“International Investors who immigrate to the United States will either be taxed as a resident alien (subject to US income tax on their world-wide income) or a non-resident Alien (subject to US income tax on US source income, only).
United States taxes "U.S. Persons" on their worldwide income according to IRC §61(A).
Under IRC §7701(a)(30) U.S. Persons include the following:
1. U.S. Citizens;
2. Resident Alien Individuals (Green Card Test; Substantial Presence Test, (IRC §7701(b)(1)(A));
3. Domestic Corporations (Corporations created under the laws of one of the 50 states) - location of corporate headquarters is irrelevant, (IRC §7701(a)(4) and (a)(9));
4. Domestic Partnerships (Partnerships created under the laws of one of the 50 states) (IRC §7701(a)(4) and (a)(9));
5. Any Estate other than a Foreign Estate - An estate is foreign if its foreign-source income is not subject to U.S. taxation (other than any income effectively connected with a U.S. trade or business (IRC §7701(a)(30)(D), (a)(31)(A));
6. Any Trust - If a U.S. court if able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust (IRC §7701(a) (30) (E)).”
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Our author, Gary S. Wolfe, has more than 34 years of experience, specializing in IRS Tax Audits and International Tax Planning/Tax Compliance, and International Asset Protection.