What Taxes Must be Paid In US When Nonresidents Sell Their US Property

The following is an excellent article from The Globe and Mail setting forth  what happens tax wise  with respect to US real property when a Nonresident alien sells their vacation home (and a lot of this applies if they sell a rental property). READ ARTICLE HERE

Contact us when you need to plan for US taxes on your sale or when you need to file returns to report the sale of your US property.  ddnelson@gmail.com

Want To Be Paul Manafort’s Cellmate?

By Don D Nelson, International Tax Attorney

One of the criminal charges against Paul Manafort involves his failure to report foreign bank
and financial accounts he controlled.  All such foreign accounts must be reported to the US
Treasury each year on form 114 (FBAR) if the combined highest balances in those accounts
are $10,000US or more.  Paul Manafort appears to have never filed that form and answered
the yes or no question on his tax return asking if he had foreign bank accounts “no.”

If you are like Manafort you too can spend five years in jail and pay a criminal fine of $500,000.
There are also civil fines that can go up to ½ of the balances you maintained in your foreign
bank and financial accounts.

There are several programs that will allow you to catch up with past unfiled foreign assets
reporting forms due the IRS which will reduce or eliminate your financial and criminal
exposure for failing to file the Form 114.  However, like Manafort, if the IRS for FBI discovers
your failure to file before you do try to catch up, you will be exposed to huge monetary penalties
and possible felony charges. Most foreign banks and financial institutions are reporting your
foreign balances to the IRS.  Best to take action now before you get to know Paul better.

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Don D. Nelson, is a US tax attorney who has been assisting Americans in Mexico with their
taxes for over 25 years. He offers his clients the absolute privacy provided by
“Attorney client privilege.” His firm has assisted over a hundred expats in Mexico catch
up with their FBAR filings and regular returns   If you have questions or wish to meet with
him email him at ddnelson@gmail.com or his Los Cabos
phone number is 624 131 5228. US phone number 949-480-1235

WHEN IS A US NONRESIDENT ALIEN REQUIRED TO FILE A US INCOME TAX RETURN?

(Email us with your questions or for assitance at ddnelson@gmail.com)

If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of two tests. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1-December 31).

Certain rules exist for determining the Residency Starting and Ending Dates for aliens.

In some cases aliens are allowed to make elections which override the green card test and the substantial presence test, as follows:

• Nonresident Spouse Treated as a Resident
• Closer Connection To a Foreign Country
• Tax Treaties

You can be both a nonresident alien and a resident alien during the same tax year. This usually occurs in the year you arrive or depart from the United States. If so, 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 section "Dual-Status Aliens" – "First Year Choice" in Publication 519, U.S. Tax Guide for Aliens.)

A resident alien who is required to establish his/her U.S. residency for the purpose of claiming a tax treaty benefit with a foreign country should refer to Certification of U.S. Residency for Tax Treaty Purposes.

We are experts at filing tax returns and tax planning for resident and nonresident aliens. Email us at ddnelson@gmail.com with your questions. We can set up a phone or skype conference to  discuss your situation and put together a US tax plan.

Chose the Right Tax Free State to Locate can Reduce your Taxes Greatly

As a US Nonresident  when you decide where to locate your US business or to live temporarily in the United States, the state you chose to locate your business or live can save you substantial amounts of income taxes. Some states charge taxes up to 13% of your taxable income.  Others have no income taxes. Remember the US state income tax is paid on top of the US Federal taxes which can run up to 33 percent of your taxable income (21 percent for corporations).

The 6 best states to locate to avoid state income taxes include:

• Nevada
• Texas
• Florida
• Washington
• South Dakota
• Wyoming

We can help you chose the best state to in which to locate your business. We can  file for your corporation or LLC in the best tax free state. We are experts in US tax filing requirements for nonresidents and businessmen from other countries who want to locate a business in the USA. Email us at ddnelson@gmail.com to set up a consultation and learn more.

We offer Certified Public Accountant and Attorney services  associated firms  which results in lower fees to you and more efficient service.  Don D. Nelson, Attorney at Law and Kyle Lodder CPA

US Nonresidents- Where to open your US business to Save Taxes

If you are a US nonresident and want to start a business in the USA or establish a subsidiary in the US to operate your business, there are two important decisions you need to make:

1. What type of US entity to use..... a corporation or a Limited Liability Company. The tax consequences of these entities vary substantially and careful consideration of those tax consequences is need to make the right decision. There may also be legal consequences which need consideration.

2. Corporations and LLCs are chartered by one of the US 50 states. Picking the state to organize your LLC or Corporation and for it to operate its business can also have significant US tax consequences. There are 7 states which currently have no corporate income tax. Some states have taxes which can run up to 12 to 13 percent. This tax is in addition to the Federal tax the corporaton will owe the IRS.   The Seven U.S. states currently don't have an income tax are :Alaska, Florida, Nevada, South Dakota, Texas,Washington and Wyoming. 

We can help you form the US entity you need to operate your business and chose the best state operate your business for tax savings. Email us at ddnelson@gmail.com  or call our US phone number at 949-480-1235. Advance planning can save you a lot of taxes.

Nonresident US source income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate. Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

In many situations nonresidents may have the option to be elected as a resident and then pay taxes at the regular graduate rates for US residents which run from 10% to 39.5%. See the sliding scale tax rates HERE

Need help with your nonresident US tax forms or want to plan your US financial connections to achieve the optimal US income tax outcome.?  Email us at ddnelson@gmail.com

Manafort Failed to File the Form 114 - Foreign Bank Account Report with IRS and now faces 150 years in Prision

Forbes magazine article states this is the same way they got Al Capone....tax evasion. Make certain you report all foreign financial accounts that you own or sign on to the IRS to avoid Manafortś problem. READ MORE IN THE FORBES ARTICLE