When a Nonresident Must Pay Taxes on Their Business Income and US Real Estate Sales

For tax purposes, an alien is an individual who is not a U.S. citizen . Aliens are classified as nonresident aliens and resident aliens. Publication 519 will help you determine your status

and give you information you will need to file your U.S. tax return. Green card holders are considered the same as citizens in most circumstances and normally must file the Form 1040 as a would a citizen.

Many nonresidents are sellling products through Amazon or other on line companies and due to inventories, etc. would be deemed as subject to US  income tax on their Sales through this companies.   These rules apply even though the nonresident may not have an permanent business establishment in the US.  If the nonresident has a US Agent this can sometimes cause them to be deemed to have a tax situs in the US.

Nonresidents are taxable on their sales of US real properties. Also should the nonresident individual owner die, the value of the US properties are subject to US estate taxes if the fair market value of the property of the date of death exceeds $60,000.  There are tax strategies available to avoid the US estate tax.

US Interest and Dividend income is usually taxable to nonresidents, though US capital gains from the sale of US stocks in the stock market are not taxable.

If you are a US nonresident who wishs to do business in the US, sell products, buy US real estate and rent US real estate we can help you plan the best tax strategies.  We are US attorneys and CPAs that specialize in US nonresident taxation. EMAIL US

If you are a US nonresident that needs to file their US income tax return for 2019 or earlier years, we can prepare that return to provide you with the optimum tax results. DOWNLOAD OUR TAX QUESTIONNAIRE AND RETURN TO US FOR A FEE QUOTE

Dual Status Aliens - Special Tax Return Filing Requirements

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Dual status aliens determine their residency status under both the Internal Revenue Code and tax treaties.  When you status changes in the middle of a year from a resident to a nonresident you must file a dual status tax return. This return includes a form 1040 for the part of the year you are a US resident and a 1040NR for the part of the year you are a nonresident. This usually occurs when you surrender your green card (permanent residency) or surrender your US Citizenship.

Dual Status Alien

If you change status during the current year-

• from a nonresident alien to a resident alien, or
• from a resident alien to a nonresident alien

Aliens who make such a change are Dual Status Aliens and must file a special tax return called a Dual Status Return as described in Publication 519, U.S. Tax Guide for Aliens.

Dual Status Alien - First Year Choice

If you are a Nonresident Alien who will become a Resident Alien under the Substantial Presence test in the year following this taxable year, you may elect to be treated as a Dual Status Alien for this taxable year and a Resident Alien for the next taxable year if you meet certain tests. Refer to the First Year Choice area, under Dual-Status Aliens, of Chapter 1 in Publication 519, U.S. Tax Guide for Aliens.

Tax Treaties

Most Tax Treaties contain an article which defines tax residency for purposes of the Tax Treaty. Tax residency determined under the residency article of a tax treaty may differ from the residency provisions of the Internal Revenue Code.

Dual Status Aliens Married to U.S. Citizens or Resident Aliens

A dual status alien married to a U.S. citizen or to a resident alien may elect to file a joint income tax return with his/her U.S. citizen or resident alien spouse. Refer to Nonresident Spouse Treated as a Resident.

These rules are complex.  We can help you prepare your dual status return or review one you prepare on your own or answer your questions. Email us at ddnelson@gmail.com