International Tax Guide

About This Guide

This guide collects the international tax and foreign-national filing articles we have prepared for our clients. It covers common questions about U.S. tax residency, reporting of foreign accounts and foreign assets, ownership of foreign corporations, the expatriation tax on giving up a green card, and applying for a taxpayer identification number (ITIN).

Each chapter can be read on its own. You can start by browsing the table of contents to find the topics most relevant to your situation; the "Tax Intake Worksheet" at the end of the guide can be used to organize your personal records systematically before tax season.

This series will continue to be updated and expanded. As the tax law changes and new topics are added, we will release updated editions; please rely on the latest edition.

Disclaimer: This guide is provided only as a general introduction to tax topics and does not constitute individual tax, legal, or accounting advice. Your actual tax status and filing obligations will vary depending on your visa status, days of presence, sources of income, tax treaties, marital filing elections, and specific facts. Please consult a qualified tax professional before filing.

The "183-Day Rule" and U.S. Tax Residency

Substantial Presence Test · Form 1040 vs 1040-NR

Many foreign nationals who come to the United States to travel, work, study, accompany a student, visit family, or stay for a short period hear the following claim:

"If you stay in the United States for more than 180 days, you have to file as a U.S. tax resident."

That claim is not accurate. For U.S. federal income tax purposes, the correct concept is generally not a "180-day rule" but a 183-day rule; more precisely, it is the Substantial Presence Test.

Under U.S. tax law, non-U.S. citizens generally fall into two categories: Resident Alien, a foreign national who is a U.S. tax resident, and Nonresident Alien. The tax consequences of these two statuses are very different. A U.S. tax resident generally must report worldwide income; a nonresident alien generally only needs to report U.S.-source income and income effectively connected with a U.S. trade or business. The IRS draws the same basic distinction in its tax residency rules.

1. Common Misconception: It Is Not a "180-Day Rule" but a "183-Day Rule"

Misconception 1: If you stay in the United States for more than 180 days, you automatically become a U.S. tax resident

This is not precise enough. U.S. tax residency is generally determined not by "180 days" but by 183 days.

More precisely, a foreign national who is not a green card holder generally needs to look at whether he or she meets the substantial presence test. Under IRS rules, a foreign national who is present in the United States for at least 31 days in the current year, and whose presence in the current year and the two preceding years totals at least 183 days under a weighted formula, is generally treated as a U.S. tax resident. The calculation is: all days of U.S. presence in the current year count in full, one-third of the days of U.S. presence in the prior year count, and one-sixth of the days of U.S. presence in the year before that count.

The formula is:

Days in the U.S. in the current year × 100% + Days in the U.S. in the prior year × 1/3 + Days in the U.S. two years prior × 1/6 = Substantial presence test days

If this weighted result is 183 days or more, and no special exception applies, the person may become a U.S. tax resident.

Misconception 2: Only whether you exceed 183 days in the current year matters

This is also not entirely accurate. The substantial presence test looks at a three-year weighted formula, not just the current year.

For example:

Although this person did not stay in the United States for a full 183 days in the current year, the three-year weighted formula reaches 185 days, so the person may meet the substantial presence test.

Conversely, if a person stays in the United States for 120 days each year for three consecutive years, the weighted calculation is 120 + 40 + 20 = 180 days, which is less than 183 days, so the person does not meet the substantial presence test. The IRS uses a similar example in its explanation of the substantial presence test: 180 weighted days are not enough; 183 days are required.

Misconception 3: Only "more than 183 days" counts; exactly 183 days does not

This is also not accurate. The correct standard is "183 days or more," not "more than 183 days." If the weighted result is exactly 183 days, the person may still meet the substantial presence test.

Therefore, both "more than 180 days" and "it only counts above 183 days" are inaccurate.

Misconception 4: Every day spent in the United States always counts

Not every day of presence in the United States necessarily counts toward the substantial presence test. Certain days may be excluded, for example days of certain students on F, J, M, or Q visas, certain teachers or trainees on J/Q visas, foreign-government-related individuals on A/G visas, certain days on which a person was unable to leave because of a medical condition, and days in transit of less than 24 hours. The IRS specifically explains that "exempt individual" here means those days may not be counted for the presence test; it does not mean the person is completely exempt from U.S. tax.

This point is especially important for international students, visiting scholars, teachers, researchers, diplomats, and employees of international organizations.

2. When Does a Foreign National Become a U.S. Tax Resident?

A foreign national generally becomes a U.S. tax resident in one of the following two ways:

First, by meeting the Green Card Test. A person who is a lawful permanent resident of the United States, that is, a green card holder, is generally treated as a U.S. tax resident.

Second, by meeting the Substantial Presence Test, that is, the 31-day plus 183-weighted-day rule described above. The IRS explains that a non-U.S. citizen who meets the green card test or the substantial presence test may be treated as a U.S. tax resident.

A foreign national who neither holds a green card nor meets the substantial presence test is generally a Nonresident Alien.

A person who is a nonresident alien for part of a tax year and a U.S. tax resident for another part of the same year may be a Dual-Status Alien. This is common in the first year of arriving in the United States or the last year before leaving. The IRS also explains that when a person's status changes from resident to nonresident, or from nonresident to resident, during the year, there is generally a dual-status tax year.

3. Once You Reach 183 Days, Must You Always File as a U.S. Tax Resident?

Generally, a foreign national who meets the substantial presence test is treated as a U.S. tax resident and must report worldwide income on Form 1040.

However, there are exceptions.

1. Closer Connection Exception

Even if a person meets the substantial presence test, if he or she was present in the United States for fewer than 183 days in the current year, has a tax home in a foreign country, has a closer connection to that foreign country than to the United States, and timely files Form 8840, he or she may still be treated as a U.S. nonresident.

Note carefully: the closer connection exception requires presence in the United States of fewer than 183 days in the current year. If a person has already been present in the United States for 183 days or more in the current year, the exception generally cannot be used.

In other words, "183 days" here means actual days in the current year, not three-year weighted days. This is a point many people confuse.

2. Tax Treaty Tie-Breaker

If a person is a U.S. tax resident under U.S. tax law and at the same time a tax resident of another country under that country's tax law, he or she may be a dual-resident taxpayer. Certain income tax treaties between the United States and foreign countries provide tie-breaker rules to determine which country's residency the person should ultimately use for treaty purposes. The IRS explains that if, under a treaty tie-breaker rule, a person is treated as a resident of the foreign country and claims treaty benefits, he or she may be treated as a nonresident alien for purposes of computing U.S. income tax, but generally must satisfy filing and disclosure requirements, such as Form 8833.

4. Without a Social Security Number, Do You Still Need to File?

It depends on your tax status and the type of income. Not having a Social Security Number does not mean you have no U.S. filing obligation.

