Planning to relocate to the U.S.? Understanding key tax rules—from determining your residency status to navigating worldwide income taxation—is essential for staying compliant and minimizing potential liabilities. Here’s what you need to know before making the move.

10 Key Tax Considerations when Moving to the U.S.

1. Residency Status and Tax Filing Requirements
   Your tax residency status (distinct from your immigration status) determines your U.S. tax obligations. Residency is based on time spent in the U.S. or connections to the country—not your visa or citizenship.
2. Worldwide Income Taxation
   The U.S. taxes residents on worldwide income. Once you become a U.S. tax resident, all income—regardless of where it's earned—may be subject to U.S. taxes.
3. Foreign Bank Account Reporting (FBAR)
   If the total value of your foreign financial accounts exceeds $10,000, you must report them annually using the FBAR form. Noncompliance can result in severe penalties. For 2024, the FBAR is due April 15th, with an automatic extension to October 15th.
4. Foreign Earned Income Exclusion (FEIE)
   If you maintain foreign employment as a U.S. tax resident, the FEIE may allow you to exclude up to $126,500 (tax year 2024) of foreign-earned income, provided you meet specific conditions. Additional exclusions for housing expenses may apply.
5. Tax Treaties
   The U.S. has tax treaties with many countries to prevent double taxation. These agreements may affect the taxation of your income, pensions, and investments, offering relief from dual taxation in certain cases.
6. State Taxes
   State tax laws vary widely in the U.S.—some states have no income tax, while others may tax foreign income. Researching your state’s tax rules is essential to avoid surprises.
7. Social Security and Medicare Taxes
   Most employees in the U.S. are required to pay Social Security and Medicare taxes. Self-employed individuals pay these through self-employment tax, covering both the employee and employer portions.
8. Tax Planning for Dual Status
   In the year you move, you might be classified as a dual-status taxpayer—nonresident for part of the year and resident for the other part. Careful planning can help minimize your tax liability during this transition.
9. Retirement Contributions and Accounts
   The tax treatment of retirement accounts, both foreign and U.S.-based, varies. Contributions to foreign plans may not receive the same benefits in the U.S., and withdrawals or rollovers from foreign accounts may be taxable.
10. Estate and Gift Tax Implications
    U.S. estate and gift taxes apply to worldwide assets for tax residents. Reviewing your estate plan and understanding potential obligations is critical for asset protection.

Navigating U.S. tax laws can be complex, especially with foreign income or assets. Consulting a tax advisor experienced in international tax issues can help you stay compliant and optimize your financial strategy.