Arlington Cross-Border Tax

International Ties in Arlington

Arlington's automotive supply chain includes companies from Canada, Mexico, Japan, Korea and Europe, UTA enrolls thousands of international students and researchers, and the Metroplex draws professionals from around the world. BOMCAS prepares the U.S. side of these matters, including federal and Texas filings and information returns, and has particular experience with Canada–U.S. tax.

Canada–U.S. basics are on the Texas cross-border tax page, while this page covers Arlington's suppliers, students and newcomers.

Foreign Suppliers

A foreign automotive supplier that ships parts to Arlington may owe U.S. tax if it has a permanent establishment, such as a warehouse with employees or a sequencing operation near the plant. Many set up U.S. subsidiaries, which file U.S. corporate returns, Form 5472 for related-party transactions and the Texas franchise tax report. Intercompany prices for parts, tooling and services must be supported by transfer pricing documentation. Canadian suppliers often deal with USMCA rules of origin, which affect duty but not income tax.

International Students and Researchers

F-1 and J-1 students at UTA are generally nonresidents for their first five calendar years and file Form 1040-NR with Form 8843. Scholars and researchers on J-1 visas are usually exempt from the substantial presence test for two years. Some treaties exempt certain income from U.S. tax, which requires Form 8833 or Form 8233 with the employer. Students who stay on Optional Practical Training or switch to H-1B status may become residents and need to file dual-status returns.

Canadians Moving to Arlington

Canadians who move to Arlington for jobs with suppliers, engineering firms or sports organisations become U.S. residents under the green card test or substantial presence test. In the year of the move they may file a dual-status return and a Canadian departure return. RRSPs and RRIFs can generally keep deferral under the treaty, while TFSAs and RESPs are taxable in the U.S. FBAR and Form 8938 report Canadian accounts.

Athletes and Entertainers

Foreign athletes and performers who earn income at Arlington venues may owe U.S. tax on that income, with withholding at 30 percent unless a treaty or central withholding agreement applies. Promoters and teams paying foreign performers need to withhold and file Form 1042-S.

U.S. Residents With Foreign Assets

Residents report worldwide income and foreign accounts. Foreign pensions, rental properties and investments need to be reported, with credits for foreign tax paid. Foreign mutual funds may be PFICs with complex reporting on Form 8621.

Mexican Suppliers and Workers

Much of the auto supply chain feeding Arlington runs through Mexico. Mexican companies that send engineers or technicians to Arlington for plant launches need to consider whether their presence creates a U.S. permanent establishment under the U.S.–Mexico treaty and whether the workers owe U.S. tax on their pay. Mexican professionals in Arlington on TN status become U.S. residents for tax purposes once they meet the substantial presence test.

Foreign Owners of Arlington Property

Foreign investors own rental houses and commercial property in Arlington. When they sell, the buyer generally must withhold 15 percent of the price under FIRPTA, and the seller files a U.S. return to report the gain and recover any excess. Foreign owners of rental property can elect to be taxed on net rental income rather than gross rent, which usually lowers their tax. They also need an ITIN or EIN to file.

Common Filings

Form 1040-NR, Form 8843 and dual-status returns.
Forms 5472 and 1120 for foreign-owned subsidiaries.
Form 1042-S for payments to foreign persons.
FBAR, Form 8938 and Form 8621.
Treaty statements on Form 8833.