After that you only file income tax returns if you have income from US sources or you become a US resident.
The 10 year rule was repealed in 2008.
Example: So your US corporation "pays" your Ireland corporation, who than pays you in the EU? Would that avoid the income from being considered US sourced?
You would not need that intervening corporation in Ireland for income tax reasons but there are probably good business reasons for putting a layer between you and the US company.
If you are a US citizen you are taxed on your wages no matter where you are on Planet Earth. Some relief is possible (first approx $100k not taxable, for instance).
If you live in a country with no income tax then your US income tax is a net cost to you -- making you poorer compared to that British coworker who makes the same salary as you but pays no UK tax. Look around Dubai. Count Americans and count British people. Tax is part of the reason.
Correct me if I'm wrong, but after that $100K deduction you're essentially paying the higher of the local tax, or the US tax?
A large chunk of this forum likely has US source income, so it would be good to know.
The magic is in understanding the metaphysics of the definition of US source. Just because the money comes from a US customer doesn't mean that you have US source income.
If I hire a web developer in Canada and he designs my site whilst sitting in a chair in Vancouver, the income he ears from me is not US source. Weird I know. For services, income is sourced where the human body who did the work is physically located. God what an awful sentence.
My intuition says "not us source" because the production and administration of the product was in Canada.
There are also categories of income which are exempt from witholding, such as royalties. For instance, Canadian authors receive royalty cheques from Amazon with no witholding if they submit a W-8BEN. Is their income "non-US source" because the owner is not resident in the US?
