Heightened tension surrounding the state of U.S immigration may be making national headlines, but high-net-worth individuals immigrating to the United States face a unique challenge. The U.S. uses a citizen-based tax system, and residence-based tax system. A citizen-based tax system taxes all income earned by a citizen, in the U.S. or outside the U.S. The residence-based system taxes worldwide income of those individuals who are residents in the U.S. In addition, the U.S. imposes a 40% estate tax on worldwide property. This comes as a shock to foreign investors immigrating to the U.S.
For a wealthy foreigner moving to the United States, failure to consider the impact of residency on an individual’s taxes could be disastrous. At Aliant Law, our California based wealth management, tax management, asset protection and immigration oriented law firm can help people take the appropriate preemptive measures that can also yield insight into what to expect.
For EB-5 investors, careful, advanced planning can help avoid certain U.S. tax rules that apply to regular U.S. taxpayers. This can be done in a variety of ways within the law, including shifting assets into new legal entities, accelerating income, and funding foreign trusts.
Prior to the resident start date, an individual should aim to recognize capital gains and step-up basis, accelerate his or her income, defer deductible expenses, and transfer his or her assets to foreign trusts. Starting with these objectives can ensure that EB-5 investors and other wealthy immigrants are able to minimize the U.S. income and estate tax.
About Jacob Stein, Esq.:
Jacob Stein is a Los Angeles attorney who specializes in structuring international business transactions and international taxation. The author of multiple books and articles, Mr. Stein has represented a variety of clients, ranging from small business owners to directors of Fortune 500 companies. Mr. Stein regularly lectures on topics such as Pre-immigration Tax Planning and Structuring Foreign Investment in the U.S. to other figures in the field and to his students at the CSU, Northridge Graduate Tax Program where he is an adjunct professor of taxation.
Read more about Jacob Stein here: www.aliantlaw.com/attorneys/jacob-stein/
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