International Taxation – US Citizen and Green Card Holder (Resident Alien)
                     International Taxation for U.S. Citizen & 
Green Card Holder 
Webinar Series: Episode 
2
PRESENTED BY:
Vivek Shah Mansi Shah
US Tax Expert  US Expat Tax Expert  
Managing Partner  Sr. Tax Manager  
@Smart @Smart 
Accountants Accountants
Webinar Overview:
Definition Overview of Individual
Foreign Banks & Financial Overview of Partnership
Accounts
Foreign Tax Credit Overview of Corporation
Foreign Earned Income Overview of 5472 & 5471
Exclusion
U.S Source Of Income Streamline Package
Estate & Gift Taxation and Exit Tax
Definition:
Green Card holders and Citizenship are terms that grant foreign nationals the right to live 
and work in the United States of America.
Green Card Holder:
Green Card holders and Citizenship are terms that grant foreign nationals the right to live and work in 
the United States of America.
 Substantial Presence Test:
To meet this test, a person must be physically present in the United States on at least:
1. 31  days during the current year, and‘
2. 183 days during the 3-year period that includes the current year and the 2 years  immediately 
before that, considering:
 All the days a person was present in the current year, and
 One-Third (1/3) of the days a person was present in the first year before the current year, and
 One – Sixth (1/6) of the days a person in the second year before the current year.
QUESTION
1. Mr. X is US Green card holder but living permanently in India. As per Indian Income tax rules, 
he is claiming Indian tax residency. What would be US residency status for him?
a. Non- Resident
b. Resident
c. Resident unless we claim treaty-based position.
d. No filing requirement in US
Pre-Immigration Tax Planning
 Tax Planning must be a part of a person’s immigration process in order to avoid adverse tax 
consequences.
 All global income of U.S. residents and citizens is subject to taxation. However, foreign income 
credits and foreign income tax exclusions can help alleviate a person’s U.S. tax burden.
The Source Of Income:
There are two types of Sources of Income:
Foreign Source Income U.S. Source Income
• A non-resident alien is subject to U.S. • Includes all income received from U.S. 
Income tax only on U.S. source income. organizations or individuals and 
Foreign-Sourced income received by non- compensation received from both U.S. and 
resident alien is not subject to U.S foreign organizations or individuals for work performed in the U.S.
taxation.
   
Foreign Bank & Financial Accounts
 A  U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must 
file an FBAR to report:
1. A financial interest in or signature or other authority over at least one financial account located outside the United 
States.
2. In FBAR we have to share Form 8938 copy to IRS departments along with main tax return and FBAR Copy share to 
Department Of Treasury.
 The maximum value of an account is a reasonable approximation of the greatest value of currency or nonmonetary 
assets in the account during the calendar year. 
 The Following are due date and Form to file FBAR:
FORM FinCEN Form 114
Due Date 15th April, 2022 but allowed automatic extension to October 15
 Form 8938(Statement of Specified Foreign Financial Assets) is a tax form used by some U.S. taxpayers, corporations, 
partnerships, and trusts that hold foreign assets beyond a certain threshold
 Individuals residing in the United States are required to file Form 8938 if the market value of their foreign financial 
assets is greater than $50,000 on the last day of the year or greater than $75,000 at any time during the year.
 
 
Form-1116  Foreign Tax Credit
Meaning Taxes Paid in other countries Form & Taxability
qualifies for the FTC
• The US Foreign Tax Credit allows •
•  They were levied on your Form- 1116(FTC)-  For Individual , Americans who pay foreign Estate or Trust
income taxes to claim US tax income.
credits on a dollar for dollar basis •  You were legally obliged to pay •
to the same value as income them. Form -1118(FTC- C corp)- 
Corporation
taxes that they’ve already paid to •  You did pay them.
another country, so reducing •  You did not gain from paying 
their US tax liability. them, and
•  The United States has not 
• Please note that there is foreign sanctioned the country.
tax credit set-off available 
against state income taxes and 
Net Investment income taxes.
Form 2555-Foreign Earned Income Exclusion
 The foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction are 
based on foreign earned income.
 For this purpose, foreign earned income is income you receive for services you perform in a foreign country in a 
period during which your tax home is in a foreign country and you meet either :
 
 A U.S. citizen who is a bona fide residence or the physical presence test.