A foreign national who is already a U.S. tax resident generally must file Form 1040 and report worldwide income. Not having an SSN does not automatically relieve the person of the filing obligation. If the person is not eligible for an SSN but has a U.S. federal tax filing obligation, he or she generally needs to apply for an ITIN, Individual Taxpayer Identification Number. The IRS explains that a foreign national who does not have, and is not eligible to obtain, an SSN but needs a taxpayer identification number on U.S. tax documents should use an ITIN.

So the reasoning is not:

"I don't have an SSN, so I don't have to file."

It is:

"Am I a U.S. tax resident? Do I have U.S.-source income? Do I have a U.S. filing obligation? If I have an obligation but no SSN, do I need to apply for an ITIN?"

5. If You Are a U.S. Tax Resident, What Income Must You Report?

If a foreign national becomes a U.S. tax resident, the basic rule is:

Report worldwide income.

The IRS states clearly that U.S. tax residents are generally taxed like U.S. citizens and must report on their U.S. tax return income from both inside and outside the United States, including interest, dividends, wages, compensation for services, rents, royalties, and other income; U.S. tax residents generally use Form 1040.

Common types of income that must be reported include:

Therefore, if a foreign national meets the substantial presence test and becomes a U.S. tax resident, he or she generally must report income on U.S. Form 1040 even if it comes from a foreign bank, a foreign employer, a foreign company, or foreign real estate.

In addition, U.S. tax residents may also have foreign account and foreign asset reporting obligations. For example, FBAR generally applies to a U.S. person, including U.S. citizens and residents; if the aggregate value of foreign financial accounts exceeds $10,000 at any time during the year, an FBAR may be required. Form 8938 may also apply to certain foreign financial assets above the thresholds, which vary by place of residence and marital filing status.

6. If You Are a Nonresident Alien, What Income Must You Report?

A foreign national who remains a Nonresident Alien generally does not need to report worldwide income. A nonresident alien generally has U.S. tax liability only on the following income:

First, income effectively connected with a U.S. trade or business, that is, Effectively Connected Income (ECI).

Second, U.S.-source fixed, determinable, annual, or periodical income, that is, FDAP income, such as certain interest, dividends, rents, royalties, scholarships, pensions, and annuities.

The IRS explains that the taxable income of a nonresident alien generally falls into two categories: income effectively connected with a U.S. trade or business, and U.S.-source FDAP income. ECI is generally taxed at graduated rates, and FDAP is generally taxed at a flat 30% rate on the gross amount, unless a lower tax treaty rate applies.

7. How Is the Source of Income Determined?

For a nonresident alien, one key question in deciding whether income must be reported in the United States is whether the income is U.S.-source income.

The IRS clearly summarizes the source rules for nonresident aliens. For example, the source of wages and compensation for services generally depends on where the services are performed; interest generally depends on the residence of the payer; dividends generally depend on whether the paying corporation is a U.S. or foreign corporation; rents depend on where the property is located; royalties depend on where the property is used; and sales of real property depend on where the real property is located.

The common rules are:

This point is very important for remote work. The IRS explains that the source of wages and compensation for services generally depends on where the services are actually performed, not on where the contract was signed, where payment is made, or where the payer lives.

For example, a foreign employee located in the United States works remotely for a foreign company. Even if the employer is a foreign company and wages are paid from a foreign account, as long as the services are performed in the United States, those wages may generally be treated as U.S.-source wage income.

8. Does a Nonresident Alien Need to Report Foreign Income in the United States?

Generally, no.

For a foreign national who is a nonresident alien, foreign-source income is generally not subject to U.S. income tax unless it is effectively connected with a U.S. trade or business. The IRS explains that a nonresident alien is generally taxed only on ECI and U.S.-source FDAP income; foreign-source income is generally not subject to U.S. tax unless it is ECI.

Common types of foreign-source income that do not need to be reported in the United States include:

However, if a nonresident alien actually works inside the United States, the wages may become U.S.-source income even if they come from a foreign employer. Whether a short-stay exception or tax treaty benefit applies requires case-specific analysis.

9. U.S.-Source Income: Reporting May Be Required No Matter How Many Days You Stay in the United States

Even if a foreign national is present in the United States for fewer than 183 days, as long as he or she has taxable U.S.-source income, he or she may still need to file Form 1040-NR or be subject to U.S. withholding.

Common types of U.S.-source income include:

Pay particular attention to U.S. interest income. Not all U.S. interest is necessarily taxable to a nonresident alien. The IRS explains that a nonresident alien is not taxed on certain interest that is not effectively connected with a U.S. trade or business, such as certain interest paid by U.S. banks, savings and loan associations, credit unions, and insurance companies, and qualifying portfolio interest. The IRS also explains that if a nonresident alien files Form 1040-NR, this non-taxable interest is generally not reported in the body of Form 1040-NR and is only disclosed in response to the relevant question.

10. Capital Gains of Nonresident Aliens: Another Easily Confused 183-Day Rule

There is another special rule here that is easy to confuse with the substantial presence test.

For certain nonresident aliens, if they are present in the United States for 183 days or more during a tax year, U.S.-source capital gains may be taxed at a 30% rate unless a lower tax treaty rate applies. The IRS specifically explains that this 183-day capital gains rule has nothing to do with the 183-day rule under the substantial presence test.

So "183 days" can appear in at least three different places in U.S. tax law:

These three 183-day rules each mean something different. They must be analyzed separately and should not be lumped together.

11. When Do You Use Form 1040? When Do You Use Form 1040-NR?

When to use Form 1040

A foreign national who is a U.S. tax resident generally uses Form 1040.

U.S. tax residents generally must report worldwide income, just like U.S. citizens. The IRS explains that a resident alien must follow the same tax laws as U.S. citizens, report worldwide income, and file Form 1040 or Form 1040-SR.

Common situations include:

When to use Form 1040-NR

A foreign national who is a nonresident alien and has a U.S. filing obligation generally uses Form 1040-NR.

The IRS explains that a nonresident alien who is engaged, or treated as engaged, in a trade or business in the United States must file; even without a U.S. trade or business, a nonresident alien may need to file if he or she has U.S. income and the tax was not fully satisfied by withholding, or if he or she wants to claim a refund, deductions, or credits.

Common situations include:

12. Form W-8BEN and Tax Treaties

Nonresident aliens are often asked by banks, brokerages, or payers to complete Form W-8BEN. This form generally serves to certify foreign status and, where eligible, to claim a reduced withholding rate or exemption under a tax treaty. The IRS explains that a foreign person who is the beneficial owner of a payment that may be subject to withholding should provide Form W-8BEN when requested by the payer or withholding agent.

However, once a person has become a U.S. tax resident, Form W-8BEN is generally no longer appropriate for certifying nonresident status. A U.S. tax resident should generally be treated under the rules for U.S. residents, for example by using Form W-9 to provide taxpayer identification information to the payer.

