International Tax Issues for Athletes and Entertainers: Residency, Tax Treaty Provisions, Mitigating Dual Taxation

Description

Individuals increasingly travel abroad for work, and it is the nature of the business for many athletes and entertainers. Proper planning can mitigate the jurisdictional taxes for an American-based performer working outside the U.S. or a nonresident traveling to the U.S.

U.S. citizens, residents, and green-card holders are taxed on worldwide income regardless of whether it was earned within the U.S. or outside its borders. On the other hand, nonresidents are taxed on income effectively connected with the U.S. Since this is key to the taxation regime, tax advisers working with performers or athletes must be able to differentiate between the two. For Americans, incorporating can generate substantial tax savings; however, there are drawbacks to this classification that need to be understood.

In addition to structuring opportunities, there are special treaty benefits and exclusions available for nonresident performers who reside in treaty jurisdictions and central withholding agreements (CWAs) with the IRS than can aid in reducing the burden of withholding taxes.

Listen as our panel of foreign taxation experts discusses determining U.S. residency status, incorporating to save taxes, unique treaty benefits, and reduced withholding opportunities for U.S. performers working abroad and nonresidents with ties to the U.S.