Non-US Citizens investing in the US

There has recently been an increase in foreign investment in the US which has given rise to an additional group of individuals filing US returns.

This is known as Taxation of Non-Resident Aliens and is a complex area of the US code.

Non Americans who are engaged in US business and receive “effectively connected income” or who receive other US source income which is fixed determinable, annual or Periodical (”FDAP”) may be required to file non resident US tax returns.

Common examples of where these filing requirements might arising are individuals invested in hedge funds or PE houses that engage in US activities of any UK (or other non-US) individual who invests in US property and generates US sourced rental income or capital gains.

In many of these cases state tax filing issues may also arise.

Naturally care should be taken which filing these individuals UK tax returns as well to ensure double taxable does not occur.

The UK and US returns should ideally be prepared together to ensure symmetry between the tax return and to help minimise double tax exposure.

If you would like to speak to us about any of the issues raised above please contact us.