Immigrating to another country can be intimidating and stressful. We make it easier by providing you with the information you need about U.S. taxes and developing a plan to minimize your overall tax liability. We will take a thorough inventory of your assets, assess your potential U.S. tax liability, compare that with your tax liability in your home country, and recommend a plan of action that will minimize your overall taxes if you do become a U.S. resident.
Why Pre-Immigration Planning Is Necessary
Your tax obligations in the U.S. may be far greater than in your home country. If this is the case, there may be steps you can take to minimize your tax liability prior to relocating. For example, suppose you own corporate stock that you purchased for $100,000 that is now worth $1,000,000. If you hold on to it and sell it after you relocate to the U.S., you may face capital gains taxes of up to 23.8%, or $214,000. If your home country has a lower tax rate – for example, 10% – you would save over $100,000 by selling the stock prior to immigrating. Conversely, if the tax rate is higher in your home country than it is in the U.S., you may want to defer sale of the stock until you become a U.S. resident.
In addition to new income taxes, your status as a U.S. taxpayer may create a large estate tax bill for your children. The current amount exempted from the estate tax is $5.25 million per individual (for 2013). If your net worth is more than $5.25 million (or you expect it grow to that amount in the near future), you may wish to take steps to reduce your future estate prior to becoming a permanent U.S. resident.
Careful tax planning can reduce some of the sting of becoming a U.S. taxpayer; however, most of these strategies are effective only if you implement them prior to receiving your green card, or in some cases, before you move to the U.S. on a temporary visa. If you are considering immigrating to the U.S., consulting with a tax professional early in the process can help you minimize your overall tax bill.
Pre-Immigration Planning Considerations
You should do a thorough analysis of your tax situation prior to applying for a green card or prior to moving to the U.S. if you foresee applying for a green card after arriving in the U.S. Substantial tax savings can be gained by planning ahead of time, and some opportunities for planning can be lost if you wait too long.
- What country is the source of my income?
- How would taxes on my earned income change if I became a U.S. resident?
- How would taxes on my passive income change if I became a U.S. resident?
- Can I accelerate income prior to relocating or defer losses until afterwards?
- Do I own any appreciated assets that would be subject to capital gains taxes if sold? Would I be better off selling those assets as a non-U.S. resident or as a U.S. resident?
- Do you own any interests in businesses located abroad? Would they be subject to U.S. anti-deferral rules?
- Have you created or are you a beneficiary of any foreign trust? If so, would that have any U.S. tax consequences?
- Am I likely to be subject to U.S. estate taxes if I become a resident? How will this affect my family’s overall estate tax liability?
- Would I be subject to the “covered expatriate” rules if I decided to relinquish my green card? What effect would this have on me and my family?
- Should I give assets away prior to becoming a U.S. resident to avoid estate taxes or “covered expatriate” status?
- Are there other actions that I can take prior to immigrating that would reduce my future tax liability?
If you’re planning on moving to the U.S. and you don’t want to pay any more taxes than necessary, contact us to schedule a consultation.
