international tax lawyers

2025 Foreign Earned Income Exclusion | International Tax Lawyer & Attorney

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The Foreign Earned Income Exclusion (“FEIE”) is a valuable tax strategy available to US tax residents who live and work abroad. It allows US citizens to exclude a certain amount of foreign earned income from their US taxable income. The IRS adjusts the precise amount every year.  In this article, I will discuss the 2025 Foreign Earned Income Exclusion.

2025 Foreign Earned Income Exclusion: Background Information

FEIE was born out of the fact that the US tax system is unique and taxes its citizens and even more broadly its residents on their worldwide income irrespective of where they reside. In many countries, such taxpayers are subject to local foreign income taxes on the same income. In order to alleviate the potential burden of double taxation, the US Congress enacted Section 911 of the Internal Revenue Code. This section codified FEIE.

Section 911 allows qualifying individuals to exclude a specified amount of foreign earned income from US taxable income. The IRS adjusts this amount every single year.  A taxpayer must use Form 2555 to claim FEIE.

2025 Foreign Earned Income Exclusion: Eligibility

In order to claim FEIE, a taxpayer must meet certain requirements set forth in IRC §911. I will provide only a brief outline of these requirements in this article. They are discussed in more detail in other articles on our website.

First of all, FEIE applies only to foreign earned income, not passive income and not US-source income.

Second, the taxpayer must maintain his tax home in a foreign country. “Tax Home” is a term of art that has its specific meaning.

Third, you must pass either the physical presence test or the bona fide residence test.

2025 Foreign Earned Income Exclusion: Additional Considerations

While FEIE brings a huge benefit of income exclusion, it often is not the best option for US taxpayers who reside overseas. Let’s focus on the four most important considerations.

First, FEIE limits and in some cases completely eliminates the ability to take Foreign Tax Credit (“FTC”). If you use FEIE, you cannot use the FTC to reduce US taxes on income already excluded under the FEIE.  The problem arises when FTC is actually higher than the US tax.  In this case, you may be losing a very important tax strategy to reduce your US taxes not only in the current year, but also in the future.

Second, FEIE may result in ineligibility to take other tax credits normally available to a taxpayer.

Third, despite the income tax exclusion, your tax bracket will still be the same as if you were taxed on the whole amount (i.e. as if you had not claimed the foreign earned income exclusion).

Finally, while not a tax consideration, usage of FEIE by US permanent residents may result in the abandonment of their green card. In other words, FEIE may present a huge risk to the immigration goals of a taxpayer.

2025 Foreign Earned Income Exclusion: Adjustment for 2025

On October 22, 2024, the IRS announced that the foreign earned income exclusion amount under §911(b)(2)(D)(i) is going to be $130,000 for the tax year 2025. This is up from $126,500 in the tax year 2024.

Contact Sherayzen Law Office for Professional Help with Foreign Earned Income Exclusion

The Foreign Earned Income Exclusion is a vital tax tool for US taxpayers working abroad, but it must be used cautiously and after careful consideration of all circumstances.  Hence, if you are a US taxpayer who lives abroad or you are planning to accept a job overseas, you need to secure the help of Sherayzen Law Office, a premier firm in US international tax compliance. We can help you navigate the complexities of FEIE, determine your eligibility for it and build a tax strategy to help you maximize the advantages offered by the Internal Revenue Code.

Contact Us Today to Schedule Your Confidential Consultation!

2024 Form 5471 Deadline in 2025 | International Tax Lawyer & Attorney

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IRS Form 5471 is one of the most important and most complex US international information returns. In this brief essay, I will discuss the tax year 2024 Form 5471 deadline in the calendar year 2025.

2024 Form 5471 Deadline: What is Form 5471

Form 5471 is a US international information return. In general, the IRS uses Form 5471 to collect information about certain US persons who are officers, directors, or shareholders in certain foreign corporations. These US persons, in turn, use Form 5471 to satisfy the reporting requirements of the IRC (Internal Revenue Code) §§965, 6038 and 6046 as well as related regulations. In other words, US taxpayers utilize Form 5471 to comply with their reporting obligations concerning their ownership of and transactions with a foreign corporation.

Form 5471, however, is more than just an international information return. It also contains the schedules related to income recognition by US owners of foreign corporations through the operation of anti-deferral tax regimes such as Subpart F rules, 965 tax and GILTI tax.

