Frequently Asked Tax Questions

Under IRC § 6038A and Treasury Decision 9796, any US Single-Member LLC that is 25% or more foreign-owned is classified as a domestic corporation for reporting purposes. It must file an annual informational return on Form 5472 attached to a pro-forma Form 1120 by April 15, reporting all cross-border capital contributions, distributions, and loans. The penalty for failing to file Form 5472 is an automatic $25,000 per violation.

The Section 199A deduction permits eligible pass-through business owners (sole proprietors, LLC members, S-Corp shareholders, and partners) to deduct up to 20% of their qualified business income directly on their personal Form 1040, substantially lowering their effective tax rate. Specified service trades or businesses (SSTBs) like law, medicine, and consulting face phaseouts based on taxable income thresholds.

Under 31 U.S.C. § 5314, every US person (including US citizens, Green Card holders, and resident aliens on H-1B/L-1 visas meeting the SPT) who has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate peak balance of all accounts exceeded $10,000 USD at any point during the calendar year. This includes Indian NRE, NRO, FCNR, Demat, mutual funds, EPF, and PPF balances. Nonresident aliens (Form 1040-NR filers) are exempt from FBAR filing.

The FBAR is an electronic Bank Secrecy Act filing submitted to the US Treasury's Financial Crimes Enforcement Network by April 15 (auto-extended to October 15) with an aggregate $10,000 threshold. FATCA Form 8938 is an IRS tax disclosure form attached directly to your annual Form 1040 with much higher reporting thresholds ($50,000 for single filers; $100,000 for married filing jointly on the last day of the year). Many international filers must submit both forms annually.

Yes, 100% taxable in the US! While Section 10(4)(ii) of the Indian Income Tax Act exempts NRE bank account interest from Indian income tax, the US Internal Revenue Code does not recognize foreign domestic exemptions for US tax residents. US citizens and resident aliens must report all NRE and NRO interest on federal Form 1040 Schedule B. However, for NRO interest where 30% TDS was deducted in India, you can claim the Foreign Tax Credit (Form 1116) to offset your US tax liability dollar-for-dollar.

The IRS classifies foreign mutual funds and SIPs as Passive Foreign Investment Companies (PFICs) under IRC § 1297. Under the default Section 1291 excess distribution regime, capital gains are not taxed at favorable 15%–20% long-term rates. Instead, they are allocated across your holding period, taxed at the highest individual marginal rate (up to 37%), and assessed daily compound interest penalties. Each mutual fund scheme requires a separate IRS Form 8621 attached to your Form 1040.

Do not panic or pay the proposed assessment immediately! Notice CP2000 is an automated mismatch notice, typically triggered when a brokerage platform reports RSU or ESPP stock sales on Form 1099-B with a $0 or missing cost basis. Because your W-2 already included the share value in Box 1 wages, the IRS computer calculated tax on your gross proceeds instead of your actual net gain. Our CPAs reconstruct Form 8949 using Code B to reflect your real cost basis, routinely eliminating the entire proposed tax and penalty.

Yes. Our licensed CPAs and Enrolled Agents have full statutory practice rights before the IRS. Under Form 2848 (Power of Attorney), we handle all communications, conference calls, written rebuttals, and penalty abatement petitions directly with IRS revenue officers and appeals divisions on your behalf.

Yes! As an authorized IRS Certified Acceptance Agent (CAA), UniFinTax personally inspects and authenticates original foreign passports and birth certificates. We issue a formal IRS Certificate of Accuracy (Form W-7 COA), allowing you to retain your physical passport safely in your possession while your ITIN application is processed by the IRS ITIN Operation Center in Austin, Texas.

The IRS typically processes Form W-7 ITIN applications within 7 to 11 weeks. During peak tax season (January through April), processing times can extend to 12–14 weeks. When submitting through our Certified Acceptance Agent service, your complete federal return and W-7 are submitted via dedicated CAA postal channels to prevent document rejections.

