Tag Archives: non-resident alien

US Estate Tax Trap for Non-US Persons

September 01, 2015  |   Posted by :   |   International Tax Planning   |   0 Comments

By Craig Thompson, ustaxfs.com Consideration of local estate taxes is a central responsibility for executors in most jurisdictions. In cases where the decedent held US assets, even if they were not a US citizen, domiciliary or lawful permanent resident, there is also an added complication in that US estate taxes too must be taken into […]

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Rate and Calculation of Tax

July 08, 2013  |   Posted by :   |   Domicile   |   0 Comments

Rates. For nonresident alien decedents dying after November 10, 1988 (the date of enactment of the Technical and Miscellaneous Revenue Act of 1988 (“TAMRA”) the estate tax rates are the same as for U.S. citizens. Credits available to offset the tax include: (a) IRC § 2102(b): Unified credit of $13,000 is equal to an exemption […]

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U.S. Estate, Gift, and Generation Skipping Transfer Taxation of Non-Resident Aliens

July 07, 2013  |   Posted by :   |   Domicile   |   0 Comments

U.S. Estate Tax 1. Taxation based on citizenship and residence. 1.1 U.S. citizens and residents are subject to estate tax on all interests in property wherever located owned or controlled at death. 1.2 Individuals who are neither U.S. residents nor U.S. citizens (“non-resident aliens”) are only subject to U.S. estate tax on: (a) Interests in […]

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Applicability of U.S. Transfer Tax to Nonresident Aliens

July 07, 2013  |   Posted by :   |   Domicile   |   0 Comments

Scope of U.S. Estate Taxation U.S. estate and gift taxation applies to non-resident alien transferors who have property located in the United States (referred to here as foreign clients) in addition to citizens and residents of the United States. For nonresident aliens, the gross amount subject to U.S. estate tax can be determined by reference […]

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U.S. Gift Tax

July 06, 2013  |   Posted by :   |   Domicile   |   0 Comments

U.S. Gift Tax 1. U.S. citizens and residents are subject to gift tax on all direct or indirect transfers of property, wherever located, for less than full and adequate consideration. 2. Non-resident aliens are subject to gift tax only on gifts of tangible personal property and real property located in the United States. IRC § […]

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Identifying Property Economically Owned by the Nonresident Alien Decedent

July 05, 2013  |   Posted by :   |   Domicile   |   0 Comments

Nominal but not substantive ownership. The foreign client may be only the nominal owner and may hold the property on behalf of some other person. For example, the foreign client could hold the U.S. property as an agent for other parties, including for a corporation, or the foreign client could hold the property in some […]

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International Investors – U.S. Tax Planning

May 07, 2013  |   Posted by :   |   International Investors,Voluntary Disclosure   |   0 Comments

International investors who either move to the U.S. or invest in U.S. assets (with U.S. source income) face multiple U.S. tax issues: 1. U.S. Income Tax Residents, For those international investors who become U.S. income tax residents, under either the “Green Card Test”, or the “Substantial Presence Test” (i.e. they are in the U.S. 183 […]

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IRS OVDP – International Investors and U.S. Income Tax

April 18, 2013  |   Posted by :   |   International Investors,Voluntary Disclosure   |   0 Comments

International investors are subject to tax reporting and tax payment of U.S. income taxes as either a U.S. income tax resident, or as a non-resident alien. Resident aliens (under either the “Green Card” or “Substantial Presence Tests”) are subject to taxation on their world-wide income which includes annual tax filings: Form 1040 (report world-wide income), […]

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Taxation of NRAs- FDAP Income

April 17, 2013  |   Posted by :   |   Voluntary Disclosure   |   0 Comments

Passive income (i.e. FDAP income) is subject to a 30% withholding tax with exceptions for: 1. Bank Deposit Interest; 2. Portfolio Interest: Fixed interest only. Exception not applicable to bank loans in ordinary course of business, “10% shareholders” of corporate or partnership lender. Regarding Portfolio Income, under IRC Sec. 469(e)(1), it includes: interest, dividends, annuities […]

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Taxation of NRAs – Effectively Connected Income

April 17, 2013  |   Posted by :   |   Voluntary Disclosure   |   0 Comments

Non-Resident Aliens (NRAs) have net basis tax on income “effectively connected” with a U.S. business. Income from U.S. sources is effectively connected income. However, payments under a covenant not to compete are “FDAP Income”, so the tax issue is where all services under covenant not to compete are performed, which source rule determines whether it […]

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