Tax Planning Before Immigrating to the United States Should Be Done Early

The tax laws in the United States are diverse and complex. Non-U.S. citizens should engage in tax planning before immigrating or settling in the United States. Rushing to the U.S. without any tax planning could lead to significant tax burdens. Today, we will share with you the points to consider before immigrating to the United States, hoping that everyone can enjoy the benefits and advantages of life in the U.S. while effectively and legally reducing unnecessary tax expenses.

1. How to Arrange Your assets?

U.S. residents are subject to global capital gains tax. After obtaining a temporary green card, if you sell real estate or stocks outside the United States, the income may still be subject to a 20% federal capital gains tax and state taxes. The United States only taxes on realized income, that is, taxation occurs when property is bought or sold or transferred. If the property has not been transferred, the appreciation on the books is not subject to capital gains tax, such as the appreciation of real estate, stocks, bonds, and jewelry.

Stocks & Real Estate

Because assets brought into the United States from abroad are not taxed when becoming a U.S. resident, unrealized gains can be realized before reporting. For example, one can sell stocks or transfer real estate ownership. Then, after obtaining residency status, the cash can be reinvested in new stocks and real estate. In contrast, if there are investment losses, there is no rush to sell them. It’s possible to wait until obtaining a green card to sell, which can be used to offset taxes. Additionally, primary residences can be sold after immigration, satisfying the conditions for a primary residence, and you can still enjoy the individual $250,000 or couples’ $500,000 tax exemption for primary residences.

Income after retirement

Some people, perhaps of older age, may want to come to the United States. In that case, it is recommended that before coming to the United States, they calculate all their retirement funds at once and withdraw them all. This way, they can avoid having to report income tax to the U.S. government every year thereafter.

Bank accounts or financial accounts

You can close some unnecessary bank accounts or financial accounts.

2. Who Are Green Card Applicants?

It is recommended here that spouses with low income, minimal assets, and a desire to settle in the United States serve as the primary applicant for the green card. If the wife applies for a green card, then the husband’s assets outside the United States will not have the issue of overseas income subject to taxation. Of course, it is also preferable for assets under the wife’s name to be primarily in the United States. According to U.S. tax laws, green card holders must disclose their assets and company shares held overseas, as well as report their financial accounts held abroad.

3. Remember to Keep a Record of the Net Worth Report for Asset Items

If unsure whether one will renounce U.S. citizenship in the future, it is advisable, when preparing for immigration, to submit copies of asset declaration documents to the immigration authorities and keep them on file to avoid potential issues with calculating capital gains tax on asset sales in the future.

4. Avoid Becoming a Tax Resident Before Obtaining Green Card

U.S. tax residents include U.S. citizens, green card holders, and anyone who resides in the United States and its territories for 183 days or more. The calculation of these 183 days is as follows: each day spent in the U.S. in the current year counts as one day, three days in the previous year count as one day, and six days in the year before that count as one day. If the total exceeds 183 days, the individual is deemed a U.S. tax resident and must fulfill tax obligations similar to those of U.S. citizens. Some people are concerned about becoming tax residents before immigrating to the United States, so they transfer most of their assets overseas to their parents before obtaining a temporary green card to achieve tax avoidance. However, if new immigrants have their parents come to the U.S. for short-term stays and forget to calculate the time they spend in the U.S. each year, they may also become U.S. tax residents.

In conclusion, before immigrating to the United States, it is advisable for everyone to remember to consult with financial and tax planning professionals. They can assist in preparing property planning before moving to the United States. Otherwise, there is a high risk of making significant financial mistakes.

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This article is for informational purposes only and should not be construed as financial advice or legal advice. Please consult with a professional to develop a strategy that is right for you. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. TransGlobal Advisory, LLC (TGA) does not provide legal, tax, or accounting advice. You should consult your personal tax or legal advisor before making any financial decisions.