2024 Form 5471 Deadline: Who Must File It

Determining whether you are required to file a Form 5471 and which schedules you must attach to it may also be very complicated. As a result of the 2017 tax reform, Form 5471 now sports a total of five categories of required filers. Two of these categories contain three sub-categories. In other words, the instructions to Form 5471 describe now a total of nine categories of filers!

Once you determine that you fall into one of these categories, you must carefully determine which schedules, statements and attachments you must complete in order to fully comply with your Form 5471 obligations.

I should also note that a separate Form 5471 is required for each applicable foreign corporation. This is the case even if one foreign corporation owns the other; there is no consolidated group filing under Form 5471.

2024 Form 5471 Deadline: Complexity

Form 5471 is incredibly complex. It forces its filers to convert foreign financial statements to US GAAP. It further requires reporting of an astounding range of transactions between a foreign corporation and its US owners as well as the affiliates of US owners. Finally, US taxpayers use Form 5471 schedules to calculate the income that they must recognize under the various anti-deferral tax regimes.

Thus, completing a Form 5471 may require a significant effort and a lot of time. This is why you need plan well ahead to make sure that you file your Form 5471 timely.

2024 Form 5471 Deadline: Penalties

A failure to timely file an accurate Form 5471 may result in imposition of large IRS penalties. Moreover, since Form 5471 satisfies a variety of tax obligations, the IRS may assess different penalties under different IRC sections.

For example, a failure to file Form 5471 Schedule M may result in the imposition of a $10,000 penalty pursuant to §6038(a). A failure to file Form 5471 Schedule O is a violation of §6046 and the IRS may assess a separate section 6046 is subject to a $10,000 penalty for each reportable transaction.

2024 Form 5471 Deadline: When to File and Where

All filers (unless they fall under an exception) must attach their Forms 5471 to their income tax returns (if applicable, a partnership return or tax exempt organization return). Both, the income tax return and Form 5471 must be filed by the due date, including extensions, for that return.

In other words, if you are an individual filing Form 1040, your 2024 Form 5471 deadline is April 15, 2025. If you file an extension, the deadline will shift to October 15, 2025.

Contact Sherayzen Law Office for Professional Help With Your 2024 Form 5471 Deadline

If you must file a Form 5471 for the tax year 2024, contact Sherayzen Law Office for professional help. We have successfully helped US taxpayers around the world with their Form 5471 compliance, and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Corpus Christi Foreign Inheritance Lawyer | International Tax Attorney Texas

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Retaining a Corpus Christi foreign inheritance lawyer to deal with the IRS is very likely to be necessary if you reside in Corpus Christi, Texas and have received an inheritance from a non-resident alien (i.e. foreign inheritance).  Sherayzen Law Office, Ltd. is a leader in US international tax compliance concerning foreign inheritance, including offshore voluntary disclosures concerning late disclosure of a foreign inheritance, and may be your Corpus Christi foreign inheritance lawyer.

Corpus Christi Foreign Inheritance Lawyer: Why Foreign Inheritance is Important to Your US international Tax Compliance

Receiving a foreign inheritance requires proper US international tax compliance in five areas: disclosure of foreign inheritance to the IRS, information reporting requirements that are linked to foreign inheritance, classification and recognition of income linked to foreign inheritance (including special requirements concerning inheritance of foreign real estate), inheritance of US-situs property and transfers of cash/assets to the United States.

Each of these areas of foreign inheritance has its own complications, traps and important reporting reporting requirements. These reporting requirements may have important tax implications with potentially high noncompliance IRS penalties.

This is precisely why it is highly recommended to consult a tax lawyer if you received or about to receive foreign inheritance. However, not every tax attorney would be the right fit for your foreign inheritance case.  In order to be properly classified as a Corpus Christi foreign inheritance lawyer, the lawyer must be an international tax attorney with extensive experience in various US international tax reporting requirements related to foreign inheritance.

Corpus Christi Foreign Inheritance Lawyer: International Tax Attorney

A foreign inheritance lawyer is first and foremost an international tax attorney – i.e. a lawyer with profound knowledge of and extensive experience in US international tax law, particularly in the area of US international tax compliance. This means that a lawyer must be familiar with such common US international tax forms as: Form 3520 (critically important for foreign inheritance reporting) and Form 8938.  He must also understand related US international tax compliance forms such as Forms 3520-A, 5471, 8865, 8858, et cetera.  Of course, every US international tax lawyer must be very familiar with FinCEN Form 114 commonly known as FBAR.

In addition to information returns, an international tax lawyer must be familiar with all types of foreign income reporting.  This requirement includes the knowledge of such distinct areas of international income tax reporting sub-areas as foreign rental income, PFIC compliance, GILTI income, capital gains concerning foreign real estate, et cetera.

