There are various ways to avoid tax and live in the USA, but none of the methods are perfect. Each method will require one or another sacrifice. There are two kinds of potential non-taxed USA residents; to navigate these options effectively, it’s important to consult with a Tax preparation service. They can help identify strategies that work best for your specific situation, ensuring compliance while minimizing tax liability.
US CITIZENS AND PERMANENT RESIDENTS: If a person is born in USA, he is bound to be an US citizen. This implies that the person has to pay the taxes on income regardless where they are earned.
NON-US CITIZENS: The USA offers a wider spread of quality education than other countries, which makes it open for better opportunities for citizens of other countries. The citizens who immigrated to the USA shall be termed as non-US residents. Four ways will legally enable you to pay zero taxes in the USA.
1] LIVE THERE PART-TIME
It will require the taxpayer to constantly move around the globe. In any country, the tax is levied on a taxpayer based on their stay in the country, regardless of their citizenship. If a person wants to avoid paying taxes in the USA, then his stay in the immediately preceding and current year should not be more than 120 days without making a substantial presence. And the person should not be engaged in any effectively connected income. Proper planning needs to be done to avoid becoming an eligible person for a substantial presence in the USA. A citizen of Canada is only allowed 90 days in a year and for non-US citizens, it is extended to 120 days.
2] BECOME A STUDENT OR SCHOLAR
Taking any educational courses in USA does allows a five-year exemption from substantial present. After completion for such five year the person shall pay tax as US citizen. NOTE: The above exemption is only allowed for income from foreign and the income from US shall be taxed accordingly. This plan is best for previous US citizen and this exemption shall not be allowed to an US citizen.
3] BECOME A DIPLOMAT
The salary of a diplomat shall not suffer tax in the USA if such salaries are already by the host country. The tax-free benefit is only allowed up to the salary of the diplomat. If the diplomat earns any US income then it shall be appropriately taxed.
4] MOVE TO PUERTO RICO OR THE US VIRGIN ISLANDS
According the provision of ACT 22, a US citizen shall have to pay only 4% of tax on all income if such resident re-domicile in Puerto Rico or the Virgin Islands. This way is not totally tax free but it allows discount in tax payments up to 90% on tax bills.
CONCLUSION
The United States of America is a capitalist country and it is the largest tax collector in the world. However the above ways are suitable for the person who wishes to stay in US forever.
