What Foreign Nationals Relocating to the U.S. Needs to Know About the Check-the-Box Rules
By Anthony DiosdiOnce a foreign national immigrates to the United States, he or she will likely become a U.S. person for income tax purposes. A U.S. person is subject to U.S. income tax on his or her worldwide income. He or she may also become subject to a comprehensive information reporting regime. This includes the filing of a Form 5471 for any foreign entities treated as a corporation for U.S. tax purposes. The Form 5471 is an incredibly complicated information return that can be costly to prepare. Sometimes an understanding of the U.S. check-the-box rules can result in significant reduction in U.S. tax on foreign holdings and tax compliance savings. We will begin with a discussion regarding the taxation of U.S. business entities. Foreign nationals may operate domestic entities through…