# US tax on non-US investment



## TagOctober20 (Oct 20, 2018)

Hi, there! Any advice on the following matter would be greatly appreciated.

I'm a US citizen married to an Asian. She inherited a block of land a couple of years ago and plans to sell it in accordance with the wishes of several other family members. We plan to invest the proceeds in Asia, which will generate income. None of this involves (or involved) any money from or to the US in any way; it's all within Asia 100%. The investment income we cannot take out of Asia due to foreign exchange restrictions; understandable as this is a poor country. We will have to pay minimal taxes on this here but will have to pay substantial US taxes on it.

This is where the problem is. While we can afford to pay these US taxes over the next few years, this will be a terrific drain on our US savings.

Besides being grossly unfair, is there anything that can be done about this?

Thanks in advance for any advice you can provide.


----------



## Bevdeforges (Nov 16, 2007)

Unfortunately, the fact of being grossly unfair doesn't really matter when it comes to US taxes.

There are ways you might get around this. If the land is in her name and her name only, then she should be the one to invest the proceeds of the sale and as long as she is not a US citizen, nor a "US person" (i.e. not resident in the US) then she shouldn't be subject to US taxes on the investment income. You would have to file as married, filing separately, which does carry a few minor disadvantages. But the US would only be able to tax YOUR income and not hers.

If you live in the US, no way since you would both be subject to US taxes.


----------



## TagOctober20 (Oct 20, 2018)

Thanks for the quick response, Bev.
We are now both US citizens ...


----------



## TagOctober20 (Oct 20, 2018)

I must say this makes no sense.
If this country in Asia severely limits how much money can be sent abroad and a US person earns income only in this country, how are they expected to pay US income tax in the US, when they have little or no income in the US? Where is the US money to pay the US tax supposed to be coming from?


----------



## Bevdeforges (Nov 16, 2007)

I'm afraid you're preaching to the choir here. The US notion of citizenship based taxation goes a LONG way back - almost to the Civil War days. (Or so I'm told - there was no Federal income tax until something like 1919.) 

There have been attempts to lobby for changes, but the Congress appears not to care (or more likely, not to have a clue) even though the only other country that taxes its people in this manner is Eritrea.

OTOH, the IRS is extremely limited in its enforcement powers outside the US. And normally only has access to your accounts and/or assets in the US if they believe you have an unpaid bill.


----------