Under New York's aggressive "Convenience of the Employer" rule, telecommuters assigned to a NY office are taxed on 100% of their wages by New York unless their remote office is established for the bona fide necessity of the employer. To prevent double taxation, you must file a nonresident NY return (Form IT-203) and a resident NC return (Form D-400), claiming the statutory resident tax credit (Form D-400TC). Our CPAs calculate the exact state credit apportionment so you do not pay dual state taxes.

A Part-Year Resident return is filed when you permanently moved your primary domicile from one state to another during the tax year (e.g. moving from California to Texas in June). You only report income earned during your residency period in each state. A Nonresident return is filed when you lived in one state the entire year but earned income physically within another state (such as temporary travel or consulting assignments).

Your US tax residency status is determined by the IRS Substantial Presence Test (SPT) under IRC § 7701(b). You are classified as a Resident Alien (filing Form 1040) if you were physically present in the US for at least 31 days in 2026 AND 183 weighted days over a 3-year period (all current year days + 1/3 prior year days + 1/6 second prior year days). If you do not meet this threshold, you file Form 1040-NR as a Nonresident Alien. Students on F-1 visas are exempt individuals for their first 5 calendar years and generally file Form 1040-NR regardless of physical presence.

Your US tax residency is governed strictly by IRC § 7701(b). If you are a US Citizen, Lawful Permanent Resident (Green Card holder), or meet the 183-day Substantial Presence Test (SPT), you are a Resident Alien and must file Form 1040. If you do not meet the SPT or are an "exempt individual" (such as an F-1 student in your first 5 calendar years or J-1 scholar in your first 2 years), you are a Nonresident Alien and must file Form 1040-NR. Nonresidents report only US-sourced income, whereas residents report worldwide income.

Generic software packages only support resident Form 1040 and cannot file Form 1040-NR. Erroneously filing Form 1040 allows you to claim standard deductions ($14,600+) you are legally not entitled to, which the IRS treats as an inaccurate return. During future immigration proceedings (such as H-1B stamping, PERM labor certification, or Green Card interviews), USCIS officers routinely review prior tax transcripts. To fix this, you must file an amended return using Form 1040-X with an attached Form 1040-NR to correct your filing status and pay any tax differential before the IRS detects it.

If you arrived in the United States mid-year on an H-1B, L-1, or O-1 visa and did not pass the Substantial Presence Test in your arrival year, you may be eligible to make the "First-Year Choice" election. Under this election, you agree to be treated as a resident alien from your physical arrival date through December 31, allowing you to itemize deductions or claim joint filing benefits if you remain in the US and meet the SPT in the immediately following calendar year.

UniFinTax operates under strict IRS Publication 4557 cybersecurity safeguards. All client documents are stored outside the public web root in an authenticated AES-256-GCM encrypted vault. User sessions feature 15-minute idle timeouts, and every staff action is permanently recorded in a cryptographically signed HMAC-SHA256 audit ledger.

Yes. Our licensed CPAs and Enrolled Agents prepare returns for all 50 states, including part-year resident returns for clients who relocated between states during the tax year (e.g. moving from California to North Carolina or Texas), ensuring double taxation is prevented through reciprocal tax credits.

Yes! Under Article 21(2) of the US-India Income Tax Treaty, students and apprentices from India who are temporarily present in the US solely for education or training are entitled to the same standard deduction granted to US residents ($14,600+ on Form 1040-NR). This unique benefit is exclusive to students from India and is claimed directly on Form 1040-NR with Schedule OI.

Form 8843 is the "Statement for Exempt Individuals and Individuals with a Medical Condition." It is a mandatory informational statement required by the IRS to substantiate your exempt status and exclude physical days from the Substantial Presence Test. Every individual present in the US on an F-1, J-1, M-1, or Q-1 visa must file Form 8843 every year, even if they had $0 in US-sourced income.