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U.S. International Tax Compliance

U.S. International Tax Compliance

Are you a U.S. citizen or resident with foreign income, bank accounts, investments, or a business outside the United States?

Or are you a foreign individual or business coming to the U.S., earning U.S. income, investing in U.S. assets, or starting a business here?

In either situation, you may have U.S. international tax compliance obligations. Depending on your circumstances, these may include:

  • Reporting foreign bank accounts and financial assets.
  • Disclosing ownership in foreign companies and reporting foreign investments.
  • Reporting U.S. business activities and income connected to those activities.
  • Withholding and reporting U.S. tax on payments made to foreign persons.
  • Claiming foreign tax credits to reduce double taxation.
  • Applying relevant tax treaty provisions to determine your U.S. tax obligations.
Contact Us About Your U.S. Tax Matters →

How Can We Help You?

Do You Have Foreign Bank Accounts or Assets?

If you are a U.S. person with money or investments outside the United States, you may have reporting obligations even if you do not owe U.S. tax.

Remember, owing tax and meeting reporting requirements are two separate things. For example, you may still need to file certain forms to report your foreign accounts, assets, or investments, even when no additional tax is due.

We can help you determine whether you need to report:

  • Foreign bank and brokerage accounts
  • Foreign securities and investments
  • Foreign financial assets
  • FBAR (Report of Foreign Bank and Financial Accounts), FinCEN Form 114
  • Form 8938 (Statement of Specified Foreign Financial Assets)

We also help you understand the difference between FBAR and Form 8938 and whether both may apply to you.

Do You Own a Foreign Company or Partnership?

If you own, control, or invest in a foreign entity, your U.S. tax obligations may extend beyond reporting the income you receive from that entity.

We can help you determine whether you need to file:

  • Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations)
  • Form 8865 (Return of U.S. Persons With Respect to Certain Foreign Partnerships)
  • Form 8858 (Information Return of U.S. Persons With Respect to Foreign Disregarded Entities and Foreign Branches)
  • Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund)
  • Form 3520 (Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts)

Where applicable, we also analyze the following U.S. international tax rules:

  • Controlled Foreign Corporation (CFC) rules
  • Subpart F income rules
  • Global Intangible Low-Taxed Income (GILTI) rules
  • Passive Foreign Investment Company (PFIC) rules
  • Foreign Tax Credit (FTC) rules

Are You a U.S. Citizen or Resident Living Outside of the United States?

Moving abroad does not automatically end your U.S. tax obligations.

U.S. citizens and resident aliens generally remain subject to U.S. tax on their worldwide income, even when they live and earn income in another country.

We can help you address:

  • Worldwide income
  • Foreign employment and business income
  • Foreign investments
  • Foreign bank accounts
  • Foreign companies and partnerships
  • Foreign trusts
  • Foreign tax credits
  • Foreign Earned Income Exclusion
  • FBAR and Form 8938
  • Other international information reporting

Are You a Foreign Individual Coming to the United States?

If you are moving to, working in, or investing in the United States, your U.S. tax treatment depends on your specific circumstances.

We can help you determine:

  • Whether you are a U.S. tax resident or nonresident
  • How the Substantial Presence Test applies
  • Whether a tax treaty affects your residency
  • How your U.S.-source income is taxed
  • Whether your income is ECI or FDAP
  • Whether you need to file Form 1040-NR
  • What U.S. withholding requirements apply

Are You a Foreign Business Operating in the United States?

If your foreign company is entering the U.S. market, hiring people, providing services, selling products, investing, or otherwise conducting activities in the United States, you need to understand your U.S. tax exposure.

We can help you determine whether you have:

  • A U.S. trade or business (USTB)
  • Effectively Connected Income (ECI)
  • A Permanent Establishment (PE) under an applicable tax treaty
  • A U.S. filing obligation

Depending on your circumstances, our services may include:

  • Form 1120-F (U.S. Income Tax Return of a Foreign Corporation)
  • Protective tax filings for foreign corporations
  • Branch profits tax
  • U.S. tax withholding and reporting requirements
  • Tax treaty positions and disclosures
  • U.S. tax compliance for foreign-owned U.S. entities

Is Your U.S. Business Expanding Abroad?

If you are taking your U.S. business into another country, the structure you choose can create continuing U.S. tax and reporting obligations.

We can help you evaluate:

  • Foreign subsidiaries and branches
  • Controlled Foreign Corporations (CFC)
  • Subpart F and other CFC income rules
  • Foreign partnerships
  • Foreign disregarded entities
  • Foreign tax credits
  • Foreign withholding taxes
  • Transfer pricing
  • Foreign entity reporting
  • Tax treaty considerations

The objective is to help you understand the U.S. tax consequences before your international expansion creates unexpected compliance problems.

Are You Making Payments to Foreign Individuals or Businesses?

If your U.S. business pays a foreign person or company, you may have U.S. withholding and information-reporting responsibilities.

We can help you determine what applies to payments for:

  • Services
  • Interest
  • Dividends
  • Royalties
  • Rent
  • Management services
  • Licensing
  • Software and other cross-border transactions

Depending on the payment, your U.S. withholding and reporting obligations may include:

  • Forms W-8 to document foreign status and claim applicable tax treaty benefits.
  • Chapter 3 withholding on certain U.S.-source payments to foreign persons.
  • Foreign Account Tax Compliance Act (FATCA) requirements.
  • Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons).
  • Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding).
  • Partnership withholding on certain income allocated to foreign partners.

