Posts filed under the Nonresidents category.

Ten Things Foreign Investors Need to Know about Buying Real Estate in US

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  1. ITIN You will need to apply an individual taxpayer identification number. An ITIN can help you to fileUS tax return and get your payments.  A request for an ITIN is made on Form W-7.
  2. W-8 ECI: If property is used for rental purpose, the IRS requires foreign owner to withhold and pay income tax at a rate 30% of the gross rents collected. However, foreign owner can elect to treat the rental income as “effective connected income” withUS trade or business.

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Tax Credits—Some is Better Than Others

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Unlike deductions, tax credit tax credits reduce your tax liability by dollar for dollar directly whereas tax deductions reduce your taxable income. Some tax credits can be more valuable than others.

Refundable vs. nonrefundable tax credit
Tax credits can either be refundable or non-refundable. If the tax credit were a refundable credit, it is not limited by the amount of an individual’s tax liability. When the tax credit is greater than the taxpayer’s tax liability,

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