Tax Planning for Gold Card Visa Applicants

Foreign nationals preparing for U.S. residency under the Employment-Based Fifth Preference (EB-5) Immigrant Investor Program—or similar pathways such as the “Gold Card” visa—Gold Card Visa Applicants face significant tax exposure upon becoming U.S. persons for income and estate tax purposes. This transition triggers a broad range of reporting and compliance requirements under U.S. law, notably including FATCA, FBAR, and estate tax rules. Without proper pre-immigration tax planning, new residents may find themselves unexpectedly liable for worldwide income taxation and U.S. estate tax on global assets.

This post outlines key planning considerations for prospective U.S. residents with substantial foreign holdings. It addresses (1) income and information reporting under FATCA and FBAR, (2) estate tax risks, and (3) the strategic use of pre-immigration trusts to manage long-term exposure.

 Background and Context

The United States taxes its residents on worldwide income and imposes estate tax on all assets owned at death, regardless of location. A non-citizen becomes a U.S. tax resident either by meeting the “substantial presence test” or by obtaining a green card. Once this occurs, the individual is treated as a U.S. person for both income and estate tax purposes.

Key Definitions:

• FATCA (Foreign Account Tax Compliance Act): Requires U.S. persons to report foreign financial assets over certain thresholds
• FBAR (Report of Foreign Bank and Financial Accounts): Mandates annual reporting of foreign accounts exceeding $10,000 in aggregate at any time during the calendar year.
• Estate Tax Exposure: Applies to U.S. persons on the fair market value of worldwide assets at death, with a federal estate tax exemption of $13.61 million in 2024 (subject to sunset in 2026).
• Grantor Trust: A trust in which the grantor retains certain powers or benefits and is treated as the owner for income tax purposes.

Absent planning, newly resident individuals may be subject to punitive taxation and significant penalties for failing to report global income or assets correctly.

What Has Changed or Been Clarified

While the underlying tax rules are not new, recent enforcement actions and global cooperation initiatives have made compliance more urgent:

• FATCA enforcement has expanded, with financial institutions in over 100 countries exchanging information with the IRS.
• FBAR penalties remain steep—up to $10,000 for non-willful violations and the greater of $100,000 or 50% of the account balance for willful violations.
• Estate tax scrutiny has increased, particularly for high-net-worth immigrants who may inadvertently expose family-held assets held abroad.

Pre-immigration tax planning has evolved to focus more on asset segregation, foreign trust structuring, and reporting preparedness before commencement of U.S. residency b.

Real-World Impact

Consider the example of a Hong Kong entrepreneur planning to move to the U.S. under a Gold Card or EB-5 visa. Without proper planning:

• Their interest(s) in offshore family companies, foreign real estate, and investment portfolios becomes subject to annual U.S. reporting.
• If they die as a U.S. person, their entire global estate may be subject to U.S. estate tax at rates up to 40%.

Key Strategies to Consider Before Immigration:

• Establish a Foreign Non-Grantor Trust: Done prior to U.S. residency, this structure may exclude assets from the individual’s estate and shift future income tax liability away from the U.S. taxpayer.
• Gift Assets Before Residency: Transferring appreciating assets before U.S. tax residency can avoid triggering gift or estate tax later.
• Step-Up Planning: Carefully timing immigration can help secure a “step-up” in basis for certain assets, reducing future capital gains exposure.

Compliance and Reporting

Once an individual becomes a U.S. person for tax purposes, the following forms and deadlines apply:

• Form 8938 (FATCA): Due with the filing of the individual’s annual IRS Form 1040; thresholds begin at $50,000 for single filers.
• FinCEN Form 114 (FBAR): Due annually by April 15, with an automatic extension to October 15.
• Form 3520/3520-A: Required for transactions with foreign trusts or receipt of foreign gifts.
• Form 706 (Estate Tax Return): Required upon death of a U.S. person with an estate exceeding the exemption.

Failure to file these forms can result in civil penalties, loss of deductions, and potential criminal exposure in cases of willful neglect.

Considerations and Caveats | Tax Planning for Gold Card Visa Applicants

There are important nuances to consider:

• State-Level Taxation: Some states, such as California, do not conform to federal exclusions or trust treatment and may impose additional taxes.
• Treaty Protections: Certain estate and income tax treaties may reduce or eliminate double taxation but require careful analysis.
• Timing Is Critical: Trusts must be established and funded before establishing U.S. residency to be effective for estate tax exclusion.

Conclusion | Tax Planning for Gold Card Visa Applicants

Pre-immigration tax planning should be completed for high-net-worth individuals seeking U.S. residency. The U.S. tax system’s global reach and complex reporting obligations can create significant exposure without proper advance preparation.

Prospective Gold Card visa holders should:

• Engage with experienced tax professionals before arriving in the U.S.
• Evaluate foreign trusts and asset transfers as part of their estate strategy
• Prepare for robust annual reporting to avoid FATCA and FBAR penalties

The tax and trust team at RJS LAW has years of experience creating strategies to limit tax exposure for overseas investors moving to the US. Contact RJS LAW on the web or at 619-595-1655 for a free confidential consultation to discuss your specific needs.

Written by Ronson J. Shamoun and John Powers