Tax & Accounting Blog

Paying Foreign Employees Part 1

Paying Foreign Employees Part 1

At one time, only major multinational corporations and institutions of higher education had to concern themselves with the special tax rules and procedures for paying foreign employees. That time is long gone. Even small and medium-sized companies pay foreign nationals for services both in the U.S. and abroad. In the new IRS initiatives, all employers need to comply … Read More

U.S. or Foreign Person Part 4: Individuals and Entities in U.S. Possessions

U.S. or Foreign Person Part 4: Individuals and Entities in U.S. Possessions

Determining the proper withholding and reporting on income paid to individuals or entities in U.S. possessions or territories can be confusing. In addition to the rules for determining U.S. or foreign person, there are special rules that might apply for withholding and reporting purposes. Individuals who were born in Puerto Rico, Guam or the U.S. Virgin … Read More

U.S. or Foreign Person Part 3: Foreign Person

U.S. or Foreign Person Part 3: Foreign Person

Individuals who are foreign persons include all non-U.S. citizens who are neither green-card holders nor meet the 183-day substantial presence test (called nonresident aliens). Nonresident aliens also include individuals who meet the 183-day substantial presence test for the calendar year but who are also residents of a tax treaty country (called dual residents) who make an … Read More

U.S or Foreign Person Part 2: U.S. Person

U.S or Foreign Person Part 2: U.S. Person

Individuals who are U.S. persons include U.S. citizens and non-U.S. citizens who are resident aliens for U.S. federal tax purposes. U.S. citizens and resident aliens are subject to withholding and reporting on their worldwide income even when they live and work outside the U.S. U.S. citizens include: Individuals born in the U.S. Individuals born outside of … Read More

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