The Internal Revenue Service (IRS) broadly categorizes taxpayers as U.S. persons and foreign persons for tax purposes. However, it is important to understand that the meaning of U.S. person is not limited to an individual person; it also includes other forms of entities. To clarify the term “U.S. person” our professional tax advisors have put together a brief summary of the different terms that could be considered to be a “U.S. Person” by the IRS.
Definition of a U.S. Person
• Citizen or Resident of the United States: A U.S. citizen is a person who is born in any of the states in the U.S. or a U.S. territory, or had a parent/parents who are/were U.S. citizens at the time of your birth and you meet certain other requirements. A U.S. citizen also includes a person who has acquired citizenship through the federally administered Naturalization Test.
A resident is a person who has either been granted a ‘Green Card’ by the U.S. Citizenship and Immigration Services considering him/her as a lawful permanent resident, or someone who fulfills the ‘substantial presence test’ .
• Domestic Partnership: A partnership is the relationship existing between two or more persons who join to carry on a trade or business. When this partnership business is formed or created under the laws of any of any of the fifty states in the U.S., District of Columbia or U.S. territory, it is considered to be a ‘domestic partnership’.
• Domestic Corporation: A corporation that is incorporated or formed in one of the fifty states in the United States, District of Columbia or U.S. territory and falls under that state or territory’s jurisdiction is considered to be a ‘domestic corporation.
• Estate other than foreign estate: An estate is the sum total of everything you own at any given point in your life which includes real estate, investments, and other assets. Any property located in the United States will be considered to be part of the individuals’ U.S. estate. However, any foreign assets may affect your U.S. filing requirements
• Trust: A Trust is a legal arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Any trust (revocable/irrevocable) on which one or more U.S. persons have the authority to control all substantial decisions of the trust, and a U.S. court can exercise primary supervision over the administration of the trust is considered to be a U.S. Person.
AG Tax LLP Can Help
What qualifies as a U.S. person may vary on a case by case basis dependent upon the circumstances. The Chartered Professional Accountants at AG Tax have years of experience in determining the status of individuals and entities in regards to U.S. tax laws. Our cross border specialists can not only help you determine your U.S. status, but can also assist in any compliance or planning work that may be necessary given your situation.
Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- U.S. Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- State Sales Tax & E-commerce Taxation
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