Tax treaty provisions that may reduce or eliminate U.S. withholding tax.

Do You Have Cross-Border Related-Party Transactions?

If your U.S. company and foreign related company transact with each other, you need to consider U.S. transfer pricing rules.

We can help you address:

  • Intercompany services
  • Loans and financing
  • Royalties
  • Intellectual property
  • Cost-sharing arrangements
  • IRC §482
  • Transfer pricing documentation
  • Advance Pricing Agreements
  • Mutual Agreement Procedures
  • Related-party reporting

Are You Selling or Investing in U.S. Real Estate?

If you are a foreign investor selling U.S. real estate, or you are structuring an investment in U.S. real property, special U.S. tax and withholding rules may apply.

We can help you address:

  • FIRPTA (Foreign Investment in Real Property Tax Act)
  • U.S. real property interests
  • U.S. real property holding corporations
  • Foreign sellers
  • Partnership structures
  • Form 8288: U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests
  • Form 8288-A: Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests
  • Form 8288-B: Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
  • Related withholding obligations

Do You Have a Foreign Trust, Gift or Inheritance?

If you receive or transfer assets involving a foreign trust or receive certain foreign gifts or inheritances, you may have separate U.S. reporting obligations.

We can help you determine whether the following U.S. reporting and tax requirements apply to your situation:

  • Form 3520: Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.
  • Form 3520-A: Annual Information Return of Foreign Trust With a U.S. Owner.
  • U.S. estate tax rules for transfers of property after death.
  • U.S. gift tax rules for certain transfers of property.
  • Other applicable reporting requirements for foreign trusts, gifts, and inheritances.

Are You Giving Up U.S. Citizenship or Long-Term Residency?

If you are considering expatriation, the tax consequences need to be reviewed before you give up citizenship or terminate long-term U.S. residency.

We can help you understand:

  • Expatriation tax rules
  • Exit tax considerations
  • Covered expatriate rules
  • Foreign assets and income
  • Form 8854
  • Continuing U.S. reporting obligations

Do You Have a Missed International Tax Filing?

Perhaps you filed your U.S. tax return but later discovered that you should have reported a foreign bank account.

Or you own a foreign company and did not know that an additional information return was required.

Perhaps you moved to the United States, operated a foreign business, received a foreign gift, or invested abroad without realizing that additional U.S. reporting rules applied.

If this sounds familiar, do not simply file a form and assume the issue is resolved.

We review your circumstances and determine the appropriate approach to correcting past U.S. tax compliance issues. Depending on your situation, this may involve:

  • Amended tax returns to correct previously filed returns.
  • Delinquent information returns to file missing forms.
  • Delinquent FBARs (FinCEN Form 114) to report previously undisclosed foreign financial accounts.
  • Reasonable-cause relief to request penalty relief where the legal requirements are met.
  • Streamlined Filing Compliance Procedures for eligible taxpayers who need to correct past reporting or filing failures.
  • IRS Voluntary Disclosure procedures for certain taxpayers with potential criminal tax exposure.
Discuss Your Missed Filing →

Do You Need to Apply a Tax Treaty?

If you are dealing with another country, U.S. domestic tax rules may not be the only rules that matter.

We can help you determine whether an applicable tax treaty changes your U.S. tax position and address issues such as:

  • Treaty residence
  • Permanent Establishment
  • Business profits
  • Dividends, interest, and royalties
  • Employment income
  • Limitation on Benefits
  • Treaty-based return positions
  • Form 8833
  • Mutual Agreement Procedures

We consider the U.S. tax rules, foreign tax considerations, and applicable treaty provisions together.

How We Help You Stay Compliant

You do not need to determine which of these rules apply to you on your own.

1. We understand your situation

We look at where you live, where you earn income, what you own, which entities you are involved with, and which countries are connected to your situation.

2. We identify your obligations

We determine which U.S. tax returns, information returns, foreign account reports, withholding rules, treaty provisions, and other requirements may apply.

3. We address the compliance

We help you identify what needs to be filed, what needs to be corrected, and what you need to consider going forward.

4. We help you plan for future years

International tax compliance is ongoing. We help you understand your continuing obligations so that the same issue does not become a recurring problem.

Why Work With Arora Law P.C.?

When your tax situation involves more than one country, knowing that you have income or assets abroad is only the starting point. You need to know what the United States requires you to report, what tax may apply, whether a treaty changes the result, and which filings are required.

Arora Law P.C. focuses on U.S. international tax matters.

Whether you are entering the United States, living abroad, expanding your business internationally, investing across borders, making payments to foreign persons, or correcting a past filing, we help you understand your U.S. international tax compliance obligations and determine the appropriate next steps.

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Not Sure What You Need to File?

Tell us about your situation. We can help you identify the U.S. international tax compliance issues that may apply to you.

Contact Arora Law P.C.

Disclaimer: The information provided in this article is for general informational purposes only and does not include legal advice. This article does not comprise an attorney-client relationship between the reader and Arora Law P.C. or its attorneys. If you have specific questions regarding your individual situation, please consult with a licensed attorney.

The information in this article is current as of the publication date. U.S. Tax laws and regulations change frequently, and readers should confirm whether any updates have occurred since.