US Taxes

Mona Shah & Associates Global Blog

US Taxes

According to US tax law, all permanent residents are obligated to file US tax returns and disclose their overseas assets, including shares in overseas company, bank account, capital investment, business income, insurance information.
Sale of House Overseas
Appropriate financial management is highly recommended for EB-5 immigrant investors. For example, the sale of property located overseas is subject to 20% tax under current US tax regime. If the investors could plan ahead and sell the house before obtaining the green card, they could save the tax payment.
Tax home and 183 days requirement
Many investors entered the US with a B1/B2 visa before obtaining their green cards through EB-5 immigrant investor programs. It’s recommended that the investors should count the days they spend in the US each year. If a foreign national spends more than 183 days in the US in a calendar year, his/her tax home is considered to be in the US. Thus he/she is obligated to file a US tax return. The 183 days requirement is rather complicated; it combines the range of the past three years. The total days counted for the tax filing purpose are full days in the current year, plus 1/3 of the days spent in the US from last year, plus 1/6 of the days spent in the US from two years ago.
Will IRS ever find out I did not disclose overseas assets?
Many ask how could IRS find out about my assets overseas? In fact, as the information technology develops, the IRS has more and more access to investors financial information. For example, the conditional permanent resident will receive the IRS K-1 form from their respective regional center. IRS can easily tell who are new immigrants and will put in more effort and time to investigate the financial background of new immigrants. From an accounting point of view, it is highly suspicious if a conditional permanent resident does not disclose any overseas assets, including bank account, stock or shares in overseas company.
Tax filing for conditional green card holder
Conditional green card holder is obligated to file a US tax return in the very year that the conditional permanent residency is obtained. If the investor obtained the conditional permanent resident on December 31, he/she is still obligated to file a US tax return for the entire year. If the tax has already been paid and deducted in other countries, the investors are entitled to relevant tax credits in the US. If a foreign national works overseas for over a year, the first USD 90,000 income is tax exempt in the US. The exemption only applies to work income and business income. It does not include investment capital, stock trading proceeds, interests, sale of property, insurance, etc. For investors who obtained their conditional permanent residency in later month of the year can plan their traveling accordingly in order to benefit from the tax shield.
Yi Song, Esq.
Source from World Weekly, Edit. 47, June 26, 2011
 

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