Dominican income tax?

[CaliforniaGeorge]

Does the Dominican government collect income tax on retirement pensions which were earned by expats prior to living in the DR? In other words, do they take a bite out of your social security checks or other pension money that comes into the country?

Thanks in advance for your input.

George

[GringoCArlos]

No. Your money is safe.

[CaliforniaGeorge]

thank you very much, sir.

[ricktoronto]

However depending on the tax treaty with your country and the DR if you are a permanent resident of the DR and a non-resident of your former country there may be withholding tax deducted at source before the cheque is mailed or funds credited. That is how it is in Canada - 15% off the top. Tax here is based on residency however and in the US on citizenship.

[CaliforniaGeorge]

The U.S. will tax all income generated in the U.S., but my concern (assuming one becomes a resident of the DR) is whether the DR will also tax the income derived from the retirment/pension?

FYI, I am an American citizen but was born in the Dominican Republic. My family left when I was about 3 years old. While I have been on vacations to the DR, it never seemed possible that I might live there one day.

Now, I am considering retirment in the DR in a few years and have been reading the DR1 message boards faithfully.

I would like to say that it is a pleasure to read all the posts as they are entertaining and informative.

[Conchman]

There are international tax agreements between most countries that technically are supposed to prevent you from paying tax twice.

[ricktoronto]

I am pretty sure the DR has no way of knowing you even have a pension , where it is, who pays it and how much so it is safe even if there was a requirement to pay. If you have direct deposit you'd be better off not using a DR bank to hold your life's savings anyway, so nobody is the wiser.

[duck]

Originally Posted by CaliforniaGeorge

The U.S. will tax all income generated in the U.S.

If you are a US citizen, the US will tax all of your income, regardless of where it is generated, but if you are residing abroad you get an exemption of ca. $US 80k + housing and some other stuff.

Friends of mine living in the DR who are collecting pensions in the US just have the money deposited to their US acct, and either draw from an ATM or cash checks at money changers.

[CaliforniaGeorge]

Sure, if you make money in the DR the exemptions apply, but your retirment/pension is taxable by Uncle Sam. So is any interest or dividend derived from a foreign account. I don't think the state of CA gets a cut but I will check that out. I am not asking what people actually do, just wanted to know my legal obligation to the government.

BTW, thanks for the info, I didn't know money changers would take checks.

the following is excerpted from the IRS website
http://www.irs.gov/publications/p54/ar02.html

6) I am a U.S. citizen who has retired, and I expect to remain in a foreign country. Do I have any further U.S. tax obligations?

Your U.S. tax obligation on your income is the same as that of a retired person living in the United States. (See the discussion on filing requirements in chapter 1 of this publication.)

7) I have been a bona fide resident of a foreign country for over 5 years. Is it necessary for me to pay estimated tax?

U.S. taxpayers overseas have the same requirements for paying estimated tax as those in the United States. See the discussion under Estimated Tax in chapter 1.

Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U.S. taxation.

Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax.

The first installment of estimated tax is due on April 15 of the year for which the income is earned.