Your family may have a visa, an employment start date, or a green card interview. The next question is what changes for taxes, and from which day.
Federal tax residence depends on immigration status and on the days spent in the United States.
Dilendorf Law Firm PLLC represents individuals and families preparing to become U.S. tax residents. Our legal work proceeds alongside the client’s accountants in the United States and abroad.
183 daysDays counted over three years that can make a person a U.S. tax resident.
$10,000Foreign accounts above this total must be reported each year.
5 yearsA trust set up abroad in the 5 years before moving can be treated as set up on the move date.
Source: 26 U.S.C. § 7701; 31 C.F.R. § 1010.306; 26 U.S.C. § 679.
When Do I Actually Become a U.S. Tax Resident?
Federal income tax residence generally begins under the green card test or the substantial presence test. (26 U.S.C. § 7701)
The green card test applies when a person is a lawful permanent resident, a green card holder, during the calendar year. This test concerns federal income tax residence, not estate or gift tax domicile. (IRS, Publication 519)
The substantial presence test counts days in the United States over three calendar years. For 2026, a person needs at least 31 days in 2026 and a weighted total of at least 183 days. (26 U.S.C. § 7701)
The weighted total includes all days in 2026, one-third of the days in 2025, and one-sixth of the days in 2024.
2026Every day counts as a full day.
2025Every 3 days count as 1.
2024Every 6 days count as 1.
Source: 26 U.S.C. § 7701.
For example, 150 days in 2026, 60 days in 2025 and 60 days in 2024 count as 150 + 20 + 10 = 180 days. That is below 183, so the test is not met.
Certain days are excluded by statute or regulation. They include days as a qualifying student, teacher, trainee or diplomat, days a medical condition prevents departure, and certain days in transit. (26 C.F.R. § 301.7701(b)-3)
An exclusion applies only when its requirements are met. The residency starting date is generally the first day counted under the substantial presence test, or the first day in the United States as a green card holder. (26 U.S.C. § 7701)
Green card
Resident from the first day in the U.S. as a green card holder.
Days in the U.S.
Resident after enough days: 31 this year and 183 counted over three years.
Source: 26 U.S.C. § 7701; IRS, Publication 519.
Read more: Pre-Immigration Tax Planning
Does the United States Re-Value My Assets When I Arrive?
No. Your assets keep their original purchase price for U.S. tax purposes when you move.
U.S. tax measures a gain from what you paid for an asset, called its “basis.” The law sets basis at cost, with some adjustments, such as for improvements. (26 U.S.C. § 1012; IRS, Publication 551)
So growth in value before you move is not wiped out. If you later sell the asset as a U.S. resident, that earlier growth can be taxed too. (IRS, Publication 551)
$100,000What you paid for an apartment abroad years ago.
$300,000What it is worth on the day you move to the U.S.
$250,000U.S. gain if you sell it later for $350,000. It is measured from $100,000, not $300,000.
Source: 26 U.S.C. § 1012; IRS, Publication 551.
This is why records of the purchase price, purchase date and any improvements matter. They show the basis the IRS will use. (IRS, Publication 551)
There is one exception, and it matters only later. If a long-term green card holder gives up the green card, the exit tax uses the value on the day U.S. residence began. It does not apply to an ordinary sale. (26 U.S.C. § 877A)
Read more: Pre-Immigration and Exit Tax Planning
What Must Be Reported Without Tax Due?
Foreign accounts, assets, companies, and trusts can require reporting even when no tax is due.
The Foreign Bank Account Report covers certain relationships with foreign financial accounts. (31 U.S.C. § 5314)
Form 8938 covers specified foreign financial assets. Form 5471 can require information about certain foreign corporations, including ownership, financial data, and related transactions. (26 U.S.C. § 6038D; 26 U.S.C. § 6038)
Form 3520 covers certain foreign-trust transactions. Missing or incomplete reports can result in substantial penalties. (26 U.S.C. § 6048; 26 U.S.C. § 6677)
FinCEN Form 114 (FBAR)
Foreign bank accounts
Report if all accounts together top $10,000 at any time.
Form 8938
Foreign investments
Report if they top $50,000 at year-end or $75,000 during the year (single filer in the U.S.).
Form 5471
Foreign companies
Report certain ownership of a foreign company. Missing it can cost $10,000.
Form 3520
Foreign trusts and gifts
Report trust dealings and certain gifts from abroad, even with no tax due.
Source: IRS, Comparison of Form 8938 and FBAR Requirements; IRS, Instructions for Form 5471; IRS, Instructions for Form 3520; IRS, International Information Reporting Penalties.
Read more: FBAR, FATCA and Offshore Compliance
Are My Foreign Company and My Foreign Funds Treated the Same Way?
No. U.S. tax law has one set of rules for a company you own abroad and another for a foreign investment fund.
