My family owns a business abroad and I live and work (not for family) in the US (citizen). I help purchase items here and ship it overseas. It's not a lot so I use my credit card and get reimbursed by wire transfer from the family company. Do I have to report this as income? Even though it's just to cover the cost of the goods? Also, how would I handle it if I did make some profit? In addition, my parents wire transfer money over as gifts for my children and when I purchased my home. This is also completed through the family company since its the same accountant. Does the IRS consider this a gift even though it's not coming from parent, but rather a company that is owned by a parent. Eventually I will become a director and will receive yearly director fees and revenue distributions. What's the best way to set that up?

ANSWER

The BIDaWIZ Team's Answer:

The transactions that are being executed for both the goods purchased in the US on behalf of the foreign company and the gifts you receive, are technically for a business purpose. It is likely that the IRS would conclude that the foreign company has established tax nexus in the US based on the activities conducted here. In terms of gifts, whether you receive a gift from a nonresident alien or company, it is technically not taxable to you. However, you're required to report gifts that exceed $100,000 annually from a nonresident alien and gifts that exceed $14,375 annually from a foreign corporation or partnership via IRS Form 3520. Again, the IRS may conclude that business activities are technically occurring in the US as you are acting as an agent on behalf of the company and should be compensated as such, but those are the reporting requirements for just gifts.