The United States pairs the world's deepest capital market with the harshest personal tax regime among developed economies: it is the only major jurisdiction where citizenship alone creates a lifelong tax obligation regardless of where a person lives. The asymmetry between entry and exit defines the system: residence arises from 183 weighted days of presence or the first trip on a green card, while ending that status costs a wealthy person an exit tax under IRC §877A.
For outside capital the country runs the opposite way. The US never joined the CRS, FATCA exchange is one-directional in practice, and the trust statutes of South Dakota, Nevada and Delaware compete directly with classic offshore centres. A nonresident with no US status pays little or nothing here — until the situs rules of the estate tax are triggered.
This hub organises the American cluster of the wiki: US person status, pre-immigration planning, corporate structures and trusts, transfer taxes, expatriation, visas, reporting and the banking perimeter. Figures are stated for tax year 2026 under Rev. Proc. 2025-32; the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) of 4 July 2025 reset several of the key parameters.
US person status: the threshold question
A US person for tax purposes is a citizen, a green card holder (green card test), or an individual who meets the substantial presence test under IRC §7701(b)(3). The formula: at least 31 days in the current year and 183 weighted days across three years — current-year days count in full, the prior year at one third, the year before that at one sixth. A steady 120 days a year holds the weighted total at 180 and preserves nonresident status; 122 days a year and above meets the test.
Days spent in F, J, M and Q student and exchange statuses are excluded (exempt individual, Form 8843), while B-visa tourist days count in full. Presence of fewer than 183 calendar days in a given year preserves the closer connection exception (Form 8840) where the tax home and centre of vital interests sit elsewhere.
A green card makes the holder a tax resident from the first day of presence as a lawful permanent resident; day counts stop mattering. An O-1, L-1 or E-2 visa creates no residence by itself — the day count governs.
Tax Consequences of the Status
The status brings worldwide taxation: federal rates up to 37% (in 2026, above $640,600 for a single filer), the 3.8% NIIT on investment income, and state tax ranging from zero in Texas and Florida to 13.3% in California. A US person working abroad may claim the foreign earned income exclusion — $132,900 in 2026, earned income only. Foreign companies and funds held by a US person fall into the anti-deferral regimes covered in the CFC master guide and the CFC/PFIC stacking analysis.
Pre-immigration planning
Steps taken before the residency starting date are worth more than any optimisation afterwards. The US grants no step-up in basis on arrival: basis is adjusted only at death (IRC §1014). Gain accrued before the move is fully taxable in the US when the asset is sold after status begins.
Three workstreams make up the standard sequence. First, gain recognition: sell and repurchase securities, exercise options, declare dividends from owned companies, crystallise crypto positions. Second, cleaning the wrappers: non-US funds and ETFs become PFICs with a punitive regime and Form 8621 once residence starts, and controlled companies become CFCs with annual income inclusions and Form 5471, so funds are sold before arrival and companies are handled through check-the-box elections, liquidation or sale.
Third, trusts: a transfer to a foreign trust less than five years before residence fails, because IRC §679(a)(4) treats the trust as having a US grantor from the residency starting date, so a drop-off trust must be established well ahead. Deferred compensation runs on its own calendar — the route is set out in the deferred comp relocation analysis.
Entities: LLCs, C-corps and the fund standard
LLC
The LLC is the default form: pass-through by default, contractual freedom, strong creditor protection in Delaware and Wyoming. For a nonresident that transparency turns into a filing duty: a foreign-owned single-member LLC treated as a disregarded entity files Form 5472 with a pro forma Form 1120, and silence costs $25,000 per form plus $25,000 for each 30-day period after IRS notice (§6038A). An owner with no US trade or business (no ECI) may owe no tax whatsoever — the duty to report stands apart from the duty to pay.
