27 Dec How would Hunter Biden’s Ukraine income be taxed?

Q. They say Hunter Biden earned money from a Ukranian company. How would that money be taxed in the U.S.?
— Curious

A. A timely question.

A U.S. taxpayer is subject to tax on their income generated from worldwide sources, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

“From news accounts, Biden was paid fees for serving on the board of Burisma,” he said. “This income would be taxed as ordinary income and would also be subject to self-employment tax.”

Becourtney said the U.S. has executed tax treaties with many countries. Provisions in the treaties often include exemptions from taxing residents of the other country for specified professions or durations of time.

“For example, an educator who spends a semester teaching in a foreign country might be exempt from the foreign country’s tax,” he said. “One would have to read the treaty in detail and know exactly what Biden was paid for and over what amount of time to determine whether the income he received from Burisma was subject to Ukrainian tax.”

If he was subject to Ukrainian taxes on this income, then he would be eligible to claim a U.S. foreign tax credit to reduce or possibly fully eliminate the double taxation of the income, Becourtney said.

“This is somewhat analogous to the resident credit that New Jersey residents who work in Manhattan obtain,” he said. “In that situation, the employee first pays New York nonresident tax, then claims a credit against their New Jersey tax, which can be the full tax paid to New York.”

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This story was originally published on Dec. 27, 2019.

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