Tax treaties may also affect the tax rate on certain income or whether it is exempt. The IRS explains that the United States has income tax treaties with many countries, and residents of those foreign countries may be eligible for reduced rates or exemptions on certain U.S.-source income, but the specific result depends on the country, the type of income, and the treaty provisions.

13. Quick Reference Table: 183 Days or More vs Fewer Than 183 Days

The table below is a simplified summary. Actual results still depend on visa status, excluded days, tax treaties, and type of income.

14. Summary

A foreign national who is present in the United States for 183 days may indeed face a U.S. tax residency question, but it cannot be simplified to "if you stay more than 180 days you must file as a U.S. resident."

The more accurate statement is:

Whether a foreign national becomes a U.S. tax resident generally depends on whether he or she meets the green card test or the substantial presence test. The substantial presence test requires presence in the United States of at least 31 days in the current year, and a total of 183 days or more for the current year and the two preceding years under the weighted formula.

A foreign national who becomes a U.S. tax resident generally must file Form 1040 and report worldwide income, including U.S. wages, foreign wages, U.S. interest, foreign interest, U.S. dividends, foreign dividends, rents, capital gains, and other income.

A foreign national who remains a nonresident alien generally uses Form 1040-NR and mainly reports U.S.-source income and income effectively connected with a U.S. trade or business. A nonresident alien's foreign-source income generally does not need to be reported in the United States unless it is effectively connected with a U.S. trade or business.

Not having a Social Security Number does not mean there is no filing obligation. A foreign national who is not eligible for an SSN but has a U.S. filing obligation generally needs to apply for an ITIN.

Therefore, the more accurate name for the so-called "180-day rule" is the 183-day rule, but it is not a simple single-year 183 days; it is the three-year weighted 183-day rule under the substantial presence test.

Disclaimer: This article is provided only as a general introduction to tax topics and does not constitute individual tax, legal, or accounting advice. A foreign national's U.S. tax status and filing obligations may be affected by visa status, days of presence, excluded days, source of income, type of income, tax treaties, marital filing elections, and specific facts. Consult a qualified tax professional before filing.

Applying for a U.S. ITIN from Overseas

Form W-7 · Passport Certification · Supporting Documents

Many individuals overseas need to apply to the Internal Revenue Service (IRS) for an Individual Taxpayer Identification Number (ITIN) in order to file U.S. tax returns, sell U.S. real estate, receive U.S. income, claim a refund, or meet other federal tax requirements.

Applying for an ITIN is not simply a matter of completing Form W-7. The applicant must also prove his or her identity and foreign status. Because a passport is usually the only single document that can prove both identity and foreign status, passport verification is often the most important step in the entire application.

Why does the applicant usually need to take part in person?

If the applicant applies inside the United States through an IRS Taxpayer Assistance Center (TAC) or an IRS-authorized Certifying Acceptance Agent (CAA), the staff generally needs to check the applicant in person against the original passport. When a spouse or dependent applies for an ITIN, that person generally also needs to attend the identity verification in person.

So if the applicant is overseas and cannot come to the United States in person, that does not mean he or she cannot apply for an ITIN, but another document certification method accepted by the IRS must be used. Simply sending a passport scan, an emailed photo, or an ordinary photocopy to your accountant does not satisfy the IRS identity document requirements.

What options does an overseas applicant have if he or she cannot come to the United States?

The following options can generally be considered. Which one to choose should depend on the applicant's country, the services available at the local embassy or consulate, the timeline, and the risk to the security of the documents.

1. Have a copy of the passport certified at the U.S. embassy or consulate in the applicant's country. The applicant should contact the Consular Section or American Citizens Services in advance to confirm whether that embassy or consulate provides passport copy certification or an authentication service for ITIN applications. The scope of service, appointment requirements, and fees may vary by country and by embassy or consulate.

2. Request a certified copy from the agency that issued the passport. The copy must be issued or certified by the original passport-issuing agency and bear an official stamp or seal certifying that it is identical to the original passport.

3. Use an IRS-authorized CAA overseas. CAAs can provide services inside the United States or abroad and can generally verify the original passport and return it immediately after verification, but they may charge a service fee and require the applicant to make an appointment and attend in person according to the CAA's requirements.

4. Mail the original passport directly to the IRS with the Form W-7 application. Although this method may be accepted, the passport cannot be used while the application is being processed, and there is a risk in cross-border mailing and return, so it is generally not the first choice.

Is embassy certification a required step?

Verification of identity documents is a required step, but "embassy certification" is not the only way to do it.

If the applicant cannot travel to the United States, is not using a CAA that can verify the passport, and does not want to mail the original passport to the United States, then certification by the U.S. embassy or consulate in the applicant's country, or a certified copy from the passport-issuing agency, is usually the more practical approach.

Note in particular: the "local embassy" referred to here generally means the U.S. embassy or consulate in the country where the applicant is located, or a government agency or consular office of the applicant's own country that can issue an official certified copy on behalf of the passport-issuing agency. Not just any ordinary notary office or any country's embassy can do this.

Is an ordinary notarization acceptable?

Generally, no. The IRS generally does not accept a notarization of a passport photocopy made only by an ordinary notary public or local notary. The IRS requires the original passport, an exact copy certified by the issuing agency, or a qualifying certification service provided by a U.S. embassy or consulate abroad.

Therefore, the following documents are generally not sufficient on their own to support an ITIN application:

• A passport photocopy made by the applicant;
• A phone photo or scanned copy of the passport;
• A passport photocopy stamped by an ordinary notary;
• A photocopy marked "true copy of the original" by a bank, lawyer, or accountant on its own authority;
• A document that has only a certified translation, without certification by the passport-issuing agency or a U.S. embassy or consulate.

Is an Apostille needed?

In general, applying for an ITIN does not require a separate Apostille. The IRS's core requirement is the original passport or a qualifying certified copy; it does not require every overseas document to carry an Apostille.

An Apostille mainly serves to certify the signature, seal, or identity of the signer on a public document so that the document can be used among member countries of the Hague Convention. It does not automatically prove that a passport photocopy is a certified copy issued by the passport-issuing agency, nor can it automatically turn an ordinary notarized photocopy into an identity document acceptable to the IRS.

Therefore, we do not recommend that clients obtain "notarization plus Apostille" on their own without first confirming. Even with an Apostille, if the underlying document is only a photocopy certified by an ordinary notary, the IRS may still not accept it. An Apostille or other authentication should be added only when the local U.S. embassy or consulate, the passport-issuing agency, or the specific office handling the matter expressly requires it, and then according to its instructions.

What requirements should the certified passport document meet?

