With the development of China's economy, most of today's Chinese immigration applicants are "money-minded", especially with the increasing popularity of EB-5 investment immigration visa and EB-1C transnational executive visa. Most immigration applicants have considerable income in China and other countries around the world. For them, "global tax filing" with the U.S. government has become an issue that needs serious consideration before becoming a U.S. taxpayer. How to deal with the new US tax regulations (FATCA) and avoid global tax filing?
At the end of last year, the United States promulgated new FATCA regulations, which stipulate the disclosure of foreign financial assets and the value-added part of tax returns by US taxpayers. We received many Chinese immigration applicants as well as some H-1 and L- 1Visa holders’ advice on this law. First, we must be clear that the new law targets taxpayers’ foreign financial accounts and assets, not all foreign assets. In addition, the new law still does not tax financial assets, but only requires disclosure and tax reporting of income. Next, let’s take a closer look at the new bill’s provisions.
Form 8938
For U.S. taxpayers who are FATCA compliant, an additional Form 8938 needs to be completed by April 15 and submitted to the IRS together with Form 1040NR. It is worth noting that the United States began to implement a set of Foreign Bank and Financial Account Disclosure Act (FBAR) in 2004, and on March 28, 2011, the United States began to implement a set of Foreign Bank and Financial Account Disclosure Act (FBAR). On March 28, 2011, the U.S. Department of the Treasury completed final revisions to the law and brought it into formal implementation. Although the newly announced "FATCA Act" and the previous "FBAR Act" seem to disclose the overseas financial account information of U.S. taxpayers, there are still obvious differences when opening the 8938 form and TD F 90-22 form required by the "FATCA Act". difference.
First of all, in addition to information disclosure, Form 8938 also requires the amount of overseas income (interest, dividends, taxes, etc.), while Form TD F 90-22.1 only requires account information, not income. or the amount by which a financial asset has increased in value.
Also, in terms of filing, Form 8938 is required to be submitted to the IRS along with the 1040NR tax return by April 15, but Form TD F 90-22.1 is required to be submitted to the IRS by June 30 U.S. Department of the Treasury and expressly prohibits filing with a tax return.
As you can see, the previous FBAR Act favored the disclosure of offshore financial assets, while the FATCA Act favored tax reporting of offshore income. Furthermore, FATCA specifically states that taxpayers who are eligible to file Form 8938 are still required to file Form TD F 90-22.1 if they are also eligible for Form TD F 90-22.1. The two bills are not inconsistent with each other.
How to deal with the new U.S. tax rules (FATCA) and avoid filing a global tax return
Requirements for filing Form 8938
Identity of the filer
U.S. citizens;
U.S. permanent residents;
or
non-immigrant visa holders who meet the "substantial presence test."
Non-immigrant visa holders who meet the "substantial presence test", such as certain H-1, L-1 visa holders, etc.
Property Categories
The asset categories required to be reported to the United States include:
Financial accounts in overseas financial institutions;
While not overseas Financial property in a financial institution, but used by the holder to invest in the following projects:
Stocks or other securities issued by non-U.S. companies;
Stocks or other securities issued by non-U.S. companies ;
Stocks or other securities issued by non-U.S. companies;
Stocks or other securities issued by non-U.S. companies;
Stocks or other securities issued by non-U.S. companies Securities;
Stocks or other securities issued by non-U.S. corporations.
Stocks or other securities issued by non-U.S. companies;
Any entity capitalized by a foreign entity;
Any entity that is not a U.S. company.
Any financial instrument or contract in which an overseas entity is the issuer or counterparty.
In addition to overseas banks, overseas financial institutions (OFIs) also include other overseas investment institutions, such as mutual funds, hedge funds and other private investment funds.
Financial assets need to pay attention to the concept of "for investment". Taking real estate as an example, if it is clearly private property for personal use, it is not a financial asset, but shares used for investment in real estate companies are financial assets. property.
Other forms, such as Form 2555, are required to report income from foreign nonfinancial assets.
Amount thresholds required to report
Taxpayer is unmarried and resides in the United States: Foreign financial assets totaling more than $50,000 at the end of the tax year, or at any time during the tax year , the total foreign financial assets exceed US$75,000.
Taxpayers who are married and residing in the United States and filing jointly with their spouse: The total amount of foreign financial assets exceeds $100,000 at the end of the taxable year, or the total amount of foreign financial assets at any time during the taxable year Over $150,000.
Taxpayers who are married and residing in the United States but filing separately: The total amount of foreign financial assets exceeds $50,000 at the end of the tax year, or the total amount of foreign financial assets exceeds $75 at any time during the tax year. , 000 USD.
For taxpayers residing outside the United States and filing a separate filing: foreign financial assets totaling more than $200,000 at the end of the taxable year, or foreign financial assets totaling more than $300,000 at any time during the taxable year.
For taxpayers residing outside the United States but filing jointly with a spouse: Foreign financial assets totaling more than $400,000 at the end of the taxable year or $600,000 at any time during the taxable year.
For U.S. taxpayers who are not U.S. citizens, residence outside the United States means being outside the United States for at least 330 days during the 12 consecutive months following the end of the tax year.
Penalty for failure to report
Under the new regulations, failure to report foreign financial assets can result in a fine of up to $10,000 if the failure to report or Pay the tax and the penalty will increase to $50,000. The penalty for not filing a complete return can be up to 40% of the undeclared amount.
Reactivation of Foreign Earned Earnings (Recovery)
First, it is clear that foreign citizens do not need to report their presence in the United States to the U.S. government until they meet the "substantial presence test" or the "green card test." Any income earned outside the United States. Instead, they can choose to file a U.S. worldwide income tax return in the year they become a U.S. taxpayer, or file a U.S. worldwide income tax return in the full year they become a U.S. taxpayer. The new rules have no impact on this fundamental law, so foreign citizens will continue to have no concern that the new law will apply retroactively to income earned worldwide before they were issued a green card or met "substantial presence" requirements.