C-corporation and QSBS
A C-corporation pays 21% federal tax and carries the venture cycle. Its principal personal benefit is QSBS under IRC §1202: for stock issued after 4 July 2025, OBBBA introduced tiered gain exclusion of 50/75/100% at three, four and five years of holding, raised the per-issuer cap to $15m and the issuer's gross asset limit to $75m; earlier issuances keep the prior regime of 100% after five years within a $10m cap. For creators and public figures the holding logic sits in creator holdco.
Fund Structures and the Beneficial Ownership Register
Fund structures rest on the Delaware LP — the form itself, exempt reporting adviser status and the carried interest rules close the manager's perimeter. Privacy improved in 2025: a FinCEN interim final rule removed US companies from Corporate Transparency Act beneficial ownership reporting (Federal Register, 26 March 2025), and a final rule published on 14 August 2026 made that permanent and additionally exempted US persons as beneficial owners — leaving the reporting duty only with foreign companies registered to do business in the US (Federal Register, 14 August 2026).
Trusts: America's domestic offshore
The trust industries of South Dakota, Nevada, Delaware and Wyoming grew out of three combined features: abolition of the rule against perpetuities (South Dakota states plainly that the rule is "not in force" — SDCL §43-5-8), no state income tax on trust income, and directed-trust statutes that split the roles of trustee, investment adviser and protector. A dynasty trust funded with the $15m GST exemption (2026) removes assets from the estate tax base for generations. Asset-protection versions compete with the offshore classics — the comparison sits in the Cook Islands and Nevis analysis.
For international families the central structure is the foreign grantor trust: a foreign settlor, US beneficiaries. During the settlor's life, distributions reach US beneficiaries free of US income tax (reported on Form 3520); after death the trust becomes a foreign non-grantor trust, and accumulated income is taxed on distribution under the throwback rules with an interest charge. The transition is planned ahead through trust domestication, interim distributions and insurance solutions. Family-level coordination of ownership belongs to the family hub.
Estate and gift tax: two incomparable regimes
Wealth transfer runs on two separate rule sets, and the gap between them shapes the whole architecture of holding US assets.
| Parameter | US person / domiciliary | Nonresident (non-domiciliary) |
|---|---|---|
| Estate tax threshold | $15,000,000 (2026) | $60,000 of US-situs assets |
| Rate above the threshold | up to 40% | up to 40% |
| Gift tax | worldwide gifts; $19,000 annual exclusion per donee | US real property and tangibles only; intangibles exempt |
| Transfers to a spouse | unlimited (US citizen spouse); $194,000/year to a non-citizen | QDOT or $194,000/year |
The table leads to one conclusion: a nonresident holding US assets must plan for situs, because the $60,000 threshold is cleared by any serious brokerage account.
The situs rules are counterintuitive. Shares in corporations organised under US law are US situs for estate tax purposes even when held in an account in Zurich or Singapore; real property and tangible assets more obviously so. Deposits with US banks and portfolio debt are excluded from situs (IRC §871(g)–(i)). At the same time a nonresident's gift of intangibles is not subject to gift tax under IRC §2501(a)(2) — hence the standard answers: gift US shares during life, hold the portfolio through a foreign blocker, finance real property with non-recourse debt. Domicile turns on the intention to remain indefinitely and can diverge from day-count tax residence.
Exit tax: the price of leaving
Expatriation — renouncing citizenship, or surrendering a green card held for eight of the last fifteen years (long-term resident) — triggers IRC §877A. Covered expatriate status follows from any of three tests.
| Test | Threshold |
|---|---|
| Average annual federal income tax over five years | Above $211,000 for expatriation in 2026 |
| Net worth | $2m or more |
| Certification of tax compliance on Form 8854 | Five years not certified |
The consequence is mark-to-market treatment: assets are deemed sold the day before expatriation and gain above the $910,000 exclusion (2026) is taxed immediately, while deferred compensation and trust interests instead attract 30% withholding on payments.
