Nonresident Alien Tax Compliance: Challenges and Planning Techniques for Tax Professionals

Recent IRS Compliance Campaign, ECI vs. FDAP Income, Reporting Requirements, Exemptions, Deductions and Tax Credits

A live 90-minute CLE/CPE webinar with interactive Q&A


Tuesday, August 7, 2018

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE/CPE webinar will provide tax counsel and compliance professionals guidance on the rules, reporting requirements and available tax planning mechanisms for U.S. nonresident alien taxpayers. The panel will offer approaches for determining taxpayer classification, identifying and reporting income subject to U.S. income tax, available exemptions, deductions and credits in light of recent IRS compliance campaigns, and tax planning tips for U.S. nonresident alien taxpayers.

Description

Many nonresident aliens are either employed, own rental property or earn dividends from U.S. investments in the United States. Nonresident aliens are subject to U.S. income tax only on their U.S.-source income. Tax advisers must conduct a careful analysis to determine their taxpayer status, connection to the U.S. and approaches to reduce their tax liability.

Taxpayers without green cards or who do not maintain a substantial presence in the U.S. during the calendar year are considered U.S. nonresident aliens. These nonresident aliens can be subject to two different tax rates, one for effectively connected income (ECI) and one for fixed, determinable, annual or periodic (FDAP) income.

Taxpayers earn ECI in the U.S. from operating a business in the U.S., wages or self-employment income in the U.S. ECI is taxed for a nonresident at the same graduated rates as for a U.S. person.

If eligible income is classified as FDAP income, such as interest, dividends, rents or royalties, then the income is taxed at a 30% rate. The differences in tax rates, reporting mechanics, and withholding requirements for ECI and FDAP require tax professionals to be familiar with the ECI rules to avoid paying unnecessary taxes and penalties.

Tax treaties, deductions, credits and other options are available to reduce or eliminate the applicable tax rates or liability. Recently, the IRS implemented campaigns specifically focused on nonresident alien taxpayer compliance with tax treaty exemption claims, proper deduction of expenses and claiming tax credits.

Listen as our panel provides guidance in determining taxpayer status non-U.S. citizens, ECI vs. FDAP income classification, reporting requirements and available mechanisms to reduce tax liability of nonresident aliens. The panel will also offer tax planning techniques and best practices in light of the recent IRS compliance campaigns regarding nonresident alien taxpayers.

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Outline

  1. Overview of the rules and regulations regarding nonresident aliens and U.S. income tax system
  2. Determining taxpayer status, filing and reporting requirements
  3. Classifying eligible income: ECI vs. FDAP
  4. Tax treaties and reducing or eliminating U.S. tax on nonresident alien income
  5. IRS recent compliance campaign and handling issue-based examinations and audits
  6. Best practices for compliance and tax planning techniques for U.S. nonresident aliens

Benefits

The panel will review these and other high priority issues:

  • Tax rules and regulations applicable to U.S. nonresident aliens
  • Criteria for determining a nonresident alien taxpayer
  • Differences in tax reporting, rates and withholdings between ECI and FDAP
  • The effect of tax treaties the U.S. has with other countries
  • Recent IRS complaince campaigns focused on nonresident alien taxpayers
  • Managing IRS examinations of proper withholding and claiming exemptions or deductions
  • Best practices for compliance and tax planning techniques

Faculty

Burmester, Kirsten
Kirsten Burmester

Member
Caplin & Drysdale

Ms. Burmester's practice focuses on international tax issues, including both planning and controversy work. She has...  |  Read More

Kundra, Chaya
Chaya Kundra

Atty
Kundra & Associates

Ms. Kundra is a tax law adviser, litigator, and tax controversy attorney who operate practices in Maryland and...  |  Read More

Lee, Lucy
Lucy S. Lee

Shareholder
Greenberg Traurig

Ms. Lee focuses her practice on international tax and estate planning for individuals and families. She represents high...  |  Read More

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