Income and International Tax
A common question regarding international tax is:
I have different types of income, how do I determine where those will be taxed- either here in the U.S. or in the foreign country?
In U.S. federal income taxation, these are referred to as the source of income rules. These rules have numerous. exceptions and certain fact patterns may change the outcome altogether. As a very general rule, here are some of the types of income and where they are sourced:
Interest and dividends are generally based on the residence of the payor.
Compensation for services is generally sourced based on where the revenue is generated- in other words, where the services are provided.
Rents or royalties are generally sourced to where the location of the property is or where it is Used. If real property is sold, the gain is generally also sourced to the location of the property.
Personal property has many different rules for determining sourcing and will not be covered here.
With source of income, it is also important to see any applicable treaties, and therefore exceptions and rate exemptions that may apply.
To learn more, please visit our international tax page: https://abfinllc.mysites.io/international-tax-services/