Sherayzen Law Office is a highly-experienced and highly-knowledgeable international tax law firm with respect to all of the aforementioned income tax and information return requirements, including all of the aforementioned forms.

Corpus Christi Foreign Inheritance Lawyer: Tax Planning

In cases where it is possible, it is highly prudent to engage in tax planning concerning a foreign inheritance. This is important not only for the purpose of limiting future tax burdens, but also to control future US tax compliance costs.  Hence, when you look for a foreign inheritance attorney, you should retain a law firm which has experience with foreign inheritance US tax planning.

Sherayzen Law Office has an extensive experience in foreign inheritance US tax planning for its clients in Corpus Christi and all over the world.  We also have a highly valuable experience of combining income tax planning with offshore voluntary disclosures.

Corpus Christi Foreign Inheritance Lawyer: Offshore Voluntary Disclosures

When retaining a Corpus Christi Foreign Inheritance Lawyer, consider the fact that such an attorney’s work may not limited only to the current or future US international tax compliance. In my experience, a discussion of a foreign inheritance often involves identification and remedying of past US international tax noncompliance. In other words, foreign inheritance issues often lead to engaging in an IRS offshore voluntary disclosure option.

This means that your international tax lawyer should be very familiar with all offshore voluntary disclosure options.

Offshore Voluntary Disclosures is a core area of the our international tax practice at Sherayzen Law Office. We have helped hundreds of US taxpayers worldwide, including in Corpus Christi, to bring their tax affairs into full compliance with US tax laws. This work included the preparation and filing of all kinds of offshore voluntary disclosures including: SDOP (Streamlined Domestic Offshore Procedures), SFOP (Streamlined Foreign Offshore Procedures), DFSP (Delinquent FBAR Submission Procedures), DIIRSP (Delinquent International Information Return Submission Procedures), et cetera.

Corpus Christi Foreign Inheritance Lawyer: Out-Of-State International Tax Lawyer

Whenever you are looking for an attorney who specializes in US international tax law (which is a federal area of law, not a state one), you do not need to limit yourself to lawyers who reside in Corpus Christi, Texas. On the contrary, consider international tax attorneys who reside in other states and help Corpus Christi residents with their FBAR compliance.

Sherayzen Law Office is based in Minneapolis, Minnesota, but we have a large number of clients in Texas, including the Corpus Christi area. Hence, Corpus Christi residents can contact us and retain us to resolve their foreign inheritance issues related to US international tax compliance.

Contact Sherayzen Law Office for Professional Foreign Inheritance Tax Help

Sherayzen Law Office is an international tax law firm that specializes in US international tax compliance, including foreign inheritance reporting.  We have helped numerous clients in Texas with their foreign inheritance. We can help you!

Hence, if you are looking for a Corpus Christi Foreign Inheritance Lawyer, contact Mr. Sherayzen now to schedule Your Confidential Consultation!

Closer Connection Exception | International Tax Lawyer & Attorney

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The Closer Connection Exception is a very important provision in US international tax law, because it provides a potential way for individuals who meet the Substantial Presence Test to still be treated as nonresident aliens for US income tax purposes. This article explores the Closer Connection Exception, its requirements and its implications for US and foreign taxpayers.

Understanding the Closer Connection Exception

The Closer Connection Exception is found in Internal Revenue Code (IRC) §7701(b)(3)(B) and is further elaborated in Treasury Regulation §301.7701(b)-2. This exception allows an individual who would otherwise be considered a US tax resident under the Substantial Presence Test to be treated as a nonresident alien for income tax purposes if he can demonstrate a “closer connection” to a foreign country.

Key Requirements for the Closer Connection Exception

IRC § 7701(b)(3)(B) and Treas. Reg. § 301.7701(b)-2(a) lay out the Closer Connection Exception eligibility criteria that an an individual must meet:

1.The individual must be present in the United States for fewer than 183 days in the current calendar year;

2.The individual must maintain a tax home in a foreign country during the year;

3.The individual must have a closer connection to that foreign country than to the United States; and

4. An individual must be an eligible individual.

Let’s explore each of these three requirements in detail.

Closer Connection Exception: The 183-Day Rule

The first requirement of the Closer Connection Exception is fairly straightforward: the individual must be present in the United States for fewer than 183 days in the current calendar year. This is a hard limit. Even one additional day of presence will disqualify an individual from claiming this exception.

