As noncitizens and nonresidents of the United States have increasingly acquired global assets, they may unknowingly be subjecting themselves to various income and transfer tax laws across multiple jurisdictions. The United States has specific income tax rules for noncitizen nonresidents (NCNRs), and it has an entirely different estate and gift tax regime for NCNRs, creating traps for the unwary cross-border client.

Income Tax Considerations

The United States taxes all income earned by its citizens and residents (U.S. persons) on a worldwide basis. This means that for U.S. persons, all income is subject to U.S. income tax, regardless of where it is earned worldwide.

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