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FAQ's Regarding taxes for Americans living abroad (Vienna)

Here are a couple more common questions:

Question: Who is considered a foreign person for U.S. tax purposes?

Answer: A foreign person is an individual that is not a U.S. person. Generally, this includes non-resident alien and it also includes U.S. branches of foreign corporations, foreign estates, foreign corporations and partnerships. For example, a foreign corporation is a corporation that was created or organized outside of the United States or under the law of a country other than the United States. In general a non-resident alien is an individual whose permanent residence is outside of the United States and who is not a U.S. citizen. The U.S. or foreign status should be documented for those payees who are paid FDAP income.

Question: Please define FDAP income and include some specific examples.

Answer: In general, in order for a payment to be subject to NRA withholding, it must be a payment of FDAP income. FDAP is an acronym for Fixed or Determinable, Annual or Periodic. Some of the more common expenses paid by US withholding agents which would result in FDAP income to their vendors and other service providers are interest, royalties, compensation for personal services, rents, pensions or annuities and gains from the sale or exchange of the patents, copyrights and similar intangibles that are described in I.R.C. Sec. Protected content . See also Q&A-4 directly below.
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