Double Taxation

## Double Taxation

Double taxation occurs when the same income is taxed by two different jurisdictions. This commonly affects expatriates, cross-border workers, and investors with foreign income.

### Types

- **Juridical**: Two countries tax the same person on the same income.
- **Economic**: Two countries tax the same income in different hands (e.g., corporate profits + dividends).

### Relief Mechanisms

| Method | Description |
|--------|-------------|
| Tax treaty | Bilateral agreement allocating taxing rights |
| Foreign tax credit | Credit for taxes paid to another country |
| Exemption method | Home country exempts foreign-source income |
| Deduction method | Foreign taxes deductible as an expense |

### US Worldwide Taxation

The US taxes its citizens and green card holders on worldwide income regardless of where they live. US expats working in a foreign country may owe taxes to both the US and their country of residence, though the Foreign Earned Income Exclusion ($130,000 in 2025) and Foreign Tax Credit provide significant relief.