 A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 
330 full days during any period of 12 consecutive month.
Type of Taxability Limit for 2021 Limit for 2022
Qualifying Person Lesser of Lesser of 
Foreign Income earned Foreign Income earned
or or
$ 108,700 per Qualifying $ 112,000 per Qualifying 
Married Filing Jointly $ 217,400 $ 224,000
Continue...
 The List Below Classifies Many Types Of Income Into Three Categories.
Earned Income Unearned Income Variable Income
Salaries and Wages Dividends Business profits
Commissions Interest Royalties
Bonuses Capital Gains Rents
Professional fees Gambling winnings Scholarships and Fellowships
Tips Alimony  
  Social Security Benefits  
  Pensions  
  Annuities  
Comparative of Form 2555 and Form 1116
Form 2555 (Foreign Earned Income Form 1116( Foreign Tax Credit)
Exclusion)
 FEIE applies to foreign earned income that  FTC applies to all sort of Income and is used to  
is less than $108,700 claim credit for foreign tax paid
 In FEIE standard deduction & Personal  If you have unused FTCs from prior years, they 
Exemption available. Thus additional    automatically get carried forward and can be 
    $ 10,350 would be tax free utilized in future years.
 Once if Person Choose to exclude your  If Person Choose to use FEIE to exclude foreign 
foreign earned income, that choice income, then you are not eligible to claim 
remains in effect for that year and all Foreign Tax Credit on the same Income.
later years unless you revoke it.
 The Foreign Earned Income Exclusion is  Foreign Tax credit is more advantageous when a 
more advantageous when taxpayers taxpayer’s income is earned in a high tax rate 
income is earned in a low- or no-income country. 
tax country
QUESTION
2. Mr. X is US citizen but living in Dubai. He worked for US employer during 2021 and received 
Form W-2. What should be Mr. X claim?
a. Form 1116 Foreign Tax Credit
b. Form 2555 Foreign earned income exclusion
c. Since service performed in Dubai, this is foreign source income hence not taxable in USA
d. Form W-2 US income fully taxable in USA and need to offer taxes in USA
Overview of Green Card Holder & Citizen
There are different types of Forms for Resident Individuals and Entities which are as  
follows:
Taxability Which form is Required
For Individual Form 1040 & Form 1040-SR
For Estate and Trust Form 1041
For Domestic Partnership Form 1065
For Foreign Partnership Form 8865
For S Corporation Form 1120 S
For C Corporation Form 1120
More than 25% holding of Foreign Corporation Form 5472
in U.S. Corporation
More than 10% of Ownership of U.S Form 5471
Shareholder or entities in Foreign Corporation
 Due dates for filing 1040
INDIVIDUAL
FORM- 1040  (For Individual Income Tax Return)
 Most people in the U.S. need to file Form 1040 no matter if they are self-employed, work for someone else as 
an employee, or live off income from investments.
Now, here we explain all above forms in detail:
Type of Persons Due Date for 201 Extension Due Date for 2021
Individual 18th April 2022 17th October 2022
FORM 1040 - SR (U.S Tax Return For Seniors)
 Anyone age 65 or older can opt to use Form 1040-SR instead of Form 1040.
 There aren't any other caveats that come with using this form.
 Other things are same as Form-1040.
ESTATE AND TRUSTS
FORM 1041 (U.S Tax Return For Estate & Trusts)
The fiduciary of a domestic decedent's estate, trust, or bankruptcy estate files Form 1041 to report:
-  The income, deductions, gains, losses, etc. of the estate or trust;
-  The income that is either accumulated or held for future distribution or distributed currently to the beneficiaries;
-  Any income tax liability of the estate or trust;
-  Employment taxes on wages paid to household employees; and
-  Net Investment Income Tax. See Schedule G, Part I, line 5, and the Instructions for Form 8960.
- A trust or a decedent's estate is a separate legal entity for federal tax purposes. 
- A decedent's estate comes into existence at the time of death of an individual.
- A trust may be created during an individual's life or at the time of his or her death under a will 
(testamentary).
PARTNERSHIP
FORM 1065 (U.S Return For Partnership)
 A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, 
but it does not pay income tax.
 Instead, it “Passes Through" profits or losses to its partners.
