9 Residency and Income From Your Home Country
Question for this chapter. When a household lives in the U.S. but still has income, accounts or property tied to a home country, which country treats each person as a resident, and what has to be reported?
Answer. Each country applies its own residence test first, and some tests count days while others look at a home or where a person's main life centers. If someone is resident in both places, a tax treaty may assign them to one country, though the sources show no U.S. treaty entry for Colombia. U.S. citizens stay taxable in the U.S. on worldwide income, and tax paid abroad is usually handled through a credit that lowers tax owed rather than sending money back to a bank account.
What to check
- Apply the home country's residence test first, then ask whether the person is also a U.S. resident.
- Check whether the home country counts days, a permanent home, family ties or income sources in its test.
- If resident in both countries, work through the treaty tie-breaker steps in order, and note whether a treaty exists for your country.
- Remember that U.S. citizens remain taxable on worldwide income regardless of the tie-breaker outcome.
- Look at whether home-country accounts, pensions or large gifts create U.S. reporting duties even when no tax is due.
What to confirm. Confirm each person's residence status under both countries' rules and whether a treaty applies to your home country, using the official texts rather than this summary.
One-line summary. Residence is decided country by country, treaties and credits can reduce double taxation, and reporting duties can apply even when no tax is owed.
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