If you’re planning to move to the United States, there\u2019s more to think about than booking flights and finding a new home. One of the most important \u2014 and most overlooked \u2014 parts of the transition is your financial and tax planning.<\/p>\n
The U.S. taxes its residents on their worldwide income, and it applies complex rules to foreign trusts, corporations, and investment structures. Without the right strategy<\/a>, you could find yourself facing unexpected tax bills and complicated compliance requirements<\/a>.<\/p>\n Here are key areas to address before making the move:<\/p>\n Entity Restructuring and Classification<\/strong>: If you own foreign companies, you may be surprised to learn that the U.S. has special rules (like Subpart F and GILTI) that can tax you on your company\u2019s profits \u2014 even if the company doesn\u2019t pay you a dividend. Careful restructuring can help you avoid being caught in these rules and can also streamline your future tax reporting.<\/p>\n Under the U.S. “check-the-box” regulations (Treasury Regulations \u00a7301.7701-2<\/a> and \u00a7301.7701-3<\/a>), certain foreign entities are assigned default classifications based on the number of owners and their liability for debts. For example, a Spanish S.L. (Sociedad Limitada) would typically default to corporate treatment unless an entity classification election (Form 8832<\/a>) is filed to treat it as a disregarded entity (if single-member) or a partnership (if multi-member). By contrast, a French S.A. (Soci\u00e9t\u00e9 Anonyme) defaults to corporate treatment and is considered a “per se” corporation under U.S. regulations, meaning it cannot change its classification through the check-the-box election. Making a timely entity classification election or converting a per-se corporation to an eligible entity before becoming a U.S. tax resident can prevent unfavorable anti-deferral regimes and reduce the compliance burden.<\/p>\n<\/li>\n Tax Reporting for International Entities and Investments<\/strong>: Becoming a U.S. tax resident means you\u2019ll be subject to extensive reporting requirements. This includes filing FBARs<\/a> (FinCEN Form 114) for foreign bank accounts, Form 8938<\/a> for foreign financial assets, and potentially Forms 5471<\/a>, 5472<\/a>, 8865<\/a>, or 8858<\/a> if you own interests in foreign corporations, partnerships, or disregarded entities.<\/p>\n Part of the goal of pre-immigration planning is not just to minimize taxes, but also to simplify your reporting obligations. Restructuring foreign investments, including foreign mutual funds that may be treated as Passive Foreign Investment Companies (PFICs<\/a>), can help avoid punitive anti-deferral tax regimes and reduce the complexity and cost of annual compliance.<\/p>\n<\/li>\n Foreign Trust Cleanup<\/strong>: Many countries use trusts differently than the U.S., and the IRS imposes strict reporting and tax rules on foreign trusts once you become a U.S. person. If you are the beneficiary or creator of a trust abroad, it\u2019s critical to review whether that trust will trigger burdensome filings like Form 3520\/3520-A or create adverse income tax consequences. Sometimes it\u2019s better to restructure or terminate foreign trusts before becoming a U.S. resident.<\/p>\n<\/li>\n Gain Recognition Planning<\/strong>: In the U.S., you don\u2019t get a “step-up” in the value of your assets when you become a tax resident. That means any appreciation in your assets before your move could be taxed later when you sell. It\u2019s often a good idea to trigger gains before moving, taking advantage of lower foreign tax rates and capturing unrealized gains before the IRS takes an interest.<\/p>\n<\/li>\n<\/ol>\n For Wealth Advisors and Professionals<\/strong>: Wealth advisors, private bankers, and tax professionals often serve as the first point of contact when clients begin planning a move. Flagging these issues early can make a huge difference in the client\u2019s long-term financial health. Partnering with an experienced international tax attorney ensures that no key issues are overlooked and that the client\u2019s transition is as smooth as possible.<\/p>\n Final Thoughts<\/strong>: Pre-immigration planning is about more than tax savings \u2014 it\u2019s about peace of mind, compliance, and securing your financial future in your new home. If you’re considering a move to the United States, now is the time to develop a strategy that protects and preserves your wealth across borders.<\/p>\n If you or your clients are planning an international move, we\u2019re here to help.<\/p>\n\n