Tax & Accounting Blog

U.S or Foreign Person Part 1

U.S or Foreign Person Part 1

In order for payers (called withholding agents because of their obligation to withhold taxes) to withhold and report income payments appropriately, they must determine whether the beneficial owner of the income is a U.S. person or a foreign person. The broad definition for the term, withholding agent, includes anyone who “has control, receipt, custody, or … Read More

Residency for Tax Treaty Purposes for Individuals Part 4: The Tax Expatriation Rule

Residency for Tax Treaty Purposes for Individuals Part 4: The Tax Expatriation Rule

Tax code Sections 877 and 877A (the exit tax) impose special provisions on certain U.S. citizens who terminate their citizenship and long-term green-card holders who lose their status through abandonment (whether or not intentional) or revocation provided they meet certain criteria. As a result, most tax treaties include provisions limiting the eligibility of these individuals to use … Read More

Residency for Tax Treaty Purposes for Individuals Part 3: The Savings Clause Exception

Residency for Tax Treaty Purposes for Individuals Part 3: The Savings Clause Exception

Because the United States imposes worldwide taxation on its citizens and immigrants (popularly called green-card holders), all U.S. tax treaties include a provision commonly referred to as a savings clause because it saves the right of the U.S. to tax its citizens and residents wherever they reside in the world. For example, Article 1(4), General Scope, … Read More

Residency for Tax Treaty Purposes for Individuals Part 2: Eligibility for Treaty Benefits

Residency for Tax Treaty Purposes for Individuals Part 2: Eligibility for Treaty Benefits

Eligibility for tax treaty benefits in the first instance is based on an individual’s tax residency status (not citizenship) in the treaty country. The timing of tax residency in the treaty country varies with the treaty article providing the benefit. Most treaty benefits require an individual to be a tax resident of the treaty country at the … Read More

Partners and Details Firming around FATCA

Partners and Details Firming around FATCA

Foreign financial institutions and governments might initially have groaned when the U.S. Congress passed the Foreign Account Tax Compliance Act in March 2010, but it looks like at least some of them are starting to come around. In February, the U.S. Treasury announced it had partnered with five European nations — France, Germany, Italy, … Read More

New Cost Basis Rules May Be Lost on Many

New Cost Basis Rules May Be Lost on Many

With taxpayers in the throes of planning their 2011 income tax returns, now’s a good time to remind filers not to overlook new cost basis reporting rules governing securities sales. In the past, they had the option of specifying which shares they sold when computing their cost basis. But as of 2011, taxpayers’ account custodians … Read More