It is important to emphasize that this 183-day threshold is different from the count of days used in the Substantial Presence Test, which includes a lookback period. For the Closer Connection Exception, only days of physical presence in the United States in the current year are considered. Treas. Reg. §301.7701(b)-2(a)(1).

Closer Connection Exception: Foreign Tax Home Requirement

The second requirement for the Closer Connection Exception is that the individual must maintain a tax home in a foreign country during the year.  IRC §911(d)(3) defines the concept of “tax home” as an individual’s principal place of business.  “If the individual has no regular or principal place of business because of the nature of the business, or because the individual is not engaged in carrying on any trade or business within the meaning of section 162(a), then the individual’s tax home is the individual’s regular place of abode in a real and substantial sense.” Treas. Reg. §301.7701(b)-2(c)(1).  This is obviously a very fact-dependent definition of tax home, which requires exploration of all relevant circumstances (such as the location of the individual’s permanent home, family and even personal belongings).

The individual’s foreign tax home must be in existence for the entire current year. It must also be located in the same foreign country for which the individual is claiming to have the closer connection. Treas. Reg. §301.7701(b)-2(c)(2).

Closer Connection Exception: Closer Connection to Foreign Country

The third and often most complex requirement of the Closer Connection Exception is demonstrating a closer connection to a foreign country than to the United States.  Treasury Regulations state that this requires establishing “that the individual has maintained more significant contacts with the foreign country than with the United States”. Treas. Reg. §301.7701(b)-2(d).  

This analysis of course requires a detailed exploration of all relevant facts and circumstances. Treas. Reg. § 301.7701(b)-2(d)(1) provide the following non-exclusive list of key factors that one must consider in determining whether a closer connection to a foreign country exists:

1.The location of the individual’s permanent home;

2.The location of the individual’s family;

3.The location of personal belongings;

4.The location of social, political, cultural, or religious organizations with which the individual has a relationship;

5.The location where the individual conducts routine personal banking activities;

6.The location where the individual conducts business activities;

7.The location of the jurisdiction in which the individual holds a driver’s license;

8.The location of the jurisdiction in which the individual votes;

9.The country of residence designated by the individual on his forms and documents; and

10. The types of official forms and documents filed by the individual, such as Form 1078 (Certificate of Alien Claiming Residence in the United States), Form W-8 (Certificate of Foreign Status) or Form W-9 (Payer’s Request for Taxpayer ldentification Number).

Regarding the first factor, individual’s permanent home, it does not matter whether a permanent home is a house, an apartment or a furnished room. It also does not matter whether the individual owns or rents his home. “It is material, however, that the dwelling be available at all times, continuously, and not solely for stays of short duration.” Treas. Reg. §301.7701(b)-2(d)(1).

Closer Connection Exception: Multiple Foreign Countries

A question arises in this context: what if an individual has connections not to just one, but  two foreign countries? Can an individual have a tax home in two or more countries?

Generally, an individual can have a closer connection to only one foreign country. However, it is possible to have a closer connection to two foreign countries in a single year if the individual moved their tax home during the year. In such cases, the individual can have a closer connection to each country for the part of the year they maintained a tax home in that country.

Treas. Reg. §301.7701(b)-2(e) lays out a detailed legal test in this case of multiple foreign country connections.  In order for an individual to be able to claim the Closer Connection Exception in cases of close contacts with more than one foreign country, this individual must satisfy the following conditions:

(1) The individual maintains a tax home beginning on the first day of the current year in one foreign country;

(2) The individual changes his or her tax home during the current year to a second foreign country;

(3) The individual continues to maintain his or her tax home in the second foreign country for the remainder of the current year;

(4) The individual has a closer connection to each foreign country than to the United States for the period during which the individual maintains a tax home in that foreign country; and

(5) The individual is subject to taxation as a resident pursuant to the internal laws of either foreign country for the entire year or subject to taxation as a resident in both foreign countries for the period during which the individual maintains a tax home in each foreign country.

Closer Connection Exception: Eligible Individual

As stated above, the final condition for the Exception is that an individual must be an eligible individual. Ineligible individuals include: (a) individuals who have applied for status as a lawful permanent resident of the United States (i.e., applied for a green card), and (b) individuals who have an application pending for adjustment of status. IRC §7701(b)(3)(C). 