 Each partner reports their share of the partnership's income or loss on their personal tax return.
 The partnership must furnish copies of Schedule K-1 (Form 1065) to the partner.
Due Dates for Filing Form-1065:
Type of Persons Due Date for 201 Extension Due Date for 2021
For Partnership 15th March 2022 15th September 2022
FORM- 8865 – Return of U.S Persons With Respect to Certain Foreign Partnership
Meaning:
 U.S. person who controlled the foreign partnership at any time during the partnership's tax year.
 There are four major categories of tax filers to complete the form and the requirements are different for each 
group. 
Category 1—Any U.S. Person who controlled a foreign partnership during the tax year more than 50% interest..
Category 2—Any U.S. Person who owned more than 10% of a foreign partnership.
Category 3¬ Any U.S. Person who contributed property to a foreign partnership in exchange for an interest in the partnership.
Category 4—Any U.S. Person who had a reportable event during their tax year under section 6046A.
CORPORATION
2 Types of Corporation
S Corporation C Corporation
If all the shareholders qualify, and all the shareholders 
Business corporations are always a C corporation at the 
want to, the corporation can elect to become an “S” 
corporation. time of formation.
Form 1120 –S (U.S Income Tax Return For An S Corporation)
 In S Corporation Requirements give a corporation with 100 shareholders or less the benefit of incorporation while 
being taxed as a partnership.
 The Schedule K-1 form identifies the percentage of company shares owned by each individual shareholder for the 
tax year and must be prepared for every shareholder.
Form 1120 (U.S Corporation Income Tax Return)
 A corporation pays income tax by filing a corporate tax return on Form 1120 and paying the taxes as indicated 
by this return.
 Its owners don't pay the taxes for the corporation, unlike "pass-through" business entities that trickle income 
and deductions down to their owners and shareholders to be reported on their personal tax returns.
Due Dates for Filing Form-1120S and Form 1120:
Type of Persons Due Date for 201 Extension Due Date for 2021
For Corporation (1120 S) 15th March 2022 15th September 2022
For Corporation (1120) 18th April 2022 17th October 2022
FROM 5472- Information Return of a 25% Foreign-Owned U.S. Corporation Or A Foreign 
Corporation Engaged in a U.S. Trade or Business)
 A reporting corporation must file Form 5472 if it had a reportable transaction with a foreign or domestic related party.
 The 5472 form is an international tax form that is used by foreign persons to report an interest in or ownership over a U.S. 
company or subsidiary. When reportable transactions occur during the tax year of a reporting corporation with a foreign or 
domestic related party.
● A 25% foreign-owned U.S. corporation (including a foreign-owned U.S. disregarded 
entity OR Reporting Corporation
● A foreign corporation engaged in a trade or business within the United States.
● A corporation is 25% foreign owned if it has at least one direct or indirect 25% foreign 
shareholder at any time during the tax year. 25% Foreign Owned
● 25% foreign shareholder if the person owns, directly or indirectly, at least 25% of either:
●   The total voting power of all classes of stock entitled to vote OR 25% Foreign Shareholder
● The total value of all classes of stock of the corporation
● Penalty of $25,000 will be assessed on any reporting corporation that fails to file 
Form 5472 when due and in the manner prescribed. The penalty also applies for Penalties
failure to maintain records.
FORM- 5471 Information Return of U.S. Persons With Respect  to Certain 
Foreign Corporations
The U.S. person (individual or entity i.e. Corporation, partnership, trust, estate) has more than 10% 
ownership (in voting power or value)
There may be other circumstances that lead to filing as well, such as being an officer/director of a 
controlled foreign corporation (CFC), with over 50% of the total value or voting power owned by 
U.S. shareholders.
 
Failure to File Form 5471, Penalty is imposed for each annual accounting period of each foreign 
corporation is $10,000.
In Form 5471 there are 5 different categories of filers:
Category-1 The U.S. Shareholder has 10% or more of the total combined voting power of all classes of voting stock of the 
foreign corporation during any of tax year.
Category-2 U.S. citizen or resident who is an officer or director of a foreign corporation in which a U.S. person has 
acquired 10% stock ownership requirement with respect to the foreign corporation.
Category- 3 A U.S. person who acquires stock which, without regard to stock already owned on the date of acquisition, 
meets the 10% stock ownership requirement with respect to the foreign corporation..
