Do US residents have to pay taxes on "everything" they own, even back in their home country?

Question

I'm helping some people I know who are going to be moving here in the next few months. They will be coming to the US as US residents.

They were asking me if they were going to have to file taxes every year, and if so, on what?

I know they have to pay taxes on income, but they are both retired, and have their main bank account back home.

Question: will they have to pay taxes on the money they have back in their country? How does this work? I am not very familiar with taxes in general. They have a bank account back home with their money. Will they have to pay taxes on the money they earned over the years? They are mainly concerned about taxes on the money they have overseas.

Thanks in advance.

Answer 1

It's on what they've earned.  You can't just send money overseas to hide it, that's called money laundering.

Answer 2

US residents need to file a Form 1040 tax return every year to pick up all sources of Gross Income from all sources domestic and foreign. The income from the foreign county is taxable.  But generally after taxing you on the foreign income the US will allow a foreign tax credit for the taxes that were withheld by the foreign county.   Generally  the foreign tax credit is the lower of the tax you had withheld or the foreign treaty rate the US has with the foreign country.

Answer 3

Residents of the U.S. pay taxes on the money they earn in the U.S. It doesn't sound like your friends will be earning any income while they're here, so they won't have to worry about paying income taxes on anything.

We don't make our residents pay taxes on any money they have in the bank -- it's presumed that they would have paid any income taxes due on that money in the year that they earned it.

Your friends might want to check with a banker or accountant once they're in the process of moving here just to be sure there aren't any special circumstances for them. Professional advice is *always* a better choice than Yahoo Answers advice!