Crazy. So if you move to PR but making money from other US based interests you get exempted from US federal income tax, but if you move and work permentantly in say Germany, you still get charged US Federal Income tax?
I'm not familiar with the Puerto Rico situation, but elsewhere, some (likely significant) portion of your foreign-earned income may be excluded from your US tax burden. For most people who earn money abroad this means that while you must file taxes, you likely don't pay anything to the US Gov't on foreign-earned income.
I find the whole taxation-by-citizenship thing ludicrous and coupled with the separate Foreign Bank Account Reporting for accounts having more than $10k taxes are a headache for Americans living abroad.
That was my question. The US is one of two countries where US citizens are required to file taxes even if they're not living in the country (the other is Eritrea).
If I remember correctly, PR and Guam are the two places in the world where your income is exempt from federal income tax, if you pay local taxes. There are some exceptions to that.
It's supposed to give some local autonomy to the taxation process and fiscal management.