In addition, the new FATCA rules apply to disclosures of foreign financial assets by taxpayers filing returns after March 18, 2010, and for taxpayers filing returns in 2011. Likewise, foreign citizens will not be taxed on their foreign financial assets and will only be required to disclose them, and only the increase in the value of the assets, i.e., income, will be reported on their tax returns.
The trend in the United States to track taxpayers’ overseas financial assets
An important part of the new FATCA rules requires overseas financial institutions (such as banks) operating in the United States to Enter into an agreement with the IRS. The main thrust of the agreement is that these overseas financial institutions must conduct certain identity checks and other due diligence on their depositors and report information on their U.S. depositors to the IRS. Overseas financial institutions that are not part of the Agreement must withhold and remit 30% of their U.S. income to the IRS. This is a heavy blow to the United States' thorough investigation of taxpayers' overseas financial assets. As a result, the gray areas previously used for tax avoidance will be further cleared.
The impact of foreign financial asset declarations on resident foreigners
As we mentioned earlier, the Form 8938 required by the new bill is a foreign income tax return. Revenue includes interest, dividends, royalties and other income. income. For Chinese citizens who have become "resident aliens" in the United States, although China and the United States have signed the "Agreement for the Avoidance of Double Taxation and the Prevention of Tax Evasion on Income" (DTAIE) to prevent double taxation, However, due to the differences in the tax systems between China and the United States, these Chinese citizens may pay taxes to the Chinese government in the United States and then pay taxes to the Chinese government in the United States. Chinese citizens may still have to pay taxes to the Chinese government and then pay tribute to Uncle Sam.
While the self-conscious principle still applies to taxpayers’ offshore income, FATCA has not fully implemented its plan to require offshore financial institutions to disclose customer information to the U.S. Internal Revenue Service (IRS). Once the plan is implemented as scheduled, when offshore financial institutions disclose customer information, the appreciation and direction of their offshore financial assets will not be hindered by the IRS, and more tax avoidance projects will become more tax avoidance plans and become nothing. .
How to deal with the new US tax regulations (FATCA) and avoid global tax filing suggestions
"Global tax filing" is for some immigrant applicants with higher overseas income, or some who have lived in the United States for a long time For non-immigrant visa holders, especially some L-1 visa holders, it may indeed mean paying more taxes. However, the principle of equality of rights and obligations stipulates that those who enjoy the welfare of a country are obliged to pay taxes. Furthermore, it seems absurd to give up the "American Dream" just to avoid paying taxes to the U.S. government. In order to strike a balance between not violating U.S. laws, not giving up the "American Dream", and relatively reducing the tax burden, applicants should develop a long-term tax plan before becoming a U.S. taxpayer required to file global taxes. You can refer to our other article "Tax Planning for High Net Worth Individuals Before Becoming a "Foreign Resident" Under U.S. Tax Law" or consult our attorneys.
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United States EB- 5: Introduction to the Charter School Project
The U.S. EB-5 investment immigration is one of the fastest and most convenient ways for families to obtain a U.S. green card. Since entering the Chinese mainland market in 2004, EB-5 has become the most important investment immigration project after a wait-and-see and slow development in the past few years, and has jumped to the top with strong momentum in the past three to five years.
After the great success of the first 9 phases of the U.S. Investment Immigration Florida Charter School Project, there are only a few spots left for the 10th phase, which is currently under hot subscription. The 11th phase of the U.S. Investment Immigration Florida Charter School Project was launched by Qiaowai Immigration Another masterpiece, a shocking release. The seats are very popular. Please hurry up and sign up. The following is an introduction to the 10th Charter School Project:
Introduction to the 10th Charter School Project in Florida
1. By the United States. The EB-5 Regional Center is directly licensed by the U.S. Government and fully operated by the Florida State Government. Florida Governor Rick Scott and the Florida Department of Commerce vigorously promote this project.
2. The first 1-9 phases have achieved great success and have now become a demonstration project of the EB-5 investment immigration project!
3. The project model is recognized by the US Immigration Service, and the project assets are certified and evaluated by CBRE, the world's largest real estate company.
4. High employment creativity exceeding the standard of 55%. The US Immigration Service requires: 410 jobs. The project creates jobs: about 634 (construction and school operations).
5. Clear return strategy, EB-5 borrowing is secured by school buildings, land and rental income. The major bank (PNC Bank) provides 80 to 90 percent of the funding for charter school construction. Click here to view "What is a Charter School in the United States/detail_1248.html"
The Florida Overseas Investment Regional Center is the only regional center approved by the US Citizenship and Immigration Services to operate educational facilities throughout the state of Florida. One of eight regional centers that USCIS proposes other regional centers to follow.
Qiaohong Immigration has joined hands with the Florida Overseas Investment Regional Center in the United States and has successfully completed the sales of phases 1 to 9 of the U.S. EB-5 investment immigration Florida charter school series projects, and is currently under hot subscription. There are only a few places left in the 10th phase, and the 11th phase projects are in the sales process. Each project has been highly recognized and welcomed by customers. The client is currently processing I-526 approval documents from the US Immigration Service in batches.
Qiaohong Immigration has always adhered to the principle of beginning and end in promoting U.S. investment immigration projects. Qiaohong Immigration executives have made many on-site inspections and return visits to the progress of the project. Almost every project has various aspects from the preliminary inspection to the later return visit. All relevant information is provided to Qiaohong customers as soon as possible, so that customers can fully understand and master it in a timely manner and apply for the U.S. investment immigration project with peace of mind!