Below are some of the main compliance issues faced by foreign individuals and businesses in the United States. US citizens and businesses overseas are required to file returns with the IRS for their worldwide income.

US taxpayers overseas – US taxpayers are required to report their worldwide income to the IRS. US resident aliens normally living abroad maybe able to exclude $101,300 of their annual income from U.S. taxation if they meet certain requirements and can claim an addition 16% for certain housing expenses.

A US business operating overseas is liable to the IRS on its worldwide income. If the business operates though a subsidiary overseas it may choose to make a check-the-box election and treat the subsidiary as an opaque entity and defer payment of US taxes due on foreign earning until such earnings are repatriated.

Foreign taxpayers in the United States – Foreign individuals who have any income from a US source may be required to pay US taxes. In addition to any federal income tax due to the Internal Revenue Service (IRS) an individual may be liable for state and local (city or municipality) income tax, and social security taxes too. An individual’s tax is determined principally by reference to their status. These tax obligations may arise in addition to tax obligations in their country of origin.

Read how the IRS determines tax residency for individuals here.

Learn more about how the IRS taxes foreign individuals here.

Foreign businesses operating in the United States through a branch may be liable to pay the Branch Profits Tax or the Branch Interest Tax. For additional guidance on this matter, please contact our office.

Transfer pricing – Foreign businesses operating in the United States are subject to the same transfer pricing rules and regulations as are domestic US corporations. The IRS may impose heavy fines and penalties for non-compliance. Our team works with clients to plan transfer pricing studies and agreement pricing with tax authorities.

Whatever your needs are, we are here to help. Contact our office and we will be in touch shortly.