What Are Tax Treaties and How Does This Affect Me as a Middle Class Married Working American
Tax treaties are bilateral or multilateral agreements made with the participation of more than one state and are valid within the sovereignty of the states that are parties to the tax treaties. Tax agreements increase trade between countries and prevent double taxation, which is seen as its most important feature. When individuals or businesses evaluate their earnings by investing in different countries, the situation in which this income should be taxed generates the problem of double taxation, which encourages tax evasion. Tax treaties prevent this problem.
Effects of tax treaties
Each country has tax treaties with different countries. The US has tax treaties with around 70 countries, according to the IRS’ official website (2021). The effects of these agreements differ for the citizens of the countries that are party to the agreement. The tax treaties the US is involved in ensure that not only its own citizens but also residents of the country benefit from these treaties. From the perspective of US policy, these tax treaties affect citizens in other countries in various ways but primarily by ensuring that income is not taxed twice.
Taxes for middle-income working Americans
These agreements mainly serve as a means to claim benefits for an American citizen earning income in another country where the agreement has been made, and does not reduce the taxes paid by the American citizens or residents, except under certain conditions. In this case, the effects of tax treaties on American citizens differ.
All working American citizens of the middle class are required to pay taxes on their income or property. An American citizen residing abroad is also subject to American taxes but also obligated to pay taxes at their place of residence. At this point, tax treaties come into play. Under the auspices of the tax treaty of their country of residence with the United States, they are exempt from paying double taxes. These agreements provide exemptions up to a certain earnings limit, but middle-income American citizens can avoid double taxation entirely due to the amount of their earnings.
Apart from the exemptions offered by tax treaties, marriage also creates changes in paying taxes. In the case of marriage, when there is a salary difference, a lower tax bracket can be created due to the lower-income spouse. The point at which tax treaties are subject to marriage is when an American citizen marries a citizen of a different country. Every naturalized individual is subject to US taxes. However, if one of the spouses is a foreigner residing in the US or has income in the country of citizenship, in this case, tax deductions can be provided through inter-country tax treaties.
Tax treaties are agreements between countries that are generally considered essential to avoid double taxation.
Every American citizen with a source of income or property is subject to US taxes, but American citizens with a foreign income or residing abroad can benefit from tax treaties to avoid double taxation based on their income level. Apart from that, marriage can give the parties advantages in terms of US taxes. Every American citizen has to pay US taxes, but if one of the spouses is a foreigner, they can benefit from tax treaties if they have a source of income in a different country. In any case, tax treaties can favor American citizens depending on their income level and resources.
“An Introduction to Tax Treaties, Brian Arnold | Financing for Sustainable Development Office.” United Nations, United Nations, http://www.un.org/development/desa/financing/document/introduction-tax-treaties-brian-arnold.
“Tax Treaties.” Internal Revenue Service, 2 July 2021, https://www.irs.gov/individuals/international-taxpayers/tax-treaties.
“Tax Treaty Benefits for U.S. Citizens and Residents.” The Tax Adviser, 8 Feb. 2018, https://www.thetaxadviser.com/newsletters/2018/feb/tax-treaty-benefits-us-citizens-residents.html.
How to Format Essay about Taxes Correctly
Requirements for the formatting of such papers are determined by the teachers. If the rules are not provided, you can use the general requirements as the sole guide and are likely guaranteed some level of creativity.
Typically essays are typed in the common font Times New Roman, size 14, with one and a half spacing between lines. Continuous page numbering begins with the title page, but the page number is not placed on it. The title page is formatted according to uniform samples for written work.
If subheadings are necessary, highlight them in bold and start with a capital letter. The introduction and conclusion do not need to be titled. If you supplement the text with graphic material, number and name them by type: drawing, diagram, or table.
The list of references and applications, if used, are located at the end of the paper.
Evaluation Criteria of an Essay about Taxes
Experts can evaluate essays on taxes according to some generally accepted criteria.
- degree of understanding of theoretical material
- competent analysis of the subject
- essay’s logical connection with the thesis
Be sure to:
- Clearly and fully review concepts and examples relevant to the topic and provide relevant information about the taxes or related issues that are the subject of the essay.
- Correctly use a variety of analysis techniques. For example: comparisons, generalizations, alternative points of view, and personal attitude to the problem.
- Adhere to a single, clear, laconic writing style and strive for uniqueness – it helps to find a detail in the question that has not yet been covered extensively.
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