matter where they live' is typically understood to mean that if income is present or tax is due after applying exclusions and credits, a tax return must be filed and taxes may be owed. In practice, many expatriates can reduce or eliminate US tax liability through mechanisms like the Foreign Earned Income Exclusion (FEIE), the Foreign Tax Credit, or other deductions, but the obligation to file remains unless specific thresholds or exemptions apply. The statement therefore captures the general obligation to file and potential tax liability, making it true in the broad sense used by many tax guidance resources.
- Potential misconceptions addressed: while some individuals living abroad may have no US tax due after exclusions or credits, the requirement to file can still apply to report income and claim benefits; the claim that one always pays taxes is conditional on income level and exclusions, but the question presents the general filing obligation and potential tax due, which supports the True classification.

Option 2: False
- If interpreted strictly, one might argue that not everyone abroad owes US taxes or must file—for instance, if income is below filing thresholds or fully sheltered by FEIE/credits. However, the standard rule emphasized by tax authorities is that filing requirements can still apply for expatriates and that income must be reported, with tax liability determined after exclusions/credits. Declaring this as universally false would overlook the formal filing obligation that exists before any exclusions reduce or eliminate tax due.
- The nuance that may lead to confusion is the existence of exclusions, credits, and thresholds; those reduce or eliminate tax liability, but they do not automatically negate the filing requirement in all cases. In other words, a false interpretation would ignore the legitimate obligation to file to determine tax owed.

Summary:
- The provided dataset marks 'True' as the correct option. The reasoning supports this by describing the general filing obligation for US citizens living abroad and the possibility of tax due after applying exclusions and credits, while acknowledging that actual tax liability depends on individual circumstances. This aligns with the notion that expatriates typically must file and may owe taxes, even though exclusions can reduce the amount owed.

25_2 LAW3000 Business Law Term 6

US citizens living abroad have to file a US tax federal tax return and pay US taxes no matter where they live.

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