Tax & Accounting Blog

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 9: How Do I Find Out if the Payment Is U.S. Source Income?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 9: How Do I Find Out if the Payment Is U.S. Source Income?

The source of income is determined under U.S. tax rules based on the type of income. Compensation for personal services, whether employment or self-employment, is generally sourced where the services are performed, not where the income is paid. Therefore: Income for services performed outside the U.S. is foreign source income and is not subject to … Read More

Final Regs Clarify Economic Effect Requirement for Estate and Trust Donations

Final Regs Clarify Economic Effect Requirement for Estate and Trust Donations

On April 13, 2012, the IRS issued final regs providing guidance under Code Sec. 642(c) with regard to the federal tax consequences of an ordering provision in a trust, will or local law that attempts to determine the tax character of the amounts paid to a charitable beneficiary. Specifically, the regs confirm that a provision in a … Read More

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 8: Does the Recipient Have to Provide a SSN or ITIN to Be Paid?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 8: Does the Recipient Have to Provide a SSN or ITIN to Be Paid?

No, there is no federal law or regulation that requires that an income recipient provide you with a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) in order to be paid. In fact, you must make the payment if you have an agreement with the recipient obligating your organization to pay the amount. … Read More

Estates of Some 2011 Decedents Get More Time to Make Portability Election

Estates of Some 2011 Decedents Get More Time to Make Portability Election

The IRS has issued guidance giving certain estates of married individuals who died during the first six months of 2011 an extension of the deadline to make the portability election to pass the decedent’s unused estate and gift tax exclusion amount to the surviving spouse. Estates qualifying for and taking advantage of the extension will have … Read More

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 7: What if the Service Provider Wasn’t Authorized under the Immigration Rules to Provide the Services?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 7: What if the Service Provider Wasn’t Authorized under the Immigration Rules to Provide the Services?

You must apply the proper withholding and reporting rules based on tax residency status to payments to foreign national recipients regardless of whether the recipient was authorized to provide the services or not. It is the provision of services by an unauthorized individual that is a violation of the immigration laws. However, your organization’s payment to the … Read More

IRS Delays Effective Date for Reporting Basis on Sales of Debt Instruments and Options

IRS Delays Effective Date for Reporting Basis on Sales of Debt Instruments and Options

The IRS announced on May 2, 2012 that it intends to delay the effective date for reporting basis on sales of debt instruments and options. The Energy Improvement and Extension Act of 2008 requires brokers to report the basis on sales of certain securities. The Act applies to stock acquired on or after January 1, … Read More