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Tax Lawyer > Blog > PreImmigration Tax Planning > Pre immigration tax planning – taking advantage of lower rates in U.S. income taxes and avoiding taxation on accrued wealth

Pre immigration tax planning – taking advantage of lower rates in U.S. income taxes and avoiding taxation on accrued wealth

The United States under the new Trump Tax Bill has to some extent become a tax haven for the wealthy immigrating individuals.

More and more wealthy immigrants from strife torn or corrupt countries, can come to America and do business in America, under a tax regime that taxes profits and capital at lower rates, (the “Trump Taxes”).

Foreign investors from throughout the world are coming to the United States for increasing growth and opportunity for prosperity. Many of them are already wealthy.1

Immigration – U.S. Income Taxes

It is very important that wealthy immigrants to the U.S. understand the tax laws regarding

(1) profits in the United States,

(2) the tax laws that govern gifts of U.S. assets made by foreign taxpayers, and

(3) transfers of US assets by nonresident aliens who die owning certain types of wealth in the United States.

The United States now has several categories of individual income tax payers that may make large amounts of income and grow their wealth significantly; sometimes at a 20% tax rate, depending on the type of income they earn in the U.S. tax system.2

The maximum tax on corporations, both foreign and domestic is 21% on profits.

Wealthy foreigners who are immigrating to the U.S. and planning on a permanent move to the U.S. need to make sure that all of their accrued wealth earned over the years should not be subject to u.s. income tax and/or a tax on capital gains, because these income and gains were accrued, when the taxpayer was not a U.S.  person.

However, without the proper tax planning [in advance] of becoming a U.S. resident for tax purposes could be very costly in the form of the payment of U.S. taxes on accumulated wealth.

Avoiding U.S. Income and Capital Gains Taxes on Accumulated Wealth

It is extremely important that wealthy individuals who are seeking a degree of permanency in the U.S. tax should recognize that all of their economic gains and income that accrued before they became US taxpayers do not need to be subject to U.S. income taxes or gift taxes or death taxes [if they plan in advance] before obtaining their tax residency status.

Nonresident alien individuals who plan on a permanent move to the U.S. do not have to risk paying US taxes on sales of assets or payments of income that have been earned over all the years before they became a U.S. taxpayer if they take the right steps to protect their accrued income and gains in advance of U.S. tax residency.

In addition to planning to make sure that their accrued income and gains are not taxed; tax planning for the US immigrant must be planned in advance for the potential death of these wealthy individuals, who immigrate to the United States.

U.S. Estate And Gift Tax

The U.S. taxes transfers by gift and at death (estate tax). It is possible to avoid paying “US estate taxes” and/or ”gift tax” unnecessarily. The US has greatly increased the size of gifts and/or estate that may be transferred throughout the generations free of a U.S. estate or gift tax. For U.S. taxpayers, the U.S. will permit those people who have wealth in excess of $11,000,000 to make transfers in advance of their U.S. residency to protect against estate and gift tax. In today’s U.S., each person who is taxed as a citizen or resident may leave $11,000,000 at death without paying any “death taxes”.

Non-Resident Aliens who die owning certain U.S. assets can be taxed at extremely high United States tax rates.

There are numerous tax planning techniques that can totally avoid or greatly reduce taxes on immigrating foreigners with accrued wealth.

Nonresident aliens that wish to immigrate to the United States have great opportunities that have multiplied manifold as the unemployment rate has gone down and many good jobs have not been filled.

For Many Wealthy Individuals

In addition to preserving their wealth accumulated before coming to the U.S., the U.S. tax code includes many “tax favorable business oriented “deductions” that will decrease considerable taxes on business profits in the form of tax credits and/or deductions. U.S. taxpayers can count on a very favorable tax framework in the U.S.

An international tax attorney is an important professional to the wealth seek immigration status in the U.S.

Footnotes:

1. Immigrant U.S. taxpayers need professional guidance in order not to pay taxes unnecessarily. This advice is provided by an international tax attorney well versed in U.S. tax and international law.

2. The highest tax rate in the U.S. now is 37% on individual incomes in excess of $250,000 and $600,000 for married couples.

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