The second part of the price falls on recipients: gifts and bequests from a covered expatriate to US relatives are taxed in their hands at 40% above the $19,000 annual exclusion — IRC §2801, Form 708, with final regulations effective 14 January 2025. Leaving halfway, with the family still in the US, shifts the tax onto the family.
Exit is cheaper before the eighth year of green card status: surrendering the card on Form I-407 avoids the covered analysis entirely. A long-term resident who claims nonresident treaty status is treated as having expatriated, with the same §877A consequences.
Visas: routes into status
The investment route is EB-5: $800,000 in a targeted employment area or infrastructure project, $1,050,000 elsewhere, with ten jobs created; the amounts index from 1 January 2027 every five years (8 U.S.C. §1153(b)(5)), and the regional centre programme is authorised through 30 September 2027. For entrepreneurs and recognised professionals, EB-1A is often the better route — a green card for extraordinary ability with no capital threshold; the O-1 work visa usually serves as an interim status before the petition. A comparison of routes sits in the business owner overview; sporting trajectories belong to the athletes hub.
The sequencing rule: tax planning ends before the green card is activated. The card creates residence from the first entry, the long-term resident clock starts running in year eight, and departure after that runs through §877A. Nonimmigrant visas leave control in the client's hands: status turns on days, and the calendar remains an instrument.
Reporting: forms cost more than tax
Information penalties accrue with no underpayment of tax at all, and an international family easily accumulates a dozen forms. The mandatory minimum:
| Form | Who files | Trigger | Failure-to-file penalty |
|---|---|---|---|
| FBAR (FinCEN 114) | any US person | foreign accounts exceeding $10,000 in aggregate | civil and criminal penalties |
| Form 8938 | specified individuals | from $50,000/$75,000 (in the US), $200,000/$300,000 (abroad); MFJ ×2 | $10,000, rising to $50,000 |
| Form 5471 | US shareholders of foreign corporations | 10% or more, CFC | $10,000 per form per year |
| Forms 8865/8858 | partnerships and disregarded entities | foreign partnerships, branches | $10,000 |
| Form 8621 | PFIC investors | foreign funds, policies | statute of limitations stays open |
| Forms 3520/3520-A | persons connected to foreign trusts | transfers, distributions, gifts above $100,000 | 35% of the amount / 5% of assets |
| Form 5472 | foreign-owned US DE | related-party transactions | $25,000 |
The table makes the central point: the cost of error is measured in percentages of assets, and the entry threshold for reporting sits below any reasonable portfolio. The mechanics of the FATCA triad appear in the FBAR and Form 8938 analysis, and the foreign structure forms in the 8865/8858/926 guide. Those catching up may use the streamlined procedures: three years of returns, six years of FBARs, a 5% offshore penalty in the domestic version and none in the foreign one.
The filing calendar
The deadlines of the American year sit with different agencies, and an extension of the filing date is not an extension of the payment date.
A US citizen or resident alien who is outside the United States on the regular April due date receives an automatic two-month extension to file, to 15 June; filing Form 4868 carries the deadline to 15 October. The extension covers filing only: interest runs on tax left unpaid after the April due date. Estimated tax payments matter wherever there is no US withholding at all — self-employment, investment gains, rental income, CFC inclusions or large foreign-source income.
The FBAR runs on its own calendar: FinCEN Form 114 is filed separately from the income tax return, due 15 April with an automatic extension to 15 October that requires no request. Form 8938 does not replace it: the thresholds, the asset list and the recipient of the report all differ.
The banking perimeter
The US stands outside the CRS: information on foreign clients' accounts leaves American banks for their countries of residence only in the narrow FATCA format, and often not at all. Combined with South Dakota trust law this made the country a booking centre for non-Western capital — the industry's "onshore offshore". The custody segment runs from BNY to niche South Dakota trust companies.
