How a Nonresident Can Utilize the Closer Connection Test or a Treaty Tie-Breaker Provision to Avoid Being Taxed as a U.S. Resident
By Anthony Diosdi Of the world’s tax systems, most countries bases for taxation are residency and source of income. As a result, most global taxing jurisdictions tax residents only on income received from domestic sources. Income received from foreign sources is frequently exempted from local income tax. The United States, on the other hand, is fairly unique from a tax standpoint. This is because unlike most of the world, the U.S. taxes citizens and residents on worldwide income. Many foreign investors or foreigners working in the United States are surprised to learn how easy is it for them to become U.S. residents for tax purposes and be subject to U.S. income tax on worldwide income. In order to avoid being taxed as a U.S. resident, non-U.S. citizens must understand the…