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NON-Resident Tax Planning

Non-residents living outside the United States who perform business or own assets in the U.S. may have potential tax liabilities to consider. The first motion is to identify using the U.S. tax code whether the foreign national is either considered a resident alien or non-resident alien. This determines which tax rules apply to the Foreign National.

Tax Rules for Foreign Nationals

  • Resident aliens (Green Card holders) hold permanent residency in the United States and are taxed similar to U.S. Citizens on their worldwide income and assets.
  • Non-U.S. resident aliens do not hold permanent legal residency in the United States therefore are only taxed on U.S income and assets.
  • Resident and Non-U.S. resident aliens do not qualify for the unlimited marital deduction, which allows unlimited transfer of assets between spouses without any estate or gift taxes.

Consequently, there is a way to reduce tax liability for Non-resident aliens. In other words, if there is tax treaty between the United States and their home country. The tax liability reduction applies. For a list of tax treaty countries, please visit IRS Income Tax Treaties

List of U.S. Assets That Expose Foreign Nationals to Taxation

  • U.S. Brokerage Account Deposits
  • Personal Property Located in the U.S.
  • Real estate property located in the United States.
  • Stocks of U.S. companies
  • Business Bank Accounts

For a more complete list of assets considered U.S. situs property, please visit IRS U.S. situs rules