Category -4 A U.S. person who had control (over 50% stock ownership of the voting power/value) of a foreign 
corporation during the annual accounting period of the foreign corporation.
Category -5 U.S. shareholder who owns stock in a foreign corporation that is a CFC at any time during any tax year of 
the foreign corporation, and who owned that stock on the last day in that year on which it was a CFC.
QUESTION
3. What is Form 5471?
a. Whether foreign corporation engaged in a U.S trade or U.S. Corporation
b. Whether U.S. Person or U.S. Corporation shares in a foreign corporation during that year
c. Both a & b
d. None of the above
Form 3520 A - Annual Information return of foreign 
trust with U.S Owner
 Form 3520-A is a form filed annually by the trustee of foreign trust to provide information to the 
IRS about the trust.
 Not all trust owners need to file 3520-A. The IRS recently made a change excluding certain foreign 
trusts used exclusively for retirement funds/pension, educational purposes, medical purposes.
 Form 3520-A is due on 15th day of the 3rd month after the end of the trust’s tax year. A 
calendar year trust is due March 15.
Streamline Package
 The IRS Streamlined Procedures are designed for those taxpayers who are late or have never filed ,who can certify 
that their failure to previously report all income, pay all tax , and submit all required tax information returns, 
including FBARs, resulted from non-willful conduct.
 Taxpayers will be required to file only 3 years of back tax returns(Original Copy of Return) and 6 years of FBARs.
 There are 2 types of Streamline Procedure:
Domestic Streamline Offshore Procedure
-  U.S. taxpayers residing in the United States (or those who do not meet the foreign resident requirement) are eligible to submit to the 
streamlined domestic offshore procedures.
-  In Domestic Streamline we have to pay 5% penalty on maximum amount of Foreign Assets.
QUESTION
4. 5% Penalty is applicable in which Streamline Procedure?
a. Domestic Streamline Offshore Procedure
b. Foreign Streamline Offshore Procedure
c. Both a & b
d. None of the above
United States Tax Treaties With Various 
Countries
 The United States has tax treaties with a number of foreign countries. Under these  treaties, 
residents (not necessarily citizens) of foreign countries are taxed at a  reduced rate or are exempt 
from U.S. taxes on certain items of income they receive  from sources within the United States.
 US provides a tax credit up to a certain amount of income taxed by a foreign country.
Estate & Gift Taxation
 If you give someone a large gift, or if you leave property to someone when you die, the value of those transfers of property 
may be subject to the U.S. gift and estate tax. In addition, some U.S. states also impose an estate or inheritance tax.
United States Gift Tax To: US Citizen ( Limit for 2021) To: US Citizen ( Limit for 2022)
Spouse: Spouse:  
Unlimited Marital Deduction Unlimited Marital Deduction 
From: US Citizen &   
Domiciled Others: Others: 
Annual Exclusion: $15,000 Annual Exclusion: $16,000
   
Applicable Exclusion Amount: $11,700,000 Applicable Exclusion Amount: $12,060,000
 Which Form is Required to be filed?
Form 706 ( Estate Tax) United States Estate (and Generation-Skipping Transfer) Tax Return
Form 709( Gift Tax) United States Gift (and Generation-Skipping Transfer) Tax Return
Exit Tax For U.S. Citizens & Green Card 
Holder
 Exit Tax is a tax paid on a percentage of the assets that someone who is renouncing their US 
citizenship holds at the time that they renounce them.
 Exit tax is calculated using the form 8854(Initial & Annual Expatriation Statement),which is the 
expatriation statement that is attached on your final dual status return.
 If Person become an expatriate with assets worth $2 million or more, had an average annual net tax 
liability of more than $168,000 over the last five years, or have not filed the form 8854 for the 
year of expatriation. 
QUESTION
5. Mr. Tom is recently Engaged with Miss Jerry in Dec-2021.And after two months married in 
Feb 2022.He gifted beautiful Engagement ring valued USD 50,000 to her on Engagement 
ceremony in Dec 2021. Mr. Tom is subject to :
a. Gift Tax and needs to file form 709
b. No Gift tax since it is gifted to spouse
c. No Gift Tax since it is social occasion gift
d. Anything given in natural love & affections is exempt from Gift Tax.
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