Tax planning to immigrate to the United States should commence before a foreign person applies for U.S. lawful permanent resident status (a green card).
The key to pre-immigration tax planning is to control a client’s U.S. residency (or domicile) start date for U.S. income and transfer tax purposes to allow for sufficient time for planning and restructuring of business assets. After client’s trigger U.S. residency, they are subject to U.S. income tax on their worldwide income. Moreover, if clients are classified as U.S. domiciled, they are subject U.S. transfer taxes (estate, gift, and generation skipping transfer taxes) on their worldwide assets.
Our pre-immigration consultation includes:
- Determining a client’s current U.S. tax residency (or domicile) status for U.S. income and transfer tax purposes.
- Recommendations for delaying U.S. tax residency and avoiding U.S. domicile under either or both U.S. tax law or U.S. tax treaties.
- Initial classification of business entities in which a client is a beneficial owner and whether the form of entity should be retained or restructured.
- Minimize gain on specific assets (i.e., stock, non-U.S. real estate, personal assets, etc.) with built-in gain by recommending when they should be sold (before or after triggering tax residency or domicile).
- Techniques for stepping up the tax bases of specific assets with built-in gain to minimize post-U.S.-residency capital gain for U.S. income tax purposes.
- Methods to reduce the U.S. transfer tax of assets applicable to clients when they become U.S. domiciled.
For more information regarding pre-immigration tax planning, please contact Leticia Balcazar at lbalcazar@aliantlaw.com.
