Private Client · International Tax
Pre-Immigration and Exit Tax Planning
We represent foreign nationals relocating to the United States and U.S. persons preparing to expatriate. The goal is to minimize exposure to U.S. income tax, estate tax, and the federal exit tax, through planning completed before the triggering event.
Or email info@dilendorf.com.
The U.S. taxes its citizens and residents on worldwide income and worldwide estate transfers. Once you become a U.S. tax resident, by green card, by the substantial presence test, or by treaty election, every asset you own anywhere in the world falls inside the U.S. tax system.
Going the other direction, U.S. citizens and long-term green card holders who give up that status can face a federal exit tax under IRC § 877A. It treats worldwide assets as if sold the day before expatriation.
Both directions are planning opportunities. The window is open only before the triggering event.
Watch
U.S. pre-immigration tax planning
Max Dilendorf on how to minimize U.S. tax before moving to America, including the estate-tax exposure most newcomers never see coming.
Video: U.S. Pre-Immigration Tax Planning, How to Minimize Taxes Before Moving to America.
When you become a U.S. tax resident
A non-U.S. citizen becomes a U.S. tax resident, and therefore subject to U.S. tax on worldwide income and assets, when either of two tests is met.
- The green card test. Lawful permanent resident status from USCIS triggers U.S. tax residency from the first day of presence in the U.S. as a green card holder.
- The substantial presence test. Physical presence of 31 days in the current year, and 183 days under the weighted three-year formula (current year, plus one-third of the prior year, plus one-sixth of the second prior year), triggers residency even without a green card.
Effective pre-immigration planning must be completed before either test is satisfied. Once residency begins, the worldwide-income and worldwide-transfer-tax systems apply.
In 1999, a foreign national buys an apartment abroad for $100,000. In 2021, he becomes a U.S. green card holder. By 2022 the apartment is worth $1,500,000, and he sells.
The gain is $1,400,000. Because he is now a U.S. resident, the U.S. taxes that gain as worldwide income, even though he was not a U.S. resident when he bought the property. At combined federal and state rates near 40%, he owes more than $560,000 in U.S. income tax on a transaction that had no U.S. connection at purchase.
Planning completed before the residency date could have eliminated or substantially reduced that exposure.
The $60,000 estate-tax trap for nonresidents
A nonresident who owns U.S. assets may be entitled to only a $60,000 federal estate-tax exemption. The gap between that figure and the exemption available to U.S. citizens is staggering.
Consider a nonresident who owns a $1,000,000 U.S. condominium and passes away. Only $60,000 of that value is exempt, and the remaining $940,000 may be exposed to U.S. estate tax.
Once you become U.S. domiciled for estate-tax purposes, the exposure expands beyond U.S. real estate. Under 26 U.S.C. § 2001, the estate tax reaches the worldwide assets of individuals domiciled in the U.S. at death, including foreign real estate, investment accounts, crypto, stocks, and interests in private companies and family businesses.
Visa status alone does not protect you. A temporary visa such as E-2, H-1B, or L-1, and the newer Gold Card investor programs, does not by itself prevent this exposure. For estate-tax purposes, domicile turns on physical presence and intent to remain, not on your visa category.
Pre-immigration planning strategies
The right strategy depends on the client’s asset mix, family structure, source country, and timeline. Techniques we deploy include:
- Step-up of basis through pre-residency sales. Recognizing capital gain on appreciated foreign assets before the residency start date, so the U.S. taxes only post-residency appreciation.
- Accelerating income and deferring deductions into the pre-residency period.
- Pre-residency funding of foreign trusts for the immigrant’s family, structured to fall outside the U.S. grantor-trust and throwback-tax rules.
- Multi-tier corporate structuring to defer U.S. taxation on foreign operating income, including Cook Islands and Maltese structures.
- Pre-residency entity restructuring. Converting non-U.S. companies, untangling cross-holdings, and aligning legal title with planning objectives.
- Treaty-based positions under applicable U.S. income tax treaties to claim lower withholding rates and avoid double taxation.