A company you own abroad. If Americans control the company, the law calls it a controlled foreign corporation, or CFC. Its U.S. owners may have to pay U.S. tax on part of its income, even if the company pays them nothing. (26 U.S.C. § 951A)
Since 2026, this rule has a new name: “net CFC tested income.” It used to be called “global intangible low-taxed income.” (Pub. L. 119-21)
The owners report the company each year on Form 5471. (IRS, Instructions for Form 5471)
A foreign investment fund. A fund abroad can be a passive foreign investment company, or PFIC. That means it earns mostly investment income or holds mostly investment assets. (IRS, Instructions for Form 8621)
When PFIC shares are sold at a gain, the tax can be much higher than usual. The gain is spread over the years the shares were held, taxed at the top rate for each year, and interest is added. (26 U.S.C. § 1291)
PFIC shares are reported on Form 8621. (IRS, Instructions for Form 8621)
I Already Pay Tax at Home. Why Would I File in the United States?
The federal filing question follows U.S. residence and income rules, even when another country also imposes tax.
A person meeting a federal income tax residence test generally reports worldwide income. That can include wages, interest, dividends, rents, pensions, business income, and gains. (26 C.F.R. § 1.1-1)
Foreign tax paid does not automatically eliminate a U.S. filing duty. Any available relief must satisfy its own conditions and must be properly claimed. (IRS, Publication 519)
Differences in entity classification, income source, and recognition dates can affect whether foreign and U.S. taxes line up.
What Relief Does U.S. Law Provide?
Federal law provides specific forms of relief, each with separate eligibility and filing rules.
Tax paid abroad can count
The foreign tax credit can lower U.S. tax by the income tax already paid abroad.
A tax treaty may help
An agreement between the U.S. and another country can change some rules.
Some days do not count
Days as a student, or days illness keeps a person here, can be left out of the count.
Closer ties abroad
Some people under 183 days can stay nonresidents, but not after starting a green card application.
Source: 26 U.S.C. § 901; 26 U.S.C. § 6114; 26 C.F.R. § 301.7701(b)-3; 26 C.F.R. § 301.7701(b)-2.
None of these apply automatically. Each one has conditions and must be claimed on the tax return. (IRS, Publication 519)
Is the Estate Tax Question the Same as the Income Tax Question?
No. Federal estate and gift tax residence uses domicile, not the income tax day-count tests. (26 C.F.R. § 20.0-1)
Domicile generally requires living in a place with no definite present intention to leave. Immigration status is relevant, but it does not alone decide domicile. (26 C.F.R. § 25.2501-1)
A person who is neither a U.S. citizen nor U.S.-domiciled can still owe federal estate tax on specified property located in the United States. (IRS, Estate Tax for Nonresidents Not Citizens of the United States)
Federal gift tax reaches a nonresident noncitizen’s gifts only when the property is located in the United States, and it does not apply to their gifts of intangible property such as shares. (26 U.S.C. § 2501; 26 U.S.C. § 2511)
In practice, that leaves U.S. real estate and tangible personal property located in the United States. Tangible property is physical property, such as artwork or jewelry. (26 U.S.C. § 2511)
Income tax
Depends on the green card or days in the U.S.
Estate and gift tax
Depends on where a person lives with no plan to leave.
Source: 26 U.S.C. § 7701; 26 C.F.R. § 20.0-1; 26 U.S.C. § 2511.
What Should Be Reviewed Before the Residency Date?
The review should identify the applicable tests, affected property, entity classifications, and reporting duties.
Residency date
Apply the green card and substantial presence tests to immigration records and travel days (26 U.S.C. § 7701).
Asset basis records
Identify cost, purchase date, improvements, distributions, and ownership history under the general cost-basis rule (IRS, Publication 551).
Foreign funds and insurance products
Determine whether the PFIC classification and Form 8621 rules apply (IRS, Instructions for Form 8621).
Foreign companies
Determine whether CFC rules, current inclusions, or Form 5471 reporting can apply (26 U.S.C. § 951A).
Foreign trusts
A foreign trust funded within five years before the residency starting date can be treated as funded on that date; Form 3520 reporting can follow (26 U.S.C. § 679).
Gifts
Identify the donor’s citizenship and domicile and the property’s legal character and location (26 C.F.R. § 25.2501-1).
First-year reporting
Identify applicable income returns, FBAR filings, FATCA disclosures, and entity or trust forms (IRS, Comparison of Form 8938 and FBAR Requirements).
How We Help
Dilendorf Law Firm PLLC represents individuals and families preparing to become U.S. tax residents. Our legal work proceeds alongside the client’s accountants in the United States and abroad.
- Review of when U.S. tax residency will begin.
- Review of the foreign assets, companies, funds and trusts the U.S. rules will reach.
- Identification of first-year reporting obligations, including FBAR and FATCA.
- Coordination with the client’s accountants, who prepare and file the returns.
- Source-of-funds documentation for EB-5 investors.
- Planning under the expatriation rules for clients who later leave the United States.
Contact us before the residency date. That date fixes which rules apply to everything that follows.
Dilendorf Law Firm PLLC · New York · Nationwide Representation · 212.457.9797 · dilendorf.com
Frequently Asked Questions
How far before the move should this be looked at?
