Dual Citizenship Freelancer Where to File?

Hello,

I have an income tax question that I am hoping to get some help on.
I have the German and the American citizenship and I'm not sure where exactly I have to pay my income tax. If it's in Germany where I live or in USA. I haven't done my taxes these past years and really want to do that now, so that I can sleep better at night.
For work, I am a freelancer. I work through various sites for US and European (never German) companies and get paid in US Dollars. Is the finance authority in Germany the correct contact for me? Do I have to balance my tax debt here or in USA?
If anyone can help me or give a few tips, I'd appreciate it.

In almost all cases (and this includes Germany) you have to pay income tax where you live and work (regardless of your nationality or where and how the income is paid).
Thus the German Finanzamt nearest to you is in charge.
You will be fined for not submitting tax returns the past few years (which would have been your duty). I recommend you engage a tax consultant to do this correctly and with minimal pain.

Since the USA are an international anomaly by taxing their citizens no matter where they live, work or get paid, you probably have to file (and possibly pay) in the USA as well. There is a dedicated thread on this forum fpor that.

I’ve written extensively on this subject on this site. You have to file tax returns to BOTH countries. The US is one of 2 countries in the world that do this. German forms have to be done first and you pay any tax owed - and all of your worldwide income is included. The American forms don’t have to be filed until June 15th, as an overseas filer you get an automatic 2-month filing extension over the normal April 15th deadline.

Few Americans in this situation should actually have to pay much if any tax at all because they can take the Foreign Earned Income Exclusion which now excludes over 100,000 USD of your foreign earned income. An alternative (can’t do both) you take a tax credit and write off any foreign paid taxes from what you would otherwise owe to the States. This is all a very complex thing, so you should look at the IRS(dot)gov site for details. And one cannot say; I owe nothing so I don’t have to file, you HAVE to file to take the exclusion or tax credits. Some people don’t file and have then burned their bridges. If they file or ever work in the States then they will be on the radar and eventually get audited. If you are being paid by US companies then it’s just a matter of time before you have serious trouble. And even if one renounces their US citizenship it won’t save them from any back taxes owed. The IRS doesn’t give up. They can’t hunt you done in Germany in this case but any further work or visit to the States and you are liable to be arrested if you haven’t paid up.

Many US expats make a big deal about this whole situation or even renounce their American citizenship. The problem is not the tax owed but the bookkeeping and filing. If one has a business for example they might have to keep 2 sets of books and pay a certified accountant that knows how to do both.

Another important factor is Social Security taxes. You’ll need to get an annual statement from the German authorities showing you are covered under the German system, thus exempt from US SS taxes. This has to be included with your US 1040. I’m showing below the address and fax number and a form letter you can use with your own German SS number (Sozialversicherungsnummer). I always send this in around this time of year by fax and get the form back in a month or 2 by the post.

BFA Abteilung USA
BKZ 5565
Ruhrstr. 2
10704 Berlin
Fax 030 865 63848

Sehr geehrte Damen und Herren,
Ich brauche für das Amerikanische Finanzamt (Internal Revenue Service) für das Jahr 2019 einen Sozialversicherungsnachweis, genannt Form D/USA-101A (zweisprachig).
Meine Sozialversicherungsnummer ist: (your number). Kennzeichen:  ????.
Ich bitte um baldige Zusendung.
Mit freundlichen Grüßen,
Your name

How can I get to you easier on this ((

New topic