PRIMARY CONTACTS: Matthew S. Legg CPA
Payments to all foreign persons, including nonresident alien individuals, foreign entities and governments, may be subject to NRA withholding. Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income received by a foreign person are subject to U.S. tax of 30%, unless a reduced rate, including exemption, applies.
FATCA isset of rules designed to assistthe IRS in collecting taxes owed by foreign persons that receive payments from U.S. businesses. It impacts nearly all non-U.S. entities that receive most types of U.S. source income. Failure to comply with FATCA withholding regulations can result in increased tax liability, penalties and fines for non-compliance.
Under FATCA, your foreign payees are likely to be subject to the 30% withholding tax. Withholdable payments commonly include U.S. source dividends, rents, interest, royalties, salaries, wages, annuities or other fixed, determinable, annual or periodic income; gross proceeds from the sale or disposition of U.S. property that could produce interest or dividends; or interest paid by a foreign branch of a U.S. bank.
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About Schneider Downs Tax Advisors
With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax filing requirements and maximizing tax benefits. Our industry knowledge and focus ensures delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at Tax Services.
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