Are you considering moving to the United States or becoming a US person? Pre-immigration tax planning is crucial to minimize the impact of US taxes on your worldwide income, foreign assets, financial accounts, and investments. Understanding the intricacies of US taxation early on can save you from penalties and fines that could potentially wipe out your bank balance. Here are some key points to consider when planning for US taxes:
1. US Persons And The Substantial Presence Test {SPT}:
– To determine if you are a US person, the Substantial Presence Test plays a crucial role.
– Your visa status can impact whether your world-wide income is subject to US taxation.
– Passing the SPT can classify you as a US resident for tax purposes.
2. Consequences of Getting a Green Card/ Legal Permanent Residency:
– Green Card holders are taxed on their worldwide income similar to US citizens.
– Being classified as a “Covered Expatriate” can have significant tax implications.
– Plan strategically before obtaining a Green Card to avoid tax complications.
3. International Information Forms:
– Forms like Form 8938 and FinCEN Form 114 (FBAR) require disclosure of foreign financial assets.
– Various forms are necessary for reporting foreign trusts, partnerships, and corporations.
– Failure to comply with these reporting requirements can lead to a complex tax situation.
When planning your immigration to the United States, seek guidance from tax professionals in your current country and work closely with US tax experts. Understanding the tax implications early on and creating a strategic plan can save you from potential financial burdens. Remember to consult with professionals to ensure a smooth tax transition. Plan ahead, stay informed, and make informed decisions for your financial future.