Treas. Reg. §301.7701(b)-2(f) specifically sets forth the following list of actions which would make an individual ineligible to claim the Closer Connection Exception:

“Affirmative steps to change status to that of a permanent resident include, but are not limited to, the following—

(1) The filing of Immigration and Naturalization Form I-508 (Waiver of Immunities) by the alien;

(2) The filing of Immigration and Naturalization Form I-485 (Application for Status as Permanent Resident) by the alien;

(3) The filing of Immigration and Naturalization Form I-130 (Petition for Alien Relative) on behalf of the alien;

(4) The filing of Immigration and Naturalization Form I-140 (Petition for Prospective Immigrant Employee) on behalf of the alien;

(5) The filing of Department of Labor Form ETA-750 (Application for Alien Employment Certification) on behalf of the alien; or

(6) The filing of Department of State Form OF-230 (Application for Immigrant Visa and Alien Registration) by the alien.”

Closer Connection Exception: Form 8840

To claim the Closer Connection Exception, eligible individuals must file Form 8840, Closer Connection Exception Statement for Aliens, with the IRS. This form must be filed by the due date of the individual’s nonresident alien income tax return (Form 1040-NR), including extensions. Form 8840 requires detailed information about the individual’s presence in the United States, tax home, and factors demonstrating a closer connection to a foreign country. Failure to timely file this form may result in the individual being unable to claim the exception. Treas. Reg. §301.7701(b)-8(c).

Closer Connection Exception: Interaction with Tax Treaties

It’s important to note that the Closer Connection Exception is separate from any residency determinations under tax treaties. An individual who does not qualify for the Closer Connection Exception may still be able to claim nonresident status under a tax treaty’s tie-breaker rules. Conversely, qualifying for the Closer Connection Exception may eliminate the need to rely on treaty provisions. See Treas. Reg. §301.7701(b)-7.

Closer Connection Exception: Implications for Other Reporting Requirements

While the Closer Connection Exception can significantly alter an individual’s US income tax obligations, it is very important to understand that it may not exempt the individual from all US reporting requirements, particularly information returns such as FBAR and Form 8938.

Contact Sherayzen Law Office for Professional Help With US International Tax Law

US international tax law is extremely complex.  The Closer Connection Exception and its potential impact on an individual’s tax status is just an example of this complexity. This is why, if you have assets in or income from foreign countries, you need to seek the professional help of Sherayzen Law Office.  We are a leading US international tax law firm which offers comprehensive support in US international tax compliance (including IRS offshore voluntary disclosures) and US international tax planning. Our deep understanding of and extensive experienced in US international tax law allows us to proffer a professional advice tailored to your specific circumstances.

Contact Us Today to Schedule Your Confidential Consultation!

Substantial Presence Test | US International Tax Lawyer & Attorney

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The substantial presence test is one of the most important legal tests in the Internal Revenue Code (IRC), because it determines whether a person is a US tax resident solely by virtue of his physical presence in the United States.  Additionally, this Test is essential to the determination of whether a person is a “US Person” for FBAR and Form 8938 purposes. In this article, I will explain the substantial presence test and highlight its main exceptions.

Substantial Presence Test: The Main Rule

In reality, there are two substantial presence tests; if either test is met, a person is considered to be a US tax resident unless an exception applies.

The first substantial presence test is met if a person is physically present in the United States for at least 183 days during the calendar year. 26 USC §7701(b)(3).  

The second substantial presence test (the so-called “lookback test”) is satisfied if two conditions are met: (1) the person is present in the United States for at least 31 days during the calendar year; and (2) the sum of the days on which this person was present in the United States during the current and the two preceding calendar years (multiplied by the fractions found in §7701(b)(3)(A)(ii)) equals to or exceeds 183 days. 26 USC 7701(b)(3)(A).  

Let’s discuss how exactly the lookback test works.  The way to determine to determine whether the 183-day test is met is to add: (a) all days present in the United States during the current calendar year (i.e. the year for which you are trying to determine whether the Substantial Presence Test is met) + (b) one-third of the days spent in the United States in the year immediately preceding the current year + (c) one-sixth of the days spent in the United States in the second year preceding the current calendar year. See 26 USC §7701(b)(3).

Substantial Presence Test: Presence

As one can easily see, a critical issue in the substantial presence test is to determine during which days a person is considered to be “present in the United States”. Pursuant to 26 USC §7701(b)(7)(A), a person is considered to be present in the United States if he is physically present in the United States at any time, however short, during the day, including the days of arrival and departure.

There are limited exceptions under 26 USC §§7701(b)(7)(B) and 7701(b)(7)(C) for: commuters from Canada and Mexico, foreign vessel crew members and persons who travel between two foreign countries with a less than a 24-hour layover in the United States.

