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

US Estate Taxes on US Real Estate Owned by Nonresidents - a Big Surprise

US Nonresidents  are purchasing US real estate at dizzying rates.  The prices seem low and the locations are often really great compared with their home country. The real estate often is for a personal residence, second home, or residential and commercial investment.

Nonresidents pay the same income taxes on their rental properties (and personal properties) as paid by those who are US Citizens or green card holders.  That seems fair and works well.

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There is one surprise waiting in the darkness.  Nonresidents with property located in the US do not

pay the same estate tax as do residents.  When a nonresident dies, they must pay US estate taxes on the then fair market value of their property located in the US that exceeds $60,000.  The estate tax rate for 2015 on the amount in excess of $60,000 startes at 28% and increases to 40% for taxable amounts in excess of $1,000,000.  That is a high tax which is almost never considered when

nonresidents purchase property in the US.

Planning is required to avoid or reduce these estate taxes.  Many plannings use foreign corporations and trusts.  We recommend every nonresident purchasing  US real estate first plan  ahead for the possibility of these huge taxes  should an owner die while owning the property.  Contact us if you wish to learn more. Don D. Nelson, Attorney at Law. Kauffman Nelson LLC, Certified Public Accountants.  Email. ddnelson@gmail.com. 

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