# USA/Italy dual citizenship - Tricky tax situation



## GGiacobassi

Hello! Does anyone have some good resources for figuring out tax stuff for dual citizens? I am currently only a US citizen, but am working towards getting my dual Italian citizenship. It's exciting, but I don't want to get too far into the process before I understand more about taxes. 

My situation is rather unique. I am a working musician and once I get my Italian (and thus EU) citizenship I'll be spending about 6 months out of the year in the US and the other 6 months in Europe. I estimate I'll be earning about $10,000 per year in the US and about 15,000 euro per year while touring Europe. I will be living nomadically while in Europe (I will not have a permanent home and will stay with friends or do short sublets in various countries) and will make perhaps 1/3 of my money in Germany (about 5000 euro), while earning the rest in France, Switzerland, Poland, Czech Republic, a few Scandinavian countries, Spain, and yes, some shows in Italy as well. That might mean I'm earning about 2000 euro or less in a half-dozen countries in the EU. I am making these estimates based on several years of doing two three-month tours each year in Europe.

Most of my earnings in Europe will be from "pass the hat" situations. Sometimes the way I am paid for concerts is more official. I understand that I will need to pay taxes in the US no matter where I live. What I do not understand is how I will be paying taxes in Europe, and to whom, given the way that I live and earn money. I would love to figure all of this out as soon as possible, and would greatly appreciate any advice, info, or resources that would help me understand all of this. Thanks in advance!


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## BBCWatcher

It'll depend on each country's tax rules, individually. To the extent you need to pay personal income tax in Europe you will be able to take a Foreign Tax Credit (IRS Form 1116) as part of your U.S. tax return. Also, you will probably owe the U.S. Self-Employment Tax (IRS Schedule SE) on most or all of your income, except when you work for an employer in Europe or when you are required to pay social insurance taxes in a country that has a social security treaty with the United States. (Most if not all of the countries you list have social security treaties with the U.S.)

In the income amounts and with the short stays you describe it's unlikely you would owe income and/or social insurance taxes in those European countries, but just double check that, country by country. It's possible when you play a concert the promoter/venue will withhold taxes. That's fine, and then (for a treaty county) you don't owe U.S. SE Tax on that income, and you can count the income tax portion as your Foreign Tax Credit.

With the travel pattern you describe you'll still need to maintain Minimum Essential Coverage, i.e. "Obamacare" U.S. medical insurance. You can still qualify for premium subsidies if eligible, although (as always) you'll have to factor in your worldwide income. Keep shopping every year on Healthcare.gov. I recommend choosing a policy that provides at least emergency and urgent coverage outside the United States -- most "Obamacare" policies do, but check that. You might be tempted to suspend and restart your U.S. insurance as you exit and return to the U.S., but I don't recommend that due to continuity of coverage problems. You're still primarily U.S.-oriented, just traveling heavily, so it's still a good idea to have full year U.S.-oriented medical insurance.

You should obtain an Italian codice fiscale since you might need to provide that number for tax purposes to promoters/venues in Italy when you play there. Then they might withhold taxes, handled as per above. I don't expect you would be required to file an Italian tax return based on your description. (This it the Italy forum, and I can comment a bit more specifically about Italy.)

If you do end up paying European social insurance taxes then you might end up qualifying for tiny retirement benefits when the time comes, depending on how much tax you paid and how long you paid it. Treaty countries can count each other's work histories in order to help you qualify for retirement benefits. It might be 3 euro/month (or whatever) when the time comes, but there you go. Just keep a personal record of that, just in case.

In practice a lot of musicians just go, perform, and ignore their tax obligations (if any) -- and occasionally get caught. Kudos to you for asking in advance and trying to do the best you can to comply -- that's really commendable.


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## Bevdeforges

Frankly, your Italian citizenship won't have that much of an effect on your tax situation unless you establish tax residence in Italy. Not sure the precise requirements for Italy, though the Italians I know here in France seem to think it means 183 days in the country. 

However, in Europe, you may find that there are special tax rules for musicians and other touring artists, where you settle up your taxes at the end of your "tour" in the country. (Obviously this applies primarily to those being hired to perform, where the employer is at least responsible for taxes.)

Given that you'll most likely be spending most of your time each year in the US, I think you'll be considered US resident for tax purposes (over and above the normal requirement for all citizens), so as BBC says, you will be able to take the FTC (foreign tax credit) for any income taxes paid against your income elsewhere. To the extent you wind up paying social insurances or other "payroll taxes" there's no credit available.
Cheers,
Bev


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## GGiacobassi

To BBC and Bev, thank you for your insight. Some of it I understand and some I do not, but I don't feel as concerned. It seems like I'll be able to figure it all out as I go along, and I still have plenty of time before my dual citizenship is finalized. I'm so happy that this resource is available!
All best!
Genna


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