1. PLAN AHEAD. The United States taxes its citizens and tax residents on their worldwide income. This includes those who are a permanent resident, a student, a temporary worker or even those who become an accidental tax resident by spending too many days in the United States. Tax residents will be subject to Federal income tax, Federal estate tax, Federal gift tax, and possibly taxes imposed at the state and local level. Once you become a United States tax resident, the opportunities for preimmigration tax planning are lost. For example, the ability to accelerate income and defer losses, planning with trusts, annuities or life insurance policies, or stepping up the cost basis on appreciated assets. By planning early, we can analyze your financial profile and help implement strategies to reduce income, estate, state, and local taxes for you and your family.
  2. TALK TO TAX PROFESSIONALS. Failure to report certain assets can have civil and criminal sanctions. Speak to qualified professionals about your impending move to the United States to navigate the complex requirements of the Internal Revenue Code. Tax professionals can help you avoid traps for the unwary and unprepared, particularly in the following areas: double taxation; taxation of trusts; offshore companies; foreign and domestic corporations, operating businesses; setting up a new business in the United States; maintaining real estate or assets outside the United States; gifts between spouses and gifts to children; and reporting on bank accounts. Tax professionals can assess factors that may mitigate taxes including the use of tax treaties, foreign tax credits, and choice of entity for purposes of buying, owning or operating assets.  
  3. COUNT THE DAYS YOU ARE PRESENT IN THE U.S. Spending a certain amount of days in the United States each year could unwittingly make you a United States tax resident, regardless of your visa status. If you have taxable income anywhere in the world and also meet the “Substantial Presence Test”, you are obligated to report and possibly pay taxes in the United States. The Substantial Presence Test is a formula that the Internal Revenue Code uses to determine if you’ve spent a sufficient number of days present in the United States to qualify as a tax resident, regardless of your visa status. We can help you in determining which days must be counted, if you’ve met the Substantial Presence Test, and if so, what options are available to you. 
  4. SHORT TERM RESIDENCY VERSUS LONG TERM. Whether you plan to be in the United States for a few days, months, years, or whether you plan to stay indefinitely will have significantly varying tax consequences. Your intent to remain in the United States, regardless of your days present, can also impact how your estate is taxed. The concept of tax residency for Federal income tax purposes differs from that for Federal gift and estate tax purposes. 
  5. IT IS NOT HARD, BUT IT IS NOT SIMPLE EITHER. The United States imposes tax on the worldwide income of tax residents. Taxation in your home country may be vastly different than in the United States. Planning to minimize taxes is a valid goal, however failing to report taxes is a crime and it carries significant penalties, even if failure to report was unintentional. For those contemplating a move to the United States, consider: what is ‘residency’ and what is ‘domicile’ and how does the determination affect your taxes? Is owning one percent of a foreign company still ownership for tax purposes in the United States? Is your retirement account in a foreign company taxable? Dividends may not be taxed in your home country, while they are taxable in the United States. Understanding exactly what the United States reporting requirements are for its citizens and tax residents is not always obvious. Foreign bank accounts, foreign pension accounts, family partnerships, trusts, foreign real estate, investment accounts, active foreign companies, passive foreign companies are all just some of the categories that should be reviewed before becoming a tax resident as each will have very different reporting obligations.  
Diane Nobile