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Relocating to the United States can create new opportunities professionally and personally. However, it also introduces a new tax and financial environment that differs significantly from many countries around the world.
Foreign nationals moving to the U.S. commonly hold:
Because the U.S. tax system is based on residency, not citizenship alone, individuals who become U.S. tax residents generally face:
Foreign nationals often ask:
This guide provides an overview of how U.S. rules apply to foreign assets, pensions, and investments when an individual relocates to the United States.
This is educational information only, not legal or tax advice.
Relocating to the United States introduces a financial and tax environment that treats foreign assets very differently from most jurisdictions.
After reading this guide, you will understand:
This guide is educational only and does not constitute personalised tax, legal, or investment advice.
Foreign nationals generally become U.S. tax residents when they meet one of the following:
A lawful permanent resident is automatically treated as a U.S. tax resident.
A foreign national generally becomes a U.S. tax resident when:
Certain individuals may elect to be treated as U.S. residents for part of a year.
If an individual is considered a tax resident of two countries, income tax treaties (if applicable) may establish residency for treaty purposes.
Once an individual becomes a U.S. tax resident, the U.S. generally taxes:
U.S. residency does not depend on citizenship status.
This principle drives the importance of understanding how foreign assets interact with U.S. rules.
Foreign bank accounts remain fully permissible, but U.S. tax residents may need to:
Key reporting forms include:
Required if aggregate foreign account balances exceed $10,000 at any time during the year.
Required when foreign assets exceed certain thresholds, which depend on:
Foreign brokerage accounts may contain:
Many non-U.S.-domiciled pooled investment vehicles may be classified as PFICs (Passive Foreign Investment Companies) under U.S. tax law.
PFIC rules apply once an individual becomes a U.S. tax resident.
Non-residents (NRAs) generally do not face PFIC rules.
Foreign nationals often arrive in the U.S. with foreign retirement plans such as:
Each jurisdiction has different U.S. tax considerations.
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If you own property in your home country:
Whether double taxation relief applies depends on:
Incoming U.S. residents may hold:
U.S. tax rules may require:
Entity classification depends on facts and circumstances.
Receiving foreign gifts or inheritances generally does not create income tax in the U.S., but may require reporting.
Examples:
For certain foreign gifts or inheritances exceeding thresholds.
May involve additional reporting.
U.S. tax residents still must track foreign transactions.
Some foreign life insurance or savings plans include investment components.
U.S. tax considerations may include:
Suitability depends entirely on policy structure.
Foreign assets may be denominated in:
Currency planning may influence:
The U.S. requires reporting in USD, including:
FX conversion rules apply.
Foreign nationals may have:
The U.S. maintains totalization agreements with several countries, which:
Examples of partner countries include:
Totalization agreements do not transfer pensions, but may influence eligibility.
Double taxation may arise when:
Common areas:
The Foreign Tax Credit (FTC) may reduce overlap depending on circumstances.
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U.S. tax residents may have annual reporting requirements separate from tax calculations.
Key forms include:
Required if aggregate foreign bank account balances exceed $10,000.
Foreign financial assets required to be reported if thresholds are met.
Required for many foreign pooled investment funds.
Required for certain foreign trusts or foreign gifts.
For U.S. persons with certain interests in foreign corporations.
For certain foreign partnerships.
For certain foreign disregarded entities.
These forms relate to reporting, not investment recommendations.
These do not represent actual clients or outcomes.
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Skybound Wealth USA assists individuals with:
Conflict Disclosure:
Skybound Wealth USA may receive advisory fees when individuals choose services involving assets under management.
Individuals should evaluate all available options before making decisions.
If you would like to understand how your foreign assets, pensions, and investments interact with U.S. rules when relocating, you may schedule a discussion with Skybound Wealth USA.
With a career built on delivering the highest standards of financial advice and a passion for developing others to do the same, Tom Pewtress is a senior leader at Skybound Wealth Management. Known for his deep technical expertise and hands-on experience across global markets, Tom ensures both clients and advisers are equipped with the knowledge, tools, and strategies to succeed, no matter how complex the situation.
This material is for general informational purposes only and does not constitute personalised financial, legal, or tax advice. Tax rules vary by jurisdiction and may change. Hypothetical examples do not represent actual clients or outcomes. Investment decisions should be based on individual circumstances. Past performance does not predict future results. Skybound Wealth USA, LLC is an SEC-registered investment adviser; registration does not imply any particular level of skill or training. Please review Form ADV Part 2A, Part 2B, and Form CRS for complete disclosures.
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