At International Wealth Tax Advisors, we’re suggesting cross-border tax clients, both U.S. citizens and foreign nationals, consider the following tips to help mitigate any unexpected tax and financial consequences as a result of the Covid-19 pandemic.

Foreign Trusts

• Tax returns and international information returns including Forms 3520 for foreign trusts have been extended to July 15 from April 15.  This includes any tax payments that may be due as of April 15.
• Many foreign trusts have underlying companies which hold the assets of the trust and these underlying entities require additional filings such as Forms 5471 (Controlled Foreign Corporation), Form 5472 (US entity 25{105615a82985984cf1704e8776ec685e1345b73ddec43811fd3f038097961455} or more owned by Foreign Persons)
• Consider the utilization of foreign trust losses due to the crisis as a tax benefits

Real Estate Holdings

• Consider disposing U.S. real property investments by foreigners with minimal or no FIRPTA (Foreign Investment in Real Property Tax Act) implications (withholding taxes) and / or little U.S. tax.
• Disposal could also reduce foreigners’ exposure to U.S. estate tax.

Other U.S. Investments

• Consider reducing U.S. portfolio assets or restructuring to minimize U.S. estate and gift tax exposure.
• Foreign national executives currently working inside the U.S. should consider a U.S. trust structure or other structure before being assigned to the U.S. on a more permanent basis.

Foreign Companies Doing Business in the U.S.

• Consider restructure with little or no tax implications while value of business is low due to crisis.
• Look to obtain stimulus money by way of PPP loan or payroll tax credits.

For help in navigating your multinational business and personal tax obligations as applied to the U.S tax system in this confusing time, don’t hesitate to contact us.

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