Dianne C. Mehany spoke with The Washington Post regarding Britain's newly appointed foreign minister, Boris Johnson, who could still be on the hook for his unpaid U.S. taxes. Mr. Johnson holds both British and U.S. citizenships. For the complete article, please visit The Washington Post's website.
Excerpt taken from the article.
The United States allows citizens living abroad to credit the taxes paid in their country of residence against their U.S. bill. Because Britain’s tax rates are generally higher than America’s, it would not be surprising if Johnson did not owe Uncle Sam any money during those years, said Dianne Mehany, a tax attorney at Caplin & Drysdale.
In addition, she said, back payments of U.S. taxes would be unlikely to appear on Johnson’s British tax return unless he attempted to claim it as a credit against other liabilities.
If Johnson renounced his citizenship without cleaning up his U.S. tax obligations, he would be subject to another tax — the exit tax — that often ends up totaling more than a million dollars.
“The U.S. has taken a hard-line stance,” Mehany said. “If you are a U.S. citizen, you owe U.S. tax.”