The review should occur before the first possible federal tax residency date. The time needed depends on the number of assets, entities, trusts, and accounts.
Preparation means identifying the applicable rules and collecting records. It does not require changing an entry date, sale date, gift date, or ownership arrangement.
I only visit the United States. Can I still become a tax resident?
Yes. A visitor can meet the substantial presence test without holding a green card (26 U.S.C. § 7701).
For 2026, the test uses days in 2026, 2025, and 2024 with statutory weighting. Excluded days drop out only when a specific exception applies (26 C.F.R. § 301.7701(b)-3).
My spouse is not a U.S. citizen. Does that change anything?
Each spouse’s federal income tax residence is tested separately under the residence rules (26 U.S.C. § 7701).
Citizenship and residence can also affect reporting. This article does not address the special transfer-tax rules for a non-citizen spouse.
We set up a trust abroad last year. Does that matter?
It can. Foreign-trust ownership, transfers, and distributions can create federal tax and information-reporting consequences (26 U.S.C. § 6048).
A trust funded within five years before the residency starting date can be treated as funded on that date (26 U.S.C. § 679). Foreign trusts are covered separately.
What if we have not filed for past years?
First determine whether a return or information report was required for each year. The answer depends on residence tests, income, accounts, assets, entities, and trusts.
Different forms carry different filing rules and consequences (IRS, International Information Reporting Penalties). The options are covered in IRS Voluntary Disclosure for Foreign Assets and Crypto.
Does my state have its own rules?
Yes. State residence, domicile, filing, and tax rules can differ from federal rules and must be reviewed separately.
What happens if we give up the green card later?
Separate federal expatriation rules can apply when a long-term lawful permanent resident ends that status (26 U.S.C. § 877A).
A long-term resident is a green card holder in at least eight taxable years within the fifteen-year period ending with that year (26 U.S.C. § 877). This article does not address the exit tax or Form 8854.
Should I speak to a lawyer or to an accountant?
Both roles can be relevant. A lawyer analyzes legal status, entity and trust classification, reporting duties, and federal tax consequences.
The client’s accountants calculate the tax and prepare and file the returns. Coordination keeps the facts consistent across legal documents and tax reporting.
When are the FBAR and Form 8938 due?
The FBAR is due April 15, with an automatic extension to October 15 that does not need to be requested (FinCEN, New Due Date for FBARs).
Form 8938 is attached to the income tax return (IRS, Comparison of Form 8938 and FBAR Requirements). A calendar-year 2026 return is due April 15, 2027 (26 U.S.C. § 6072).
Who is Max Dilendorf?
Max Dilendorf is a New York attorney and the founder of Dilendorf Law Firm PLLC. His practice includes digital assets, cybercrime, and cross-border wealth matters.
He has been active in the crypto industry since 2017.
Attorney Advertising. Prior results do not guarantee a similar outcome. This is not legal or tax advice. Figures are stated for the tax year indicated.
Sources
[1] U.S. Government Publishing Office, 26 U.S.C. § 7701 – Definitions. https://www.govinfo.gov/link/uscode/26/7701
[2] Legal Information Institute, Cornell Law School, 31 CFR § 1010.306 – Filing of reports. https://www.law.cornell.edu/cfr/text/31/1010.306
[3] Legal Information Institute, Cornell Law School, 26 U.S. Code § 679 – Foreign trusts having one or more United States beneficiaries. https://www.law.cornell.edu/uscode/text/26/679
[4] Internal Revenue Service, Publication 519 (2025), U.S. Tax Guide for Aliens. https://www.irs.gov/publications/p519
[5] Legal Information Institute, Cornell Law School, 26 CFR § 301.7701(b)-3 – Days in the United States that are excluded. https://www.law.cornell.edu/cfr/text/26/301.7701(b)-3
[6] Legal Information Institute, Cornell Law School, 26 U.S. Code § 1012 – Basis of property—cost. https://www.law.cornell.edu/uscode/text/26/1012
[7] Internal Revenue Service, Publication 551 (Rev. December 2025), Basis of Assets. https://www.irs.gov/publications/p551
[8] U.S. Government Publishing Office, 26 U.S.C. § 877A – Tax responsibilities of expatriation. https://www.govinfo.gov/link/uscode/26/877A
[9] Legal Information Institute, Cornell Law School, 31 U.S. Code § 5314 – Records and reports on foreign financial agency transactions. https://www.law.cornell.edu/uscode/text/31/5314
[10] U.S. Government Publishing Office, 26 U.S.C. § 6038D – Information with respect to foreign financial assets. https://www.govinfo.gov/link/uscode/26/6038D
[11] Legal Information Institute, Cornell Law School, 26 U.S. Code § 6038 – Information reporting with respect to certain foreign corporations and partnerships. https://www.law.cornell.edu/uscode/text/26/6038
[12] Legal Information Institute, Cornell Law School, 26 U.S. Code § 6048 – Information with respect to