To reduce the risk of an IRS request for additional documents or a rejection, we recommend that the certified document meet at least the following requirements:

• The passport is still valid and unexpired on the date Form W-7 is submitted;
• Name, date of birth, nationality, and other information match Form W-7 exactly;
• The certified document clearly shows the full contents of the passport data page and the photo;
• It bears the certifying agency's official seal, stamp, or original certification mark;
• It states clearly that the copy is identical to the original passport presented by the applicant;
• If the reason for the application requires U.S. visa information, the certified copy should include the relevant U.S. visa pages;
• The certification date and the name or title of the certifying official are clearly legible;
• No pages may be incompletely cropped, blurry, altered, or illegible.

Why must the original certified document be mailed to us?

The applicant may first send us a scan for preliminary review, but the formal submission to the IRS requires the paper original of the certified document, that is, the version bearing the original seal, signature, or certification mark. A PDF scan, a photo, or a color printout alone is generally not sufficient.

"Mailing the original" here generally means mailing us the original certified passport copy issued by the embassy, consulate, or issuing agency; it does not necessarily mean mailing us the actual original passport. As long as the certified copy meets IRS requirements, the applicant can keep the original passport.

We recommend using an international courier with a tracking number and keeping a complete scan and the courier records. After receiving the original, we will check again that the name, passport number, expiration date, seal, and certification text meet the application requirements.

Basic information the client needs to provide

To prepare Form W-7 and the related tax filings, the applicant generally needs to provide the following personal information:

• Full name in English as shown on the passport, and any former names;
• Date of birth, city of birth, and country of birth;
• Current nationality or nationalities;
• Permanent foreign address and U.S. mailing address (if any);
• Telephone number and email address;
• Passport number, issuing country, date of issue, and expiration date;
• U.S. visa type, visa number, and expiration date (if applicable);
• Date of first or most recent entry into the United States (if applicable);
• Foreign tax identification number or national ID number;
• Whether an ITIN, EIN, or other U.S. taxpayer identification number has been applied for before;
• The specific U.S. tax reason for applying for an ITIN.

Checklist of formal application materials

Depending on the applicant's circumstances, the formal application package generally includes:

1. Form W-7, fully completed and signed by the applicant. An original signature is generally required; if signed by an agent on the applicant's behalf, IRS authorization and signature rules must be met.

2. The valid original passport, or an original certified copy of the passport that meets IRS requirements.

3. The original U.S. federal individual income tax return for which the ITIN is needed, such as Form 1040-NR or another applicable return. Unless the applicant qualifies for a specific exception under Form W-7, the tax return generally must be submitted together with the W-7.

4. Income and withholding documents, such as Form W-2, Form 1042-S, Form 1099, K-1, U.S. real estate transaction documents, pension documents, or other income documents.

5. If applying under a W-7 Exception without attaching a tax return, the corresponding letter from a bank, brokerage, payer, withholding agent, educational institution, or other third party, together with related documents.

6. If the applicant is a spouse or dependent, proof of the relationship and, where applicable, proof of U.S. residency.

7. The applicant's foreign mailing address, U.S. contact person, and the address to which the applicant wants the IRS to send the ITIN notice.

Additional requirements for spouses or dependents

If the applicant is a spouse or dependent, passport certification is not the only consideration. The IRS will also check whether the person has a tax purpose that qualifies for an ITIN and may require additional proof.

• A dependent may need to provide a birth certificate to prove the relationship to the taxpayer;
• Certain dependents need to prove U.S. residency, for example with U.S. school records, medical records, a state ID, a lease, bank statements, or utility bills; the specific requirements depend on age and the reason for the application;
• If the passport does not show a U.S. date of entry, the dependent may need to provide separate proof of U.S. residency;
• Each family member applying for an ITIN must complete a separate Form W-7.

Recommended steps

1. First provide us with a passport scan, your personal information, and the tax reason for applying for an ITIN for preliminary review.

2. We confirm eligibility, the W-7 application category, and whether a U.S. tax return must be attached.

3. The applicant contacts the U.S. embassy or consulate in his or her country, the passport-issuing agency, or a local IRS-authorized CAA to confirm the passport certification method.

4. The applicant brings the valid passport in person, completes identity verification according to the appointment requirements, and obtains the original certified copy.

5. The applicant first scans the complete certified document to us for review; once confirmed, the applicant mails us the paper certified original and the signed documents.

6. We complete the final review of Form W-7, the tax return, and attachments, and submit the complete application package to the IRS.

7. When the IRS finishes processing, it will mail the ITIN notice to the mailing address on the W-7.

Processing time and return of documents

The IRS generally recommends allowing about 7 weeks for processing. If the application is submitted during the peak filing season (generally January 15 to April 30), or the applicant is applying from overseas, processing may take about 9 to 11 weeks.

If a passport or other original identity document is mailed to the IRS, the IRS generally mails the document back separately to the mailing address on Form W-7. Because international mail carries a risk of delay or loss, the applicant should think carefully about whether to mail the original passport directly.

Common mistakes

• Assuming an ordinary passport photocopy plus notarization is enough;
• Obtaining an Apostille without confirming first, when the certifying party does not meet IRS requirements;
• Providing only an electronic scan and not mailing the certified paper original;
• The passport has already expired, or is about to expire before the application is submitted;
• The name on Form W-7 is spelled differently from the passport;
• Omitting the visa pages, entry information, or proof of U.S. residency for dependents;
• Not stating the specific federal tax purpose, and not attaching a tax return or exception documentation;
• Treating an ITIN as work authorization, immigration status, or general proof of identity.

Conclusion

An individual overseas who cannot come to the United States can still apply for an ITIN, but passport identity verification cannot be skipped. The applicant must submit the original passport or a certified copy in a manner the IRS accepts. Certification by the local U.S. embassy or consulate, a certified copy from the passport-issuing agency, or an IRS-authorized CAA overseas may all be viable options.

An ordinary notarization is generally not accepted, and an Apostille is not generally a required step for an ITIN. The most important thing is to first confirm that the certifying body meets IRS requirements before obtaining and mailing documents, to avoid being asked for additional documents or having to reapply because a document was in the wrong form.

Kit Leung CPA U.S. Certified Public Accountant

Sources: IRS Form W-7 Instructions, IRS ITIN Supporting Documents, and the official How to Apply for an ITIN guidance (as of June 2026).

Disclaimer: This article is for general information only and does not constitute tax, legal, or professional advice. Services offered by embassies, consulates, and passport-issuing agencies differ from country to country; each application should be confirmed based on the applicant's actual circumstances and the latest IRS rules.

Foreign Bank Account Reporting (FBAR)

FinCEN Form 114 · Streamlined Procedures · Penalties

General note: This article is for general tax education only and does not constitute legal or tax advice. FBAR cases can involve very large penalties, and the risk rises markedly when the IRS believes a taxpayer willfully failed to file.

1. What Is an FBAR?

FBAR stands for Report of Foreign Bank and Financial Accounts; the official form is FinCEN Form 114. The FBAR is a report of foreign financial account information required under the U.S. Bank Secrecy Act, and it covers foreign bank accounts, securities accounts, brokerage accounts, mutual fund accounts, and similar accounts. The FBAR is not filed with the individual income tax return, Form 1040; it is filed separately and electronically through FinCEN's BSA E-Filing System.

