Discover all the tax services we offer
Get an instance service estimate
Comprehensive guides on everything you need to know from planning your expat journey to filing your expat taxes with ease.
Our Country Guides will help you understand the ins and out of your specific U.S. expat tax requirements.
Access up-to-date articles, breaking news, deadline information and in-depth case studies on US expat taxes.
Get the answers to all your questions and browse Greenback’s most frequently asked customer questions.
Sign up for one of our live webinars hosted by our expert accountant team or watch one on-demand today.
Subscribe to our monthly newsletter to get money-saving tips, expat tax news, and exclusive promos.
Learn how our straightforward pricing, easy process, and an expert team makes us uniquely qualified to simplify the hassle of expat tax filing.
We’ve assembled a team only the most experienced, knowledgeable, and friendly CPAs and IRS Enrolled Agents our clients can trust.
Read our client testimonials to get a feel for the Greenback experience straight from the expats we’ve worked with.
We’re featured in many reliable news sources thanks to our reputation as experts on US taxes abroad.
Whatever your expat tax needs, wheverver in the world, we’d love to hear from you.
Financial Accounts & Investing Abroad
There are many ways for US expats to conduct business around the world. One form of doing business is a foreign partnership.
This article describes the US tax requirements applicable to foreign partnerships.
For US tax purposes, the Internal Revenue Code generally defines a “partnership” as a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not a corporation or a trust or estate.
In addition, the Internal Revenue Code generally defines “foreign”, for purposes of a partnership, as a partnership that is not created or organized in the United States or under the law of the United States or of any state in the United States.
The US tax reporting obligations of a foreign partnership will be determined based on whether the partnership is subject to a general rule or two exceptions to this general rule.
A foreign partnership, for US tax purposes, must file Form 1065, “U.S. Return of Partnership Income”, if either:
A foreign partnership is not required to file Form 1065 if:
A foreign partnership also is not required to file Form 1065 if:
In understanding the US taxation of foreign partnerships, it is important to note the following two basic principles:
A US person who is a partner in a foreign partnership is subject to the general rule that a US citizen is taxable on worldwide income. Thus, a US person:
In addition, a US partner in a foreign partnership can be subject to another tax obligation – Form 8865, “Return of U.S. Persons With Respect to Certain Foreign Partnerships”.
A Category 1 filer of Form 8865 generally is a US person who controlled the foreign partnership at any time during the partnership’s tax year. Control of a foreign partnership is ownership of more than a 50% interest in the partnership.
A Category 2 filer of Form 8865 generally is a US person who at any time during the tax year of the foreign partnership, owned a 10% or greater interest in the partnership while the partnership was controlled by US persons each owning at least a 10% interest.
A Category 3 filer of Form 8865 generally is a US person who contributed property during such person’s tax year to a foreign partnership in exchange for an interest in such partnership if such person either owned at least a 10% interest in the partnership immediately after the contribution, or the value of the property contributed (when added to the value of any other property contributed to the partnership by such person during the 12-month period ending on the date of transfer) exceeds $100,000.
A Category 4 filer of Form 8865 generally is a US person that had a reportable event under Internal Revenue Code Section 6046A (generally certain acquisitions, dispositions, and changes in proportional interests with respect to a foreign partnership) during such person’s tax year.
If a foreign partnership has effectively connected income that is allocable to a foreign partner, the partnership is required to report and pay a withholding tax to the Internal Revenue Service. Form 8805, “Foreign Partner’s Information Statement of Section 1446 Withholding Tax”, is filed to show a US tax credit allocable to the foreign partner relating to the foreign partnership’s payment of withholding tax.
Foreign partnerships raise complex US tax issues. At Greenback Expat Tax Services, we specialize in helping expats manage their US tax obligations. As part of our services, we have years of experience in assisting expats with foreign partnership issues, and we can help you, too, with your foreign partnership situation.
Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.
Whether you need tax advice to prepare for a move abroad, to buy property or even retire, Greenback can help. Consults upfront can help avoid costly mistakes and stress later.