- Estate and gift tax positioning. Using the pre-residency window to make tax-efficient gifts and fund irrevocable trusts before U.S. transfer-tax exposure attaches.
- Private Placement Life Insurance (PPLI). Structured before residency begins, PPLI can let investment assets grow inside a compliant policy wrapper on a tax-deferred basis, with proceeds generally received income-tax-free.
EB-5 and Gold Card investors
EB-5 investors, Gold Card visa applicants, and other investor-visa holders are the canonical pre-immigration tax planning client. The visa fixes the residency start date, and the funding decisions are made in advance. We assist with:
- Source-of-funds documentation, including for crypto-funded investments that present unique evidentiary challenges before USCIS.
- Pre-residency structuring of assets that will not be invested in the U.S. project, including offshore trust funding and entity restructuring.
- Tax optimization of the investment vehicle and the holding entities.
- Responses to USCIS Notices of Intent to Deny (NOIDs) where source-of-funds or lawful-source documentation is challenged.
- Coordination with immigration counsel so the tax structure and the visa filing are aligned.
Exit tax: IRC § 877A
U.S. citizens who renounce, and long-term residents (green card holders for at least 8 of the prior 15 tax years) who terminate residency, may face the federal exit tax. An individual is a covered expatriate if any of three tests is met (2025 thresholds).
Net worth test
Worldwide net worth of $2 million or more on the expatriation date.
Tax liability test
Average annual U.S. net income tax over $206,000 for the five years before expatriation (2025, indexed).
Compliance test
Failure to certify full compliance with U.S. tax obligations for the prior five years on Form 8854.
If covered, the individual is treated as if all worldwide assets were sold at fair market value the day before expatriation. The first $890,000 of net gain (2025, indexed) is excluded, and the remainder is taxed at applicable capital-gains rates. Special rules apply to deferred compensation, tax-deferred retirement accounts, and interests in non-grantor trusts.
A separate gift and bequest tax under IRC § 2801 applies to U.S. recipients of gifts or bequests from covered expatriates, a key consideration when U.S. family members are involved.
Pre-expatriation planning
Where exit-tax exposure is meaningful, the planning window closes on the expatriation date. Before that date, we structure:
- Net worth reduction through tax-efficient lifetime gifts to U.S. and non-U.S. beneficiaries.
- Asset basis management, accelerating recognition of losses and deferring recognition of gains.
- Retirement and deferred compensation elections, weighing lump-sum inclusion against 30% withholding on future distributions.
- Trust restructuring to manage exit-tax treatment of beneficial interests.
- Timing of expatriation relative to the inflation-adjusted thresholds and the five-year look-back.
- Coordination with destination-country counsel so the post-expatriation position is fully understood.
International tax planning for cross-border families
Pre-immigration and exit-tax planning is part of the broader international tax work we provide to U.S. and non-U.S. clients managing assets across jurisdictions:
- Inbound investment structuring for foreign capital deployed into U.S. real estate, private companies, and funds, including FIRPTA planning.
- Outbound structuring for U.S. clients with non-U.S. operations, investments, or family.
- Tax-treaty positioning and withholding-tax minimization.
- IRS reporting compliance for foreign trusts, foreign financial accounts, and foreign assets (Forms 3520, 3520-A, 8938, and FBAR).
- Cross-border estate and gift tax planning.
Why engage counsel early
The single most important variable in both pre-immigration and pre-expatriation planning is timing. Strategies that work two years before the residency or expatriation date may be unavailable two weeks before.
Once the green card is issued, the substantial presence test is met, or Form 8854 is filed, the planning window closes, and the U.S. tax system applies in full.
Watch
Estate-tax exposure and PPLI planning
A second video walkthrough for this page.
Plan before the date that fixes your exposure.
If you are relocating to or from the United States, holding an EB-5 or Gold Card investor visa, or considering expatriation, contact us for a confidential consultation. The decisions you make in the months before your residency or expatriation date determine your U.S. tax exposure for years afterward.