Supports Cross Border Professionals and Families
It is a dream come true moment when you obtain your green card. I did it over 30 years ago. I felt that I finally got my ticket to freedom. As the years pass, my appreciation for Arthur Andersen, the sponsor, and my employer, has grown. I thank Andersen for the decision that the company made. It was a game-changer.
You must know four essential pieces of knowledge as a green card holder. I provide these in the article.
- Your Worldwide Income is subject to Taxation
Once you become a green card holder, you are a U.S. tax resident for income tax purposes. This means that you must report all worldwide income to the IRS. For instance, you must inform your rental income earned in Hong Kong. You must report all the interest and dividend income earned in Swiss. You must also report the entire U.S. income. You must report even if you do not receive foreign income transfers from overseas to your U.S. account. https://www.irs.gov/individuals/international-taxpayers/tax-information-and-responsibilities-for-new-immigrants-to-the-united-states#:~:text=An%20individual%20who%20obtains%20a,to%20Determining%20Alien%20Tax%20Status.
Many may think that the IRS cannot catch unreported income. You may be mistaken because the IRS is rapidly acquiring additional technology funding.
- FBAR (Report of Foreign Bank and Financial Accounts)
You must report foreign financial accounts if you meet certain requirements. The requirements are that the aggregate value of those financial accounts exceeded $10,000 at any time during the year. Bank accounts, brokerage accounts, mutual funds, cash value accounts of your insurance, and foreign pension accounts are examples of foreign financial accounts. The aggregate value requirement forces you to review the total balance of your financial accounts together during the year. It is about something other than the year-end balance. It is also not about the individual account balance. https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
- Gift or Inheritance Over $100,000 during the year
You must report receiving more than $100,000 in gift or inheritance from a non-resident or a foreign estate during the year. You use Form 3520 to report this. Please note that the requirement is about the total amount of the year. You may face a 25% penalty if you fail to report this. The due date of this form is the same as your annual tax returns. https://www.irs.gov/instructions/i3520
- Owning Foreign Corporation’s Shares
This requirement is the most ominous. Form 5471 is one of the hardest IRS forms to understand. There are nine categories of persons who must file, and the requirements of the categories are different. It would be best to remember the magic threshold of 10%, but remember that this is not the year-end number, and acquiring or disposing of the shares also counts. I advise contacting your CPA immediately before acquiring a foreign company’s shares and seeking professional advice. A non-professional can’t understand this rule, and the penalty can be serious. https://www.irs.gov/instructions/i5471
CDH provides tax return preparation and tax consulting services for cross-border individuals living in the United States or foreign countries and strives every day to solve and explain various problems and questions of these people. In addition, the issues these people face are complex and wide-ranging, including the tax laws of your country and the United States, immigration law, life insurance, and retirement rules. This article makes complex tax laws and regulations easy to understand, which is just the point. Therefore, there are many exceptions. There is also a risk that the rules have already changed by reading them. Please contact us from the following website for the latest practices. Also, consult with tax and legal affairs experts if you take action.
CDH Resources: www.cdhcpa.com. We provide one-hour paid consultation sessions online. https://outlook.office365.com/owa/calendar/[email protected]/bookings/ If you can read Japanese, visit https://www.cdhcpa.com/ja/cross-border-individual-tax/. You can access them all on the page. YouTube, FaceBook, free online consultations, estate, permanent resident waiver, exit tax, Form 1040, tax simulation, overseas asset reporting, other sectoral online question forms, and monthly newsletter sign-ups. For more information-packed past articles, check out https://www.cdhcpa.com/ja/news/. Please feel free to use it. You can email me at [email protected]