As a foreign investor pursuing opportunities in the United States, partnering with a licensed, registered CPA (certified public accounting) has several advantages. Even seasoned investors find that navigating tax reporting requirements is time-consuming and complicated; even a single error can have serious repercussions from both a legal and financial standpoint. Ann Irons, a Bellingham, MA tax accountant, introduces a few of the most basic requirements and essential documents.
Essential Tax Reporting Documents
Several forms must be completed as part of the filing process; your tax preparer can help you locate the necessary information and fill out these forms. These may include:
Form W-8 BEN, W-8 ECI, or W-8 IMY: Documentation that shows the taxpayer's country of residence, needed to claim tax treaties benefits
Form 8288 or 8288-A: Documentation of taxes withheld under FIRTPA (Foreign Investment in Real Property Act)
Form 673: Needed for claiming exemptions from withholding any foreign earned income as outlined in Section 911 of the tax code
Form 1042: The primary form used to report foreign investors' withholdings on income from the United States
Form 1042 S: Shows the U.S. source of income subject to withholding
Form 1116: For individual investors who plan to claim the U.S. foreign tax credit
Form 1118: For corporations claiming the foreign tax credit
Recent and Proposed Changes Affecting Investors
Changes and new regulations are made frequently, which means requirements may differ from one filing year to another. For this reason, it's best to work with an experienced tax professional, preferably one who is familiar with foreign investment tax returns. A few of the most recent changes include:
- Final additions to the Foreign Account Tax Compliance Act, which creates new challenges for income generated by U.S. real estate
- The "Rebuild America Partnership" proposed by Obama, which could potentially impact foreign pension funds
- A proposed bill that would change requirements outlined in FIRTPA
It's never too early for foreign investment tax planning. To learn more about Bellingham, MA tax preparation, or to arrange a meeting with Ann Irons, CPA, LLC, contact us at (508) 966-0700. We offer accounting and tax preparation for individuals, businesses, and law practices in Bellingham, Woonsocket, Worcester, Medway, Milford, and the surrounding areas.
Ann spent over 25 years in the financial service industry, gaining knowledge and experience that allows her to provide an array of tax, bookkeeping, and accounting services for her clients. Relying on a stringent code of ethics and a dedication to maintaining the highest industry standards, Ann works hard to ensure her clients receive the quality service they’ve come to expect. A member of AICPA and MSCPA, Ann has also had an article featured in the renowned publication, Banker and Tradesman. 