The FBAR is an information return; it is not itself a form used to compute income tax. However, if a foreign account produces interest, dividends, capital gains, or other income, that income may still need to be reported on the U.S. income tax return.

2. Who Must File FBAR Form 114?

A taxpayer who is a U.S. person generally must file an FBAR if both of the following conditions are met:

• The taxpayer has a financial interest in, signature authority over, or other authority over one or more foreign financial accounts; and
• The aggregate maximum value of all foreign financial accounts exceeded $10,000 on any day during the year.

The IRS explains that a U.S. person includes U.S. citizens, U.S. residents, corporations, partnerships, LLCs, trusts, and estates. For individuals, this commonly includes U.S. citizens, green card holders, and resident aliens who meet the U.S. tax residency rules.

Note in particular that the FBAR filing obligation does not depend on whether the account produces income. Even if a foreign account earns no interest, pays no dividends, and has no transactions, a filing may still be required as long as the account value reaches the filing threshold. The IRS states clearly that whether an account produces taxable income does not affect whether it is a foreign financial account for FBAR purposes.

3. Which Accounts Are Foreign Financial Accounts?

In general, an account at a financial institution located outside the United States may be a foreign financial account that must be reported on the FBAR. Common accounts include:

In its comparison of the FBAR and Form 8938, the IRS points out that financial accounts located at foreign financial institutions are within the scope of the FBAR; accounts at foreign branches of U.S. financial institutions may also be within the scope of the FBAR, while accounts at U.S. branches of foreign financial institutions are generally not.

4. The FBAR Filing Threshold: Not a Single Account Over $10,000, but All Accounts Combined Over $10,000

Many taxpayers mistakenly believe that a filing is required only if a single foreign account exceeds $10,000. In fact, the FBAR looks at the aggregate maximum value of all foreign financial accounts. If the combined maximum value of multiple foreign accounts exceeds $10,000 on any day of the year, a filing obligation may be triggered. FinCEN also explains that an FBAR must be filed if the maximum value of a single account, or the combined maximum values of multiple accounts, exceeds $10,000.

For example:

Although no single account exceeds $10,000, the combined maximum value of the three accounts is $12,000, so an FBAR may be required.

5. Key Point: The FBAR Uses the Maximum Value for the Year, Not the Year-End Balance

One of the most common FBAR mistakes is looking only at the December 31 year-end balance. In fact, the FBAR requires reporting each account's maximum account value for the year, that is, the highest value of the account during the entire year, not the year-end balance. FinCEN explains that the maximum value is a reasonable approximation of the greatest value of the account during the year, and periodic account statements may be used to determine it, as long as those statements fairly reflect the maximum value for the year.

For example:

In this case, the FBAR should not show only the year-end $5,000; it should report the maximum value for the year of about $200,000.

If the account is held in a foreign currency, first determine the maximum foreign-currency amount in the account during the year, then convert it to U.S. dollars. FinCEN explains that foreign-currency accounts should be converted using the U.S. Treasury exchange rate for the last day of the year; if no Treasury rate is available, another verifiable exchange rate may be used, and the source of the rate should be retained. Amounts should also be reported in U.S. dollars, rounded up to the next whole dollar.

6. FBAR Due Dates

The FBAR is an annual report, generally due April 15 following the end of the year being reported. If it is not filed by April 15, it is automatically extended to October 15, with no need to request an extension separately. The IRS explains that the FBAR must be filed electronically through FinCEN's BSA E-Filing System and cannot be filed with the federal income tax return.

For example:

If a due date falls on a weekend or legal holiday, or is postponed because of a natural disaster, the actual date may be adjusted; confirm again before filing.

7. What Records Should You Prepare Before Filing an FBAR?

The IRS requires taxpayers to keep, for each account that must be reported, records of the name on the account, the account number, the name and address of the foreign bank, the type of account, and the maximum value during the year; these records should generally be kept for 5 years from the FBAR due date.

We recommend that taxpayers prepare the following:

8. FBAR Audits in Practice: The IRS May Ask About Related Transfer Accounts

Based on actual FBAR audit experience, examiners generally do not look only at the foreign accounts that were reported. If a reported account has large incoming or outgoing transfers, the IRS may go on to ask which account the funds came from, which account they went to, whose account that is, and whether that account should also have been reported on an FBAR.

Common audit questions include:

• Which account did this money come from?
• Is the sending account the taxpayer's own account?
• If it is a foreign account, why was it not reported?
• If the account belongs to a relative, a company, or someone else, is there proof?
• Is the transfer income, a gift, a loan, an inheritance, a sale of assets, or a movement of funds between the taxpayer's own accounts?
• Does that foreign account produce interest income? Has that income been reported on the U.S. tax return?

Therefore, we recommend that taxpayers prepare not only the FBAR itself but also a complete explanation of the flow of funds. Especially for large transfers, keep bank statements, wire transfer slips, purchase and sale contracts, gift statements, loan agreements, estate documents, pay stubs, corporate dividend documents, or other proof of source.

9. Joint Accounts Need Attention Too: Generally Report the Full Account Value

If a foreign account is a joint account, each joint owner generally must report the full value of the account, not just his or her nominal share. FinCEN's instructions state that each joint owner must report the entire value of the account under the rules for Item 15.

For example, a married couple jointly owns a foreign account whose maximum value for the year is $100,000. Even if one spouse considers his or her share to be only 50%, the FBAR generally must still reflect the account's full $100,000. In some cases one spouse may authorize the other to file on his or her behalf using Form 114a, but whether the conditions for that exception are met must be determined case by case.

10. The FBAR and the Income Tax Return: Foreign Interest Income Is Still Taxable

The FBAR is an information report, not an income tax return. However, U.S. citizens and resident aliens generally must report and pay U.S. tax on worldwide income, including income from inside and outside the United States. The IRS explains that U.S. citizens and resident aliens are taxed on worldwide income and must correctly report wages and other income on Form 1040.

Therefore, interest from a foreign bank account, dividends and capital gains from a foreign securities account, and other income from foreign accounts generally all need to be checked to see whether they must be reported on the U.S. tax return. Part III of Schedule B also asks whether you have foreign financial accounts and generally requires you to state the country where the account is located; the IRS guidance on reporting foreign income also notes that in most cases affected taxpayers need to attach Schedule B to report information about foreign accounts.

Common mistakes include:

11. The FBAR and Form 8938 Are Different and Cannot Substitute for Each Other

FBAR Form 114 and IRS Form 8938 are two different foreign asset reporting regimes. Form 8938 is filed with the IRS as part of the income tax return; the FBAR is filed separately through the FinCEN system. The IRS states clearly that the Form 8938 filing requirement does not replace or otherwise affect the FBAR filing obligation; taxpayers need to determine separately whether they must file Form 8938, the FBAR, or both.

