– the individual is physically present in the United States for 183 days or more during the target calendar year, or The “Substantial Presence Test” is met in either of the following circumstances: For purposes of the test, presence during any portion of a day is considered presence for a full day. It is satisfied if the alien individual is physically present in the United States for the requisite amount of time, either for the calendar year in question or for the three-year period that ends with the year in question. The second test is the “Substantial Presence Test”. However, if your Visa is a non-immigrant visa, then that would not constitute lawful permanent residence, so you wouldn’t qualify under this test. This where the alien actually has to be a lawful permanent resident with a green card (Immigration Form I-551) if you have one of these documents it doesn’t matter how long you’ve been present in the country, you can qualify as an S-Corporation shareholder. There are a two tests to determine if you can qualify as a Resident Alien if you aren’t already a U.S. Who qualifies for an S-Corporation? In order to be eligible to be a shareholder of an S-Corp you need to at least be a “ Resident Alien”. with a ‘Visa’ or ‘Green Card’ it’s even more critical to know what the rules are. If you are from a foreign country living here in the U.S. Thus, the foreigner is placed into a precarious situation…should they try to qualify for an S-Corp, or choose a different entity altogether and be thankful they avoided the SE Tax in the process. However, choosing to operate as an LLC or a C-Corporation could be worse than SE Tax because a corporate tax may apply and thus create a ‘double tax situation’. To many, it’s a pleasant surprise that non-resident aliens are exempt from SE Tax. Some Foreigners don’t need an S-Corporation? Understanding that S-Corps save on Self-Employment tax, it then begs the question: “Is this particular foreigner subject to SE Tax?” It all comes down to the question if the individual is considered a resident or non-resident alien. Thus, it’s no surprise that many foreigners will often hear or read about the benefits of an S-Corp and wonder if this is the right choice for them. The S-Corp can be phenomenal to save on Self-employment tax. Moreover, it’s perfect for consulting, selling a product or getting commissions. real estate investors rehabbing, fix and flipping or wholesaling properties. Why an S-Corporation in the first place? It’s no secret that an S-Corp is a fantastic entity for U.S. Here are some basics that can help you if you are a foreigner or investing with a foreign partner. In fact, it tends be a common concern with Canadian clients doing real estate projects in the U.S. This is a common question we are asked on a regular basis and an important one.
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