Tax Implications of Two Visas for Immigrant Investors to the USA

E2 Investor Visa and the EB-5 Visa for Immigrant Investors are given to individuals from certain countries, who invest substantially in the United States. These are 2 of the many non-immigrant visas popular with foreign investors who seek a foothold or more in the United States.


Where do I start?


1. Pre - Immigration Planning: Estate and income tax planning is best accomplished before an individual becomes taxable in the United States. A coordinated effort between your home nation tax advisor, US Immigration Attorney and a US Tax Advisor is recommended.
2. Federal and State Income Tax Issues: Individuals, whether residents or non-residents of the United States may have both federal and state reporting obligations on any income earned in and outside the US.
3. International Tax Issues: Transfer pricing regimes may come into play, to understand where profits should be taxed, to establish the source and ownership of intellectual property rights, to properly apply tax treaties and to co-ordinate with management teams in your home nation.


Will I be taxed on worldwide income?


Most likely you will be considered as a resident for tax purposes (not to be confused with residency status for immigration purposes) and therefore you will be taxed on all worldwide income, regardless of its sources. If you are a non-resident for tax purposes, you will be taxed only on income from US sources. The terms of any tax treaty between your home nation and the United States trump federal tax laws which can affect your payments. Most tax treaties will allow you to tax some of your income at a lower rate and may exclude some income all together.


Will I be subject to Withholding Taxes on US income?


Generally, no. As a US resident for tax purposes there would no withholding taxes. As a non-resident for tax purposes, withholding taxes are exempt on income connected with a trade or business in the US.


Will I be subject to Withholding Taxes in my home nation?


You may have to pay withholding taxes in your home country, if you are a US resident for tax purposes. If there is a tax treaty, the withholding tax rates maybe at a lower rate. You would also most likely obtain a credit against your US income tax liability equal to the withholding amount paid in your home country.

What about the Exit Tax?


Even if you have been substantially present in the US as a non-immigrant, avoiding permanent residence status will eliminate exposure to the US Exit Tax. Deferring permanent residence status will postpone, perhaps for many years, becoming a long term resident subject to the Exit Tax. The US Exit Tax applies to individuals with income and net worth above certain levels.


Any Final Words?


It is important to consider the tax implications before making investments in the US. Tax planning is a requirement and should not be overlooked. John L Mottram CPA, LLC offers services related to these areas and are happy to help.