Basics of Foreign Outbound Tax Reporting: Identifying Income Tax and Information Return Reporting Requirements

With the sweeping changes Congress and Treasury continue to make to the reporting requirements of cross-border activities by taxpayers subject to U.S. tax jurisdiction, it is more critical than ever for tax professionals to have a thorough grounding in the foundations of the foreign tax filing regime. The IRS has indicated that tracking compliance with foreign outbound information and income filing rules is among its highest priorities.

The framework of foreign tax reporting is intricate and complex by its very structure. Despite some movement toward a territorial tax regime, the U.S. stands virtually alone among developed nations in imposing income tax on its citizens, long-term residents, and green card holders as it applies to global income. Generally, the U.S. follows other countries' practices of taxing nonresidents with income that can be sourced to the United States but with numerous exceptions, some of which are more stringent than that of other countries.

The foreign tax reporting regime consists of two major components: assets/holdings and income. Taxpayers subject to U.S. tax filings must report what they own and what they earn no matter the source or location derived. However, determining whether a U.S. taxpayer has filing requirements can present a challenge to even seasoned tax advisers. So it is helpful to examine the reach of the taxing regime in terms of outbound (U.S. citizens and residents with activities outside the United States) activities.

Listen as our expert panel provides a solid grounding in the basics of outbound foreign tax reporting, the identification of reporting requirements, thresholds, and rules as applied to U.S. taxpayers.