Academic journal article Journal of Accountancy

New Regulations Issued

Academic journal article Journal of Accountancy

New Regulations Issued

Article excerpt

The Treasury Department recently issued final regulations under Internal Revenue Code section 7701(b) defining "resident alien" and "nonresident alien" for U.S. individual income tax purposes. The regulations apply retroactively to years beginning after December 31, 1984.

An alien's tax status in the United States is determined by whether the individual is a resident or nonresident of the United States. A resident alien is taxed similarly to a U.S. citizen, with the inclusion of all income sources and the allowance of appropriate deductions. A nonresident alien is subject to a quite different scheme, with a tax assessed on certain gross income items and a rather limited set of deductions.

The final regulations reflect proposed section 7701(b) regulations, issued in 1987, which established several objective and subjective tests to determine whether an alien qualifies as a resident.

Some individuals qualify both under the domestic laws of the United States and the laws of countries with whom the United States has entered into an income tax treaty. These individuals are considered dual residents, with their residency status determined according to the tie-breaker provision of the relevant income tax treaty.

Under the proposed regulations it was not clear whether a tiebreaking taxpayer electing nonresident status was required to report U. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.