Substantial Presence Test: Exempt Persons

In addition to the exceptions above, the Internal Revenue Code contains a large number of categories of persons exempt from the Substantial Presence Test. 26 USC §§7701(b). In other words, the days that these “exempt persons” spend in the United States do not count toward the Substantial Presence Test. Here is a most common list of exempt persons:

Foreign government-related individuals and their immediate family (26 USC §7701(b)(5)(B))

Teachers and trainees and their immediate family (26 USC §7701(b)(5)(C))

Foreign students on F-, J-, M- or Q-visas (26 USC §7701(b)(5)(D))

Professional athletes temporarily in the US for charitable sporting events (26 USC §7701(b)(5)(A)(iv))

Individuals unable to leave the US due to medical conditions (26 USC §7701(b)(3)(D)(ii))

A couple of notes on these categories. First, for the “professional athletes who are temporarily present in the United States to compete in a charitable sporting event” category, the sports event must meet the following requirements for the exemption to apply: (1) it must be organized primarily to benefit §503(c)(3) tax-exempt organization; (2) the net proceeds from the event must be contributed to the benefitted tax-exempt organization; and (3) the event must be carried out substantially by volunteers.

Second, concerning the last category “foreign aliens who are unable to leave the United States because of a medical condition”, Rev. Proc. 2020-20 expanded this medical condition exception to include “COVID-19 Medical Condition Travel Exception” for eligible individuals unable to leave United States during “COVID-19 Emergency Period”. The term COVID-19 Emergency Period is a single period of up to 60 consecutive calendar days selected by an individual starting on or after February 1, 2020 and on or before April 1, 2020 during which the individual is physically present in the United States on each day. An Eligible Individual may claim the COVID-19 Medical Condition Travel Exception in addition to, or instead of, claiming other exceptions from the substantial presence test for which the individual is eligible.

Substantial Presence Test: “Closer Connection” Exception

In addition to exceptions and exemptions listed above, there is one more highly important exception to the Substantial Presence Test called the “Closer Connection” Exception. Under 26 USC §§7701(b)(3)(C), a person is exempt from the application of the Substantial Presence Test if the following four conditions are met:

1) the person is present less than 183 days in the United States during the current year;

2) the person can establish that, during the current year, he had a tax home in a foreign country (obviously, “tax home” is a term of art that has its special significance for the purposes of the “closer connection” exception;

3) the person has a “closer connection” to that foreign country than to the United States; and

4) the person has not applied for a lawful permanent residency status in the United States.

I have addressed the Closer Connection Exception in detail here.

Substantial Presence Test:  Tax Treaty Exception

Tax treaties provide another exception. IRC §7701(b)(6) and Treas. Reg. §301.7701(b)-7 provide that an individual who meets the substantial presence test but is a resident of a treaty country under a tie-breaker provision of an income tax treaty may elect to be treated as a nonresident alien for US tax purposes. This election is made on Form 8833, Treaty-Based Return Position Disclosure.

It’s important to note that while this treaty election can significantly affect an individual’s US tax obligations, it does not negate the fact that the individual met the substantial presence test. This distinction is crucial for certain reporting requirements, such as FBAR and Form 8938.

Substantial Presence Test: Closer Connection Exception and Treaty Election vs. FBAR

One of the most common pitfalls of US international tax compliance relates to a situation where the substantial presence test is met but either a closer connection exception is claimed or an election is made to be taxed as a resident of another country.  In such a situation, even many practitioners incorrectly conclude that the taxpayer is not required to file FBAR.  This is not the case; even where a tax treaty foreign tax residency election or a closer connection exception claim is made, the taxpayer may still need to file an FBAR. 76 Fed. Reg. 10,234, 10,238; IRM 4.26.16.2.1.2(6) (11-06-15).

I will discuss this FBAR exception to the closer connection and tax treaty exceptions in another article.

Contact Sherayzen Law Office for Professional Help With US International Tax Law

Understanding the nuances of the US international tax law, including the Substantial Presence Test with its numerous exceptions and its implications for both tax residency and FBAR reporting, is essential for individuals who spend significant time in the United States. Given the complexity of these rules and their potential US tax impact, you need qualified professional help to properly navigate these complex rules.

This is why you need to contact Sherayzen Law Office.  Our international tax team is highly knowledgeable and experienced in this area of law. We have helped hundreds of US taxpayers to determine their US tax residency status, and we can help you!  

Contact us today to schedule your confidential consultation!