US brokerage is open to nonresidents on a W-8BEN: dividends are withheld at 30% (less under a tax treaty), capital gains are free where presence stays under 183 days (IRC §871(a)(2)), and portfolio interest is exempt outright (§871(h)). The other side is the $60,000 estate threshold: a personal account holding US shares passes to heirs only through Form 706-NA and a transfer certificate, so substantial positions are held through blocker structures or insurance wrappers. Americans abroad face the reverse problem: FATCA leads local banks to refuse service, and provider selection becomes a discipline of its own.
In crypto, the GENIUS Act established a federal regime for payment stablecoins; institutional custody runs through Anchorage Digital as a national trust bank and prime brokers of the Coinbase Prime type. The country's fintech infrastructure is mapped in the fintech hub.
Recurring combinations
Nonresident investor with a US portfolio: a brokerage account on a W-8BEN, treaty rates on dividends, exempt capital gains — and a mandatory answer to the estate question above $60,000: a foreign blocker, an insurance wrapper or lifetime gifting of intangibles.
Family two to three years before the move: gain recognition, PFIC disposals, check-the-box elections on companies, a drop-off trust outside the five-year window of §679(a)(4), then green card activation.
Founder with a US startup: a Delaware C-corp, the QSBS clock running from the stock issuance date, relocation to a no-income-tax state before the liquidity event, transfers of shares into trusts before the valuation rises.
Fund manager: a Delaware LP with ERA status, carry planning under the 2026 rules, the fund's banking perimeter and personal reporting on every foreign position.
International family with US children: a foreign grantor trust during the patriarch's life, a conversion plan ahead of the throwback rules, and a South Dakota dynasty trust funded with the GST exemption.
Q/A
Can someone spend half the year in the US and remain a tax nonresident?
No: 183 days within a single calendar year meets the substantial presence test outright. The durable safe level is up to 121 days a year, which keeps the weighted total below 183. Between 122 and 182 days the closer connection exception on Form 8840 applies where the tax home lies elsewhere. Days in F and J status fall outside the test; B-visa days count in full.
A green card has been granted but living in the US is not yet planned. What are the tax consequences?
A lawful permanent resident is a tax resident regardless of where they live: worldwide income, FBAR, Form 8938 and the rest of the package. A treaty tie-breaker can produce nonresident treatment, but for a card holder with eight of fifteen years of status, claiming that position is itself expatriation with §877A consequences. Before year eight the card can be surrendered on Form I-407 with no covered analysis; afterwards only through Form 8854 and the three tests.
What should be cleaned out of a portfolio before moving to the US?
Non-US funds and ETFs, which become PFICs; policies with an investment component; controlled foreign companies, which become CFCs; crypto positions carrying accrued gain. A sale before the residency starting date keeps the gain outside US tax, a check-the-box election is filed with an effective date before arrival, and a foreign trust must be older than five years (§679(a)(4)). Basis is not stepped up on arrival — this is where the US differs from Canada.
A nonresident holds $5m in US shares. What happens on death?
Estate tax on Form 706-NA: everything above $60,000 is taxed on a scale reaching 40% — a bill of roughly $1.9m — and the broker freezes the assets until the IRS issues a transfer certificate. The remedies exist only during life: a foreign blocker corporation, an insurance wrapper, or gifting the shares (intangibles carry no gift tax). Around fifteen countries hold estate tax treaties with the US; the CIS states do not.
EB-5 or EB-1A — which route suits an investor?
EB-5 is bought with capital: $800,000 in a TEA, a passive role, but project risk and country-of-birth backlogs. EB-1A demands a record of achievement instead of money and is often faster for an active entrepreneur. The tax side is identical: any green card means worldwide taxation from day one, so the pre-immigration plan comes first and the visa category second.
An American abroad owes no US tax after credits. Is anything still due?
Yes. Form 1040 is filed whenever worldwide income exceeds the basic threshold; the FBAR from $10,000 in foreign accounts; Form 8938 from $200,000 for those living abroad; Forms 5471, 8621 and 3520 by reason of holding structures. The FEIE of $132,900 (2026) and foreign tax credits often reduce the payment to zero, and none of that removes the filing duty.