With careful planning the tax implications of becoming an EB-5 investor might not be so bad.
When an EB-5 investor receives their visa and becomes a U.S. permanent resident their global income becomes subject to US taxes. For EB-5 investors who earn income from multiple international sources they may worry that their taxes will get complicated fast.
With the right planning, however, EB-5 investors can ease their tax concerns. They can learn more about when and how to report and if they need to pay on their global income. They can also conduct advanced planning and find out about gift tax obligations and estate tax.
Here are 3 tips for EB-5 investors to help to get started with their tax planning:
1. Investors should find a skilled and licensed tax professional who has expertise in advising international clients. This tax professional may be able to assist with determining the investor’s overall tax liability in advance of applying for the EB-5 Program. Also, investors should be aware that if they live in certain states may owe state taxes in addition to federal taxes, so knowing where they plan to live in the US can be beneficial too.
When an EB-5 investor becomes a US resident they likely need to immediately file multiple different types of tax forms.This is where pre-immigration planning and determining your future tax liability can relieve a lot of the stress. Failure to comply and file the mandatory forms could result in major penalties.
2. Find out if your country of origin has a tax treaty with the US. Consult with a specialized tax professional to find out if the US has a tax treaty with your home country. Income tax credits may be available. Not all countries have a tax treaty with the US. Investors can speak with a knowledgeable tax attorney or CPA to learn more, to take advantage of any tax credits available to you, and to plan ahead.
3. While visiting the US, prior to the application phase of the EB-5 process, investors may benefit from paying close attention to how long they are staying in the country and other rules in order to avoid becoming a “US resident” for tax purposes. The IRS will consider the investor a US resident if they had a substantial presence in the US.
Every EB-5 investor’s situation is different. To learn more consult with a specialized tax professional. Keep in mind while planning that the EB-5 Modernization Rule goes into effect on November 21, 2019, and it will raise the EB-5 minimum investment amount from $500,000 to $900,000. To take advantage of the lower minimum investment amount, apply for EB-5 as soon as possible.
- New York
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