USA Citizens and Income Tax

They have no tax treaty, do you also have to do Ecuadorian income tax?

Per IL (which I would not rely upon as gospel, but here it is FWIW):

"Foreign residents of Ecuador are taxed on their Ecuadorian-sourced income but not on income earned outside of the country."

From this article:

https://internationalliving.com/countri … dor/taxes/

Thanks, and what income from stock investment if broker in USA

Bigbrad2008 wrote:

Thanks, and what income from stock investment if broker in USA

You are taxed only on Ecuadorian-sourced income.  A stock investment on a USA stock, and/or from a USA broker, would not be considered Ecuadorian-sourced income.

But if it was an Ecuadorian stock?  I'd check with a Ecuadorian tax professional.

If a US Citizen pays foreign income taxes on foreign income then said citizen can take a credit against US taxes, an extra form is required.  Not familiar with Ecuador income tax rules.

If your worldwide income is under the income threshold, you are not required to file a return to the IRS.

Check irs.gov to figure the threshold that applies, which may be based on age (over-under 65).

The threshold may change from year to year.

cccmedia

cccmedia wrote:

If your worldwide income is under the income threshold, you are not required to file a return to the IRS.

Check irs.gov to figure the threshold that applies, which may be based on age (over-under 65).

The threshold may change from year to year.

cccmedia

It is true that certain income levels do not require filing.  Of course if any taxes were withheld, then one must file to get the refund.  Also, if one has self employment net income of $500 or more then a return must be filed because self employment (SS + Medicare) taxes are due even if the only taxable income was the Schedule C of $500.  In addition it may be in one's best interest to file even if the income says a tax return is not required.  That way there is record of your income and no taxes for the year.  Nothing is not the same as zero.

I tend to concur with mugtexh. It is often free and easy to file electronically and the record then exists.

There are other examples when one does not file the IRS will construct a return based on their information and send one a tax bill.  I saw one where a taxpayer sold stock for $20,000, his basis was $17,000, so he had a gain of $3,000.  However, the IRS got the info of the $20,000 sale but not the cost basis of $17,000.  So the IRS showed a basis of $0 And a gain of $20,000.  IRS always calculates a worst case scenario for the taxpayer, so their tax return would show it to be a short term gain. Another time a taxpayer got married, and that year they were not required to file, even though taxpayer had about the same income as when he had been single.  The IRS sent him a letter with his numbers in a single, no other dependents income tax filing and showed he owed taxes. So the newlyweds had to file a joint return to shut up the IRS, a lot of extra time involved.