Frisco Cross-Border Tax

Families and Players From Abroad

Frisco has a fast-growing international population, especially from India, and its sports teams and academies employ players and coaches from around the world. BOMCAS helps Frisco clients with cross-border tax remotely.

Treaty and Canada–U.S. basics are on the Texas cross-border tax page. This one is about Frisco's visa families, players and companies.

First Year in the United States

New arrivals become U.S. residents for tax purposes under the green card test or the substantial presence test. In the first year many are dual-status, taxed as nonresidents before arrival and residents after. Some can choose to be treated as residents for the whole year, which allows a joint return. Treaty rules may also apply.

Indian Investments

Indian mutual funds are usually passive foreign investment companies for U.S. tax. Without an election, gains and distributions are taxed at high rates with an interest charge, and Form 8621 is filed for each fund. Many families sell these funds or make a mark-to-market election. NRE and NRO accounts, fixed deposits and provident funds also need reporting.

Foreign Athletes and Coaches

Players on P-1 or O-1 visas who are in the United States long enough become residents for tax. Those who are nonresidents pay tax on U.S. income, and some treaties have special rules for athletes and entertainers. Coaches from abroad who teach at youth academies are often on employment visas and are employees.

Leaving the United States

Families returning home should plan for the final U.S. return, the treatment of U.S. retirement accounts after departure and the tax in the new country. Green card holders who have been residents in eight of the last fifteen years may face exit tax if they give up the card.

No Social Security Agreement With India

The United States has no social security agreement with India, so Indian workers in Frisco pay U.S. Social Security and Medicare even if they will leave before qualifying for benefits. Those returning to India cannot usually transfer the credits. Workers from countries that have agreements with the United States, such as Canada, Japan or Korea, may be covered differently.

Foreign Buyers of Frisco Homes

Investors from abroad buy Frisco homes as rentals. Rent received by a nonresident is subject to 30 percent withholding on the gross amount unless the owner elects to be taxed on net income and files a U.S. return. When a foreign owner sells, the buyer generally withholds 15 percent of the price under FIRPTA, and the seller files a return to claim back any excess.

Canadian Transferees

Canadians who move to Frisco for work become U.S. residents and may still owe Canadian departure tax and file a final Canadian return. RRSPs remain tax deferred in the U.S. under the treaty, and TFSAs do not.

Foreign-Owned Companies

Foreign companies with Frisco subsidiaries or offices file Form 5472 for related-party transactions, and foreign-owned single-member LLCs file it with a pro forma Form 1120. Failure to file carries a $25,000 penalty.

Family Gifts From Abroad

Parents abroad often help with a Frisco home purchase. Gifts from foreign individuals are not taxable, but more than $100,000 in a year must be reported on Form 3520, with large penalties for missing it.

Common Filings

Dual-status and first-year returns.
FBAR and Form 8938.
Form 8621 for foreign funds.
Form 1116 foreign tax credit.
Form 5472.
Treaty statements.