Foreign Nationals In The USA

FOREIGN NATIONALS & U.S. INCOME TAX

Whether you are considering entering the US for work, investment or residency, there are many issues that can be avoided and opportunities to discuss with proper planning. We will briefly outline some of the important items to examine before making any moves into the USA.

The very first step is to outline your objectives. Are you looking to invest in a US business or US real estate? Are you looking to purchase another home for shorter term visits to the USA for you and your family? Do you desire to immigrate into the US or marry a US citizen or resident alien? Are you entering the US for a short or long term work assignment? Each of these questions and more has significant US tax consequences. In ALL cases, planning in advance of taking action is strongly urged. By proceeding without proper planning, you may experience unpleasant tax costs.

  • For someone looking to marry a US citizen or resident alien, WHEN you enter the US affects how both you and your spouse will be taxed by the US government. Even if you continue to live outside of the USA, marrying a US citizen or resident alien has significant tax implications.
  • For those looking to invest in US real estate, there is an entire section of tax law dedicated to this topic. See the Investment in US Real Estate tab on this website for more details. Be aware that failing to plan before purchasing US real estate may have very dire consequences related to income tax, estate tax and even Branch Profits tax issues.
  • If you are looking to start a US business, it is essential to create the proper tax structure and choose the proper form of entity to operate your business. This requires coordination with both the US laws and your home country tax laws.
  • Coming into the US and buying a vacation home or second home seems like a simple task – right? This may have serious tax consequences to the unsuspecting foreign national. Whether you intend to rent the property on a short term basis or simply own and use it for family visits, how the property is owned has potential US estate tax consequences. Incurring 40% estate taxes on a property simply because the ownership was set up incorrectly is an example of how planning ahead adds value.
  • For those performing services or working for a company in the United States, you may be required to file a US income tax return [Form 1040NR], file other information forms with the company you are contracting with or employed by [Form W-8BEN, Form 8233, etc.]. Your compensation often will have US taxes taken out but not filing a US tax return may result in losing money that is owed to you.
  • Depending on your country of residence and/or citizenship, income tax treaties with the United States often offers better tax consequences than those hailing from countries where no tax treaty exists. You need an experienced professional to guide you so you may minimize your tax costs.
  • Entering the USA and becoming a resident subjects you to tax by the US government on your world-wide income. Failing to file the correct tax forms has penalties often beginning at $10,000 each with the risk of criminal prosecution. Have you considered or are you aware of what happens to you if you become a US resident alien?
  • For tax purposes, US resident aliens are not only those who have obtained an immigration card [Green Card] but include all persons that spend 183 days within the USA during a calendar year. If you have been spending a significant number of days in the USA during the past three years, you risk being treated as a resident alien under a three year test.
  • Many foreign nationals do not want to file a US tax return. However, without proper planning, filing a return may be required.

We cannot emphasize enough that planning your entry into the US whether through investment or physically entering our country requires careful planning. Find out what to expect rather than discovering unpleasant and costly surprises after your arrival.

We offer consulting and planning services to individual clients around the globe. Initial consultations include the first 30 minutes at no charge. We can quickly determine what issues you need to address then you are able to decide how you wish to proceed and plan.



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