pk
Level 15
Level 15

Deductions & credits

@roalddahl14 , while we cannot/ (will not) provide tax avoidance/lowering strategies for specific  situations, we can only provide generic suggestions as to what will happen in some scenarios / situation ( basically hypothetical situations).

 (a)    When one is a Non-Resident  for tax purposes, one is taxed  ONLY on US sourced  incomes in contrast to a  Resident , whom is taxed on world income.  Thus one must  become a Non-Resident Alien  for the tax year to exclude   foreign income in the calendar year.

(b)     The tax residency  is determined  each year  on its own ( 186 days present counting all the days present  in the current  calendar year, plus 1/3rd the days present in the previous year plus 1/6th of the days present  during the 2nd. previous year ).

(c)      Foreign source income deposited into a US bank account  while the owner of the account is  a Non-Resident Alien does not make that income US sourced or taxable.  However, if the foreign source income is because of work performed during Tax Resident period ( delayed payment )  would be deemed constructively received  during the  resident period.

(d)       Note that  changing  tax status  ( i.e. from tax resident to NRA ) for the sole purpose of avoiding  taxes  may not be legal.   If it happens for other reasons and  tax reduction is a byproduct  then it may be legal.  Please consult  a tax attorney for such situations.  It is the intent that matters.

(e)     IRS strongly suggests not closing bank / financial  account(s) for a period ( perhaps six or nine months ) when a tax resident leaves US  permanently  ( i.e. with no definite plans to return  ) for purposes of final settlements  post  exit from the USA.  Strength and extent of financial connection is one of the factors that determine whether  the tax payer should be treated as a Resident or Non-Resident  ( especially when the tax payer want to exclude income from US taxation).

 

Hope this covers  your question.  If you need more specific answers , please consider PM

 

pk