A simple comparison:

12. What If You Did Not File FBARs in the Past?

If a taxpayer did not file FBARs in the past, how to address it depends on the facts, including whether foreign income was omitted, whether tax is owed, whether the IRS has already made contact, whether the taxpayer is under audit or criminal investigation, and whether the failure to file was non-willful.

1. Delinquent FBAR Submission Procedures

If a taxpayer does not need to use the Streamlined procedures or the Criminal Investigation Voluntary Disclosure Practice to file delinquent or amended tax returns, has not filed required FBARs, is not currently under a civil examination or criminal investigation by the IRS, and has not been contacted by the IRS about the delinquent FBARs, the taxpayer may consider the Delinquent FBAR Submission Procedures. The IRS explains that the taxpayer should file the delinquent FBARs according to the FBAR instructions and include a statement explaining why they were filed late.

If the taxpayer has already correctly reported on the U.S. tax return, and paid the tax on, the income from the foreign accounts, and has not been contacted by the IRS about the relevant years, the IRS states that it will not impose a penalty for filing these delinquent FBARs; the FBARs will not be automatically audited, but they may still be selected for review.

2. Streamlined Foreign Offshore Procedures for Taxpayers Living Abroad

If a taxpayer lives outside the United States and the past failure to report foreign financial assets, pay tax, or file FBARs resulted from non-willful conduct, the taxpayer may be able to consider the Streamlined Foreign Offshore Procedures. The IRS explains non-willful conduct as including negligence, inadvertence, mistake, or conduct resulting from a good-faith misunderstanding of the requirements of the law. For U.S. citizens or green card holders, generally the taxpayer must, in at least one of the most recent three years for which the due date has passed, have had no U.S. abode and have been physically outside the United States for at least 330 full days.

Taxpayers who qualify for the Streamlined Foreign Offshore Procedures generally must file delinquent or amended U.S. tax returns for the most recent 3 years and file delinquent FBARs for the most recent 6 years, and pay the tax and interest due. If the taxpayer qualifies and completes the procedures, the IRS explains that the taxpayer will not be subject to failure-to-file, failure-to-pay, accuracy-related, information return, or FBAR penalties.

Penalty amount under the foreign Streamlined procedures: generally a 0% FBAR penalty, but the tax and interest arising from the unreported income must still be paid.

3. Streamlined Domestic Offshore Procedures for Taxpayers in the United States

If a taxpayer lives in the United States, does not meet the non-residency requirement of the foreign Streamlined procedures, has previously filed the required U.S. tax returns for the most recent three years, and the omission of foreign accounts, foreign income, or related international information returns was non-willful, the taxpayer may consider the Streamlined Domestic Offshore Procedures. The IRS explains that taxpayers using the domestic Streamlined procedures generally must amend the tax returns for the most recent 3 years, file delinquent FBARs for the most recent 6 years, and pay the Title 26 miscellaneous offshore penalty.

Penalty amount under the domestic Streamlined procedures: generally 5%. The 5% is computed on the highest aggregate annual value of the foreign financial assets subject to the penalty during the covered tax return period and the covered FBAR period. The IRS explains that the highest aggregate value here is determined by adding up the year-end account balances and year-end asset values for each year, and then selecting the highest year.

Example:

Distinguish carefully here: normal FBAR reporting uses the maximum value for the year; but the 5% Streamlined Domestic penalty is generally computed using the year-end account balances and year-end asset values for the relevant years.

13. Important Limits on the Streamlined Procedures

The Streamlined procedures are available only when the taxpayer can certify that his or her conduct was non-willful. The IRS explains that if the IRS has already initiated a civil examination of the taxpayer for any tax year, even if the examination is not necessarily related to foreign financial assets, the taxpayer is not eligible for the Streamlined procedures; a taxpayer under criminal investigation by IRS Criminal Investigation is also not eligible.

In addition, a Streamlined submission does not result in a formal closing agreement with the IRS. The IRS explains that returns submitted under the Streamlined procedures are processed like any other returns, receipt will not be automatically acknowledged, and the matter will not be closed with a signed closing agreement; these submissions are not automatically audited, but they may still be selected for review or checked against information from banks, financial advisers, and other sources.

14. Penalties for Failing to File an FBAR

FBAR penalties depend on the specific facts, especially whether the IRS considers the taxpayer's conduct to be non-willful, willful, or due to reasonable cause. The IRS explains that FBAR filing or recordkeeping violations may result in civil penalties or criminal penalties, and the maximum civil penalty amounts are adjusted for inflation.

15. FBAR Compliance Checklist

Before filing an FBAR, we recommend checking each of the following:

• Have all foreign accounts been listed, including accounts closed during the year?
• Are joint accounts included?
• Are accounts over which you have only signature or other authority included?
• Have all foreign accounts been combined to determine whether they exceed $10,000?
• Is the maximum value for the year used, rather than the year-end balance?
• Have full-year monthly statements or other records supporting the maximum value been kept?
• Have foreign-currency accounts been converted to U.S. dollars at an appropriate exchange rate?
• Do the foreign accounts produce interest, dividends, or capital gains?
• Has the foreign income been reported on Form 1040, Schedule B, or other relevant forms?
• Has it been determined separately whether Form 8938 must be filed?
• Have records of large transfers and source-of-funds documents been kept?
• Can you explain whose accounts the funds came from or went to?
• If there were past omissions, has an appropriate remediation procedure been evaluated before the IRS makes contact?

16. Key Takeaways

U.S. citizens, green card holders, and U.S. tax residents who have a financial interest in, signature authority over, or other authority over foreign financial accounts generally must file FBAR Form 114 if the aggregate maximum value of all foreign accounts exceeded $10,000 at any time during the year.

The most important points of FBAR compliance are:

• The FBAR reports the maximum value for the year, not the year-end balance;
• Whether the account produces income does not affect the FBAR filing obligation;
• But interest, dividends, capital gains, and other income from foreign accounts may still need to be reported for U.S. income tax;
• In an IRS audit, you may be asked about related transfer accounts and the source of funds;
• Joint accounts generally require reporting the full account value;
• The FBAR and Form 8938 are different filings and cannot substitute for each other;
• If you qualify for the foreign Streamlined procedures, the FBAR penalty is generally 0%, but tax and interest must still be paid;
• If you qualify for the domestic Streamlined procedures, a 5% miscellaneous offshore penalty is generally payable;
• If the IRS considers the failure to file willful, penalties may be very high and may even involve criminal risk.

Taxpayers who have not filed FBARs in the past should organize their foreign account records, interest income, transfer records, and source-of-funds documentation as soon as possible, and, before the IRS makes contact, evaluate whether the Delinquent FBAR Submission Procedures, the Streamlined Foreign Offshore Procedures, the Streamlined Domestic Offshore Procedures, or another compliance approach applies.

