1. BPM LLP International Tax Services
International Tax for Business School Students

2. Agenda Introduction to BPM Legal Disclaimer US Tax Residency
Requirement to file a US return
Potential Tax Treaty Impact
Individuals from a Non-Treaty Country
Foreign Asset Form 8938 Filing Requirement
List of Forms
Useful Resources

3. BPM At a Glance Facts Expertise Approach
50 partners, many former Big 4
> 400 employees
6 offices ringing the Bay, as well as one office in Hong Kong and one in India
Expertise
Full-service accounting and consulting firm
Largest California-based CPA firm
12th largest SEC practice in the nation
Approach
Can-do, practical, entrepreneurial
Santa Rosa
St. Helena
Walnut Creek
Palo Alto
San Jose
San Francisco

4. Local Presence, Global Expertise
BPM client locations around the globe

5. Our Services

6. International Capabilities
LEA
We are a member of the Leading Edge Alliance, an international association of 150 independently-owned accounting firms located in 94 countries.
If the LEA were one firm, it would be the 5th largest CPA firm in the US (only the Big 4 are larger).
International Tax
We provide guidance on overseas business issues, including tax compliance, transfer pricing, and IC-DISC. Our practice is the largest on the West Coast.
China and India Desk
With more than 30 BPMers fluent in Chinese and Hindi, we offer tax, assurance and consulting services to both individuals & businesses.

7. Celebrating 30 Years of Service in 2016
Because People Matter
We are dedicated to creating an environment fostering a balanced quality of life and a commitment to the community in which we live, work, and play.
Our Core Values
Community, Respect, Integrity, Creativity, Knowledge, Excellence, Teamwork, and Success.
BPMers at work in our community

8. Legal
This presentation is for general guidance only and does not constitute tax advice. Individuals should seek independent guidance and counsel based on their particular facts and circumstances before filing returns.
Any tax advice included in this written communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency.

9. Who Files US Taxes?
US Citizens, Residents and Green Card Holders (US Tax Residents)
Tax residents report worldwide income
People with US Source Income (US Tax Non-Residents)
Tax non-residents report US income only

10. US Tax Residency
Tax residency status is different from immigration residency
US Citizens or US Green Card holders are always considered residents for US Tax purposes
If you are not a US Citizen and do not hold a US green card, your residency status is determined using a days count, known as the substantial presence test (“SPT”)
2017 Tax Year Substantial Presence Test Formula:
Days in US during /3(US Days 2016) + 1/6(US Days 2015) ≥ 183
Days in the US while holding a J-1/F-1 visas are not counted in SPT
5 year limit, unless can prove that no intention to stay in the U.S. after graduation
Closer connection exception may still apply

11. Do I need to file a US return?
J-1 or F-1 visa holders – nonresident aliens
You will have a requirement to file US returns if you received salary, fellowship grants or scholarships or other income
Examples
Paid summer internship
Consulting performed in US
Grants or scholarships greater than educational expenses
Independent contract work (Ex: on-demand services)
A filing requirement does not mean that you owe tax, but you must report the income to be in compliance

12. Forms to File? US Citizens or green card holders
Federal: complete and mail Form 1040NR
California: complete and mail Form 540/540NR
Other states where you worked
Depends on state and amount (nonresident)
US Citizens or green card holders
You will have a requirement to file a US return – Form 1040

13. Additional forms to file
Other forms you may need to complete:
Form W-7: Application for Individual Taxpayer Identification Number (ITIN)
Complete and attach to completed return
Treaty country: Choose reason “F”
Non-treaty country: Choose reason “B”
Attach notarized documents
Mail with the return
Note: US citizens should apply for a Social Security Number, not an ITIN on Form SS-5, available at
Form 8843: Statement for Exempt Individuals …
Required if filing as a non-resident due to J- or F-visa status

14. Potential Tax Treaty Impact
Tax treaties are in place between the US and many countries
A list of countries with whom the US have a treaty in place is available at
Income tax treaties provide for special tax treatment for various payments
Nonresident aliens on an F- or J- visa from a treaty country may be able to exclude a certain dollar amount of salary income from US tax
Nonresident aliens on an F- or J- visa can apply for an exemption from withholding on payments received by completing Form W-8BEN

15. Not from a Treaty Country
Salary income received will be taxable on the US returns.
Fellowship and scholarship income is exempt from tax to the extent it is used for “qualified tuition and related expenses”
Includes tuition, books, required course equipment
Excludes room and board, travel, research, clerical help etc.
US citizens or green card holders may qualify for education credits or deduction may be available

16. California Caveats California does not conform to Federal Tax Treaties
California does not offer Foreign Tax Credits
California offers “other state” tax credits
California taxes some types of compensation differently than the IRS (options, health savings)
When filing in California, you must disclose real estate ownership and days in the state

17. Foreign Account Disclosure Requirements
U.S. persons holding foreign financial assets with an aggregate value exceeding $50,000, or foreign accounts > $10,000.
Report certain information about those assets on a Form 8938 that must be attached to the taxpayer’s annual tax return. 
Report foreign financial accounts on FinCEN 114 – due 4/15.
Failure to report foreign financial assets on Form 8938 will result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). 
Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.

18. Form 8938 - Reporting Threshold
For U.S. Citizens or resident aliens (passing the days test). Does not apply to F-1 Visa holders.
Reporting Threshold – A specified individual is required to file if the total value of specified foreign financial assets is:
more than $50,000 on the last day of the year; or
more than $75,000 at any time during the year.
These limits are for single taxpayers. Married limits are double.
Taxpayers living abroad are required to file if the total value of specified foreign financial assets is:
more than $200,000 on the last day of the tax year; or
more than $300,000 at any time during the tax year.

19. Form 8938 – Specified Assets
Financial Accounts maintained by a foreign financial institution.
The following foreign financial assets if they are held for investment and not held in an account maintained by a financial institution:
Stock or securities issued by someone that is not a U.S. person,
Any interest in a foreign entity, and
Any financial instrument or contract that has an issuer or counterparty that is not a U.S. person.
Exception for foreign social security

20. FinCEN 114 (FBAR) Filing Requirements
Required for US persons with a financial interest in or signature authority over at least one account located outside the US
Aggregate value > $10,000 triggers filing requirement
4/15 due date with automatic extension to 10/15
Online filing required:

21. List of Forms W-2: Wage and Tax Statement
1099: Miscellaneous Income Reporting
1042-S: Foreign Person's US Source Income Subject to Withholding
1098-T: Tuition Statement
1040-NR: Federal Tax return for nonresidents
8843: Statement for exempt individuals…
1040: Federal Tax return for residents
8938: Foreign Account Tax Compliance Reporting
FinCEN 114 Report of Foreign Bank and Financial Accounts
540: California tax return for residents
SS-5: Application for an SSN
W-7: Application for an ITIN

22. List of Resources IRS Publication 970 “Tax Benefits for Education”
US Residents will find this helpful as it provides a good discussion of what benefits are taxable or tax exempt, and how to complete your US return
Discusses the credits that may be available on the US return
Not available to nonresident aliens
Not available if all education expenses are tax free
Discusses when student loan interest may be deductible
then “Forms and Publications”
Berkeley International Office – Tax Info
Tax topics:
Tax FAQs:

23. List of Resources cont’d.
California Franchise Tax Board:
Form 540 Instructions
Schedule CA (540) Instructions
“Other income”: California doesn’t follow the Federal tax treaties

24. Contact Info
Inna Merzheritsky: or
Meredith Johnson: or
Monja Keime: or

25. Thank You.