International tax
US citizens with financial assets and other foreign investments
Americans who own or have control over financial assets located outside the United States may be required to file a Foreign Bank Account Report (FBAR) annually with the Department of Treasury. Depending on the amount of assets, they may also be required to disclose the financial assets on Form 8938, which must be included with their federal income tax return. The disclosure requirements related to foreign financial assets are extremely complex, and should be carefully considered by any person who may be subject to these requirements. Such persons may also be impacted by the Foreign Account Tax Compliance Act (FACTA), under which foreign financial institutions may be required to divulge information about their customers who are U.S. person to the Internal Revenue Service.
US citizens living abroad
Americans living abroad are subject to United States tax in the same manner as those living in the United States. The impact of the world-wide taxation of the income of Americans may be alleviated by the (a) foreign earned income exclusion, which allows individuals to exclude from their income certain amounts of income earned while living and working abroad, (b) the foreign tax credit, which allows Americans to credit income taxes paid to foreign countries against their U.S. tax liability, and (c) tax treaties, which generally alleviate the impact of double taxation
Non-US residents moving to the US
A non-US resident moving to the US will become subject to U.S. income and estate tax upon becoming a U.S. resident for tax purposes. The definition of “residence” for purposes of tax is separate from the immigration law definition, although a person’s visa status may impact his tax situation. If a person is planning to spend a significant amount of time in the United States, it is advisable to undertake a comprehensive analysis of the tax consequences before becoming a United States resident, or applying for permanent status such as a greencard.