Form 5471 and the GILTI Rules

CFC · GILTI · Foreign Tax Credit · Section 962

For many years, many taxpayers and accountants thought of Form 5471 as merely an information return for foreign corporations. As long as Form 5471 was attached to the U.S. individual income tax return to disclose the foreign corporation ownership information, the filing obligation was considered satisfied.

However, since 2018, when the Tax Cuts and Jobs Act (TCJA) took effect, the U.S. international tax rules have changed significantly. Today, Form 5471 is no longer just an information return; it may involve additional U.S. income tax reporting and calculations, the most important of which is the GILTI (Global Intangible Low-Taxed Income) regime.

How Form 5471 was understood in the past

In the past, Form 5471 was used mainly to report:

• Ownership of the foreign corporation
• Financial statements of the foreign corporation
• Related-party transaction information
• Shareholder information
• The corporation's earnings information

Many people believed that once Form 5471 was filed, no additional U.S. tax issue would arise unless dividends were actually received.

Important changes after 2018

The GILTI regime changed the way the United States taxes foreign corporations.

In some cases, a U.S. shareholder, even if he or she:

• received no dividends;
• did not repatriate the corporation's earnings to the United States;
• received no actual cash income;

may still need to report, and pay U.S. income tax on, part of the foreign corporation's profits.

Therefore, in addition to Form 5471, many shareholders of foreign corporations may also need to prepare:

• Form 5471
• Schedule I-1
• Form 8992 (GILTI calculation)
• Form 8993 (Section 250 Deduction)
• Foreign tax credit analysis
• Section 962 Election analysis

Changes starting in 2026 (as of September 2026)

Section 70323 of Pub. L. 119-21 (One Big Beautiful Bill Act), enacted in July 2025, amended Section 951A of the Internal Revenue Code:

• For tax year 2025 and earlier: the GILTI rules described in this chapter still apply.
• For tax years beginning after December 31, 2025: GILTI is renamed "Net CFC Tested Income" (NCTI).
• The deduction for the "net deemed tangible income return," which was previously computed from the foreign corporation's tangible assets (QBAI), has been eliminated, so a foreign corporation with substantial plant and equipment may have more of its income included in the calculation.
• At the same time, the Section 250 deduction percentage has been changed from 50% to 40%, and the creditable percentage of deemed-paid foreign taxes under Section 960(d) has been increased from 80% to 90% (these two changes apply mainly to U.S. corporate shareholders and to individual shareholders who make a Section 962 Election).

References to GILTI in the rest of this chapter should be read as NCTI for tax years 2026 and later.

Does owning more than 10% always mean GILTI?

Not necessarily.

This is currently one of the most common misunderstandings.

Owning 10% or more of the shares of a foreign corporation may make you a U.S. Shareholder as defined in U.S. tax law, but it does not mean you necessarily must report GILTI.

First, you must determine whether the foreign corporation is a:

• CFC (Controlled Foreign Corporation)

In general, a corporation may be treated as a CFC only when all U.S. shareholders together own more than 50% of the stock.

If the corporation is not a CFC, there is generally no GILTI reporting issue.

If the foreign corporation has losses, is GILTI still payable?

Not necessarily.

Many people mistakenly believe that every CFC necessarily has GILTI.

In fact, if the corporation has:

• Operating losses
• A Tested Loss
• Limited business activity

the GILTI calculation may result in zero.

Even so, we still recommend keeping the related analysis workpapers to show that the necessary evaluation was completed.

Situations we see frequently

In recent years, more and more new immigrants have come to the United States from places such as:

• China
• Hong Kong
• Taiwan
• Singapore
• Malaysia

Many of these taxpayers are in the following situation:

• They have filed Form 5471 for many years;
• They have disclosed the foreign corporation ownership information;
• They have never performed a GILTI analysis;
• They have never prepared Form 8992;
• Each year they simply follow the prior year's filing approach.

As international tax law grows more complex, taxpayers should periodically review their filing obligations related to foreign corporations.

Points for taxpayers to watch

If you own shares in a foreign corporation, we recommend periodically checking:

• Your personal ownership percentage;
• The combined ownership percentage of all U.S. shareholders;
• Whether the corporation is a CFC;
• Whether GILTI must be reported;
• Whether the foreign tax credit can be used;
• Whether a Section 962 Election is appropriate.

Conclusion

Form 5471 is no longer a simple information return.

For many U.S. taxpayers who own shares in foreign corporations, the following now also need to be considered:

• CFC determination
• GILTI calculation
• Foreign tax credit
• Section 962 Election
• Other U.S. international tax rules

In recent years, as more and more Chinese immigrants in the United States own foreign businesses, these filing requirements have become even more important. We recommend that taxpayers periodically review their own international tax filing obligations to avoid unnecessary tax risks and penalties in the future.

Kit Leung CPA U.S. Certified Public Accountant

Disclaimer: This article is for general information only and does not constitute tax, legal, or professional advice. Please consult a qualified tax advisor about your specific situation.

Giving Up a U.S. Green Card and the Expatriation Tax

Do Green Card Holders Have to File Expatriation Tax Returns When Giving Up Their Green Card?

Understanding the 8-Year Rule, Form 8854, and the 40% Transfer Tax Risk

Many immigrants choose to give up their U.S. green cards due to retirement, relocation, family considerations, or business opportunities abroad.

Unfortunately, many people become concerned after reading online articles discussing:

• Expatriation Tax
• Form 8854
• Covered Expatriate Status
• 40% Gift and Inheritance Tax

The good news is that not everyone who gives up a green card is subject to these rules.

Step 1 – Are You a Long-Term Resident?

Before expatriation tax rules apply, the IRS first determines whether you are considered a Long-Term Resident.

A Long-Term Resident is generally a green card holder who held lawful permanent resident status in at least 8 of the 15 tax years ending with the year of expatriation.

Example 1

Green Card Issued: 2017

Green Card Abandoned: 2021

Tax Years as Green Card Holder:

• 2017
• 2018
• 2019
• 2020
• 2021

Total: 5 Tax Years

Result:

Generally not a Long-Term Resident.

Example 2

Green Card Issued: 2013

Green Card Abandoned: 2024

More than 8 tax years as a green card holder.

Result:

Long-Term Resident status applies and expatriation tax rules must be analyzed.

Step 2 – What Is a Covered Expatriate?

Even if you are a Long-Term Resident, you do not automatically owe expatriation tax.

You may become a Covered Expatriate if any one of the following applies:

1. Net Worth of $2 Million or More

Worldwide assets are included, such as:

• U.S. real estate
• Foreign real estate
• Bank accounts
• Investment accounts
• Business ownership interests
• Life insurance cash value
• Notes receivable
• Retirement accounts

2. Average Income Tax Liability Exceeds IRS Threshold

The threshold is adjusted annually for inflation: your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency must be more than the specified amount ($201,000 for 2024, $206,000 for 2025 and $211,000 for 2026).

