30 Mar. 2016

Tax Law: Immigration and Taxes: Who Has to Pay US Income Tax?

Posted By Shaheen & Gordon, P.A.

Michelle Radie-Coffin is an attorney at Shaheen & Gordon, P.A. Her practice focuses on immigration, tax, business, and employment law. Her article on Tax Law: Immigration and Taxes was published in the February 17 issue of the New Hampshire Bar News, a publication of the New Hampshire Bar Association.

In the article, Radie-Coffin clarifies the tax laws for those individuals and companies working outside of the United States.

As she states, the federal government taxes American citizens’ worldwide income no matter where they live or stay. As such, the United States has jurisdictional authority to tax the income of Americans residing in a foreign country or any income originating from a foreign country simply because they are a U.S. citizen.

For tax purposes, those who fall under the Internal Revenue Code definition of “resident alien” are deemed to be United States citizens and are therefore subject to taxes on worldwide income. Generally, the same tax treatment applies to resident aliens as they do to U.S. citizens.

Radie-Coffin’s article also addresses the tax implication for foreign corporations.

As defined by law, a “foreign corporation” is any corporation that is not organized under the laws of the U.S. federal government, and the American state, or the District of Columbia. For tax purposes, the location of the corporate office or place of management does not matter. (See IRC Section 7701(a)(5).) Like US citizens and resident aliens, US corporations are subject to US taxation on worldwide income. The jurisdictional basis is again the nationality principle.

If you have questions about a corporate or business law matter, our team at Shaheen & Gordon, P.A. is available to discuss your needs and goals. Contact us today for more information.

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