Moving to the US

Moving to the US

There are a number of very important factors to consider before making changing your residency. The logistics can be quite burdensome as well, so it is very important that you understand the process in advance to determine if this is the best choice for you.

What should I do before leaving my home country?

You should always thoroughly discuss the ramifications of becoming a non-resident in your current country of residence with your current non-US accountant. There could be unexpected results or complications that may make becoming a non-resident more difficult than expected. It may also require some advanced planning to minimize any unwanted results.

What are the tax benefits to changing my residency?

There are some benefits to becoming a US resident for tax purposes. You also would no longer be subject to the non-resident tax withholding regimes. If you invest in a US partnership, then you would no longer need to pay any taxes in the event of net income. Instead that income would simply be passed on to you as a partner and any tax needed would only be paid at the individual level. You would also no longer be subject to FIRPTA withholdings on any sale of US properties.

Another benefit includes the ability to utilize the personal exemption or itemized deductions to reduce your US taxes. You may also be subject to lower, graduated tax rates on some classification of income.

As a resident, you have better access to utilize losses that you may have incurred in moving to the US and establishing a business here to effectively decrease your taxes paid. You may also be able to use foreign source losses to decrease your US sourced income.

Can you sum up the overall considerations?

Prior to officially changing your residency to the US, I would recommend that you engage with an international tax professional to look a little bit closer at all of the factors to make sure that it is truly the best decision for you. The factors include:

  1. Why you would like to change your residency?
  2. What foreign reporting forms would need to be included in a US resident tax return?
  3. What would the overall tax impact be in changing your residency?
  4. What would you need to do to cease being a tax resident in your home country?

Please note that there are many nuances not discussed above and that this guide is meant to serve as the start of a conversation to determine whether or not changing your residency is the right move for you.

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