Income Sourcing in Multinational Tax Planning and Compliance: Navigating Residence Issues, Expatriation Rules, Foreign Earned Income

A critical component of tax planning and compliance for multinational clients is determining whether an item of income is foreign- or U.S.-sourced for purposes of U.S. tax treatment. IRC §§861 through 865 provide the statutory guidance for determining income source. Differences in sourcing priorities between the U.S. and other jurisdictions are resolved by treaty, or by negotiation between the governments involved in the absence of a treaty.

Income source rules determine the amount of foreign tax credit (FTC) allowed, income exempt from U.S. tax, FTC eligibility for tax paid to a foreign government, and whether U.S. source income is subject to withholding tax, so it is crucial that tax advisers have a thorough grasp of the sourcing rules.

There are also specific rules for determining whether a non-U.S. citizen is subject to U.S. taxes. Resident aliens are subject to either the Lawful Permanent Resident Test or the Substantial Presence Test in determining to what degree they will be subject to U.S. tax. Likewise, there are tax provisions for persons expatriating from the United States. The expatriation tax rules under Section 877 imposes an exit tax on U.S. citizens who have renounced their citizenship, as well as on certain long-term residents who have ended their US resident status.

Listen as our experienced panel of international tax practitioners provides a useful and practical guide to sourcing and residence issues as they apply to multinational tax situations.

1. Income sourcing rules in international tax planning and compliance work
2. Special source rules that apply to different kinds of income
3. Citizenship and residence in determining the tax liabilities of individuals, including the rules for determining residency
4. Tax rules that apply to expatriation
5. Foreign earned income and a housing allowance may be excluded from the taxable income of a U.S. citizen or resident

The panel will analyze these and other relevant topics:

• Types of income under the income sourcing rules
• Allocating income between jurisdictions
• Reallocation of income
• Exclusion of foreign earned income

Learning Objectives

After completing this seminar, you will be able to:

• Determine whether income is foreign or U.S. source under IRC §§861 through 865
• Identify reallocation of income and the effects of tax treaties on sourcing rules
• Distinguish tax treatment between residents and nonresidents
• Apply the permanent resident test and the substantial presence test
• Identify the tax rules that apply to expatriation
• Recognize whether foreign earned income and a housing allowance may be excluded from the taxable income of a U.S. citizen or resident

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Basic knowledge of taxation.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).