3. Failure to Certify Five Years of Tax Compliance

This includes:

• Federal income tax returns
• FBAR filings
• Form 8938 reporting
• Other required international tax filings

What Is Form 8854?

Form 8854 (Initial and Annual Expatriation Statement) is used to:

• Report worldwide assets
• Determine net worth
• Certify five years of tax compliance
• Determine Covered Expatriate status

What Happens If Form 8854 Is Not Filed?

If Form 8854 is required but not filed, the IRS may assess a $10,000 penalty, unless the failure was due to reasonable cause.

Penalty relief may be available if the taxpayer can demonstrate reasonable cause.

Understanding the 40% Transfer Tax

One of the most common concerns is:

“If I give money to my spouse or children after expatriation, will they owe a 40% tax?”

This concern relates to IRC Section 2801.

If a person is classified as a Covered Expatriate, future gifts or inheritances transferred to U.S. citizens or U.S. residents may trigger additional tax consequences.

However, these rules generally apply only to Covered Expatriates.

Most individuals who do not meet the Long-Term Resident requirements never reach this stage of analysis.

Documents to Gather Before Giving Up a Green Card

Immigration Documents

• Copy of Green Card
• Form I-407
• USCIS abandonment confirmation

Tax Documents

• Five years of tax returns
• FBAR filings
• Form 8938 filings
• Foreign asset reporting records

Asset Documentation

• Real estate appraisals
• Bank statements
• Investment account statements
• Business ownership records
• Life insurance cash value statements
• Notes receivable documentation

CPA Recommendation

Many people assume:

“Giving up a green card automatically triggers expatriation tax.”

In reality, the first question is:

Are you a Long-Term Resident?

If you have not held a green card for at least 8 tax years, many expatriation tax rules may not apply.

Before giving up a green card, consult with a qualified CPA or international tax advisor to determine your filing obligations and avoid costly mistakes.

Need Help Determining:

• ✓ Long-Term Resident Status
• ✓ Form 8854 Filing Requirements
• ✓ Covered Expatriate Status
• ✓ 40% Transfer Tax Exposure

Contact our office for a professional consultation.

Kit Leung CPA Certified Public Accountant California, USA

Foreign & Overseas Individual Tax Intake Worksheet

Client Intake Worksheet · 2025 Tax Year

Tax Year: 2025 (generally filed in 2026)

Version date: 2026-06-30

1. Quick classification: determine filing status first

Please first select the option closest to the client's situation. The final filing status must be determined based on the facts, days of presence, visa, tax treaties, and type of income taken together.

2. Key deadlines and timing

The following are common deadlines for calendar-year individuals. For weekends, holidays, disaster-area postponements, or special statuses, follow the IRS rules for the year in question.

3. Personal and family information

4. Tax residency, the 183-day rule, and entry/exit records

183-day weighted calculation worksheet

5. Income records checklist: U.S. income and foreign income

Please provide all income records. U.S. tax residents generally report worldwide income; nonresident aliens generally report taxable U.S.-source income and income effectively connected with a U.S. trade/business.

5A. U.S. income records

5B. Foreign income records

6. Foreign Earned Income Exclusion vs. Foreign Tax Credit

Many people confuse the "foreign earned income exclusion" with the "foreign tax credit"; in actual filing, the two usually need to be modeled and compared.

6A. Form 2555 specific questions

6B. Form 1116 specific questions

7. Foreign financial accounts and foreign assets: FBAR / Form 8938

7A. FBAR / Form 114 account detail sheet (make one copy per account)

7B. Form 8938 threshold quick reference

8. Foreign gifts, inheritances, and trusts: Form 3520 / Form 3520-A

8A. Foreign gift/inheritance/remittance detail sheet

9. Foreign corporations, partnerships, funds, and other investments: 5471 / 8865 / 8858 / 8621

This part is the part of the original checklist most worth expanding. Foreign corporations, partnerships, foreign funds, foreign retirement accounts, foreign trusts, and foreign single-member companies can bring high-risk information reporting and large penalties.

9A. Foreign corporation/entity information sheet

9B. PFIC / foreign fund information sheet (make one copy per fund)

10. Nonresident alien 1040-NR specific records

This part applies to clients who do not have a green card, do not meet U.S. tax residency, or are treated as nonresidents under a tax treaty / the closer connection exception.

11. State tax and residency risk in California and other states

12. Records detail and client signature confirmation

12A. Foreign income detail sheet (copy for each type of income)

12B. Entry and exit record detail sheet

Date of entry Date of departure Country/state Purpose Supporting documents

12C. Client confirmation

I confirm that I have made every effort to provide complete, true, and accurate information about my income, accounts, assets, entries and exits, status, and transactions. I understand that this worksheet is used only to collect information and does not constitute legal or tax advice; the final filing result must be determined based on the complete facts, IRS/state tax agency rules, and applicable tax treaties.

13. Basis for updates and sources

The following sources were used to update this worksheet. When actually filing, rely on the IRS, FinCEN, state tax agencies, and the latest form instructions.

• IRS - Substantial Presence Test: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test
• IRS - U.S. citizens and resident aliens abroad: https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad
• IRS - Taxation of nonresident aliens: https://www.irs.gov/individuals/international-taxpayers/taxation-of-nonresident-aliens
• IRS - Foreign Earned Income Exclusion: https://www.irs.gov/individuals/international-taxpayers/figuring-the-foreign-earned-income-exclusion
• IRS - Foreign Tax Credit: https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit
• IRS - FBAR: https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
• IRS - Comparison of Form 8938 and FBAR: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
• IRS - Gifts from foreign person / Form 3520: https://www.irs.gov/businesses/gifts-from-foreign-person
• IRS - About Form 5471: https://www.irs.gov/forms-pubs/about-form-5471
• IRS - About Form 8865: https://www.irs.gov/forms-pubs/about-form-8865
• IRS - About Form 8858: https://www.irs.gov/forms-pubs/about-form-8858
• IRS - About Form 8621: https://www.irs.gov/forms-pubs/about-form-8621
• IRS - About Form 8833: https://www.irs.gov/forms-pubs/about-form-8833
• IRS - About Form W-8BEN: https://www.irs.gov/forms-pubs/about-form-w-8-ben
• California FTB - Part-year resident and nonresident: https://www.ftb.ca.gov/file/personal/residency-status/part-year-and-nonresident.html

Disclaimer: This worksheet is used only to collect client information and organize general tax knowledge; it does not constitute individual tax, legal, or accounting advice. Specific filing obligations and tax results should be determined in light of the complete facts, applicable tax law, tax treaties, state tax rules, and the latest IRS/state tax agency form instructions.