Buenos Aires is a hotspot for American expats. As of 2024, there are more than 60,000 US citizens living in the city. Perhaps it’s the culinary culture, the welcoming warmth of the people, or the exoticness of a melancholy top-tier European city that seems to have frozen in time. It’s extremes that come together. It’s diversity. It’s nightlife that never stops. It’s an adventure. There is always something to do, and the news often seems to be more entertaining than fiction itself.
Whatever it is that attracts expats to venture into this land of uncertainty, there is always something that will tie them back home. Something that sticks with them wherever they go. Something they can’t seem to get rid of – and that something is US taxes.
As a US expat, you are subject to the declaration worldwide income. However, it’s not all bad news! Reporting this income does not necessarily mean you will have to pay taxes on it. There are a few tax benefits that you, as an expat, can make use of in order to avoid double taxation.
Gonzalo Serravalle explains: “Double taxation occurs when an individual or business is taxed on the same income by two or more jurisdictions, typically home country and a foreign country. This can result in a heavier tax burden, hinder international trade and investment, and is often alleviated through tax treaties or provisions like the foreign tax credit. You can potentially bring your tax due to $0 or who knows, possibly even get some money back. It all depends on your situation and the benefits available to you”.
General guideline of tax benefits for US citizens living in Buenos Aires
Foreign Tax Credit
The foreign tax credit is a tax benefit provided by the USnited States government to prevent double taxation for US taxpayers earning income abroad. It allows individuals and businesses to offset their US tax liability by the amount of income tax paid to a foreign country on the same income, reducing their overall tax burden.
Tax Treaties
Tax treaties are international agreements between two countries that define the tax treatment of individuals and businesses with activities in both nations. These treaties specify rules for taxation, including rates, exemptions, and dispute resolution, to prevent double taxation and promote cross-border trade and investment.
FEIE
The foreign earned income exclusion is like finding a tax oasis in the desert of financial responsibility. It lets eligible US citizens working abroad exclude a portion of their income from Uncle Sam's grasp, up to a limit (e.g., US$120,000 in 2023). It's the IRS's way of saying, "Have your tax break and enjoy it, too!"
In conclusion, Buenos Aires beckons with its unique blend of culture, cuisine, and endless excitement. Yet, amidst the allure of expat life, the specter of taxes looms. Fortunately, understanding available tax benefits, such as the Foreign Tax Credit, Tax Treaties, and the FEIE, can help navigate the complexities and ensure a smoother financial journey abroad.
Also, it is possible to generate income in the United States from Argentina and expand your business.
Learn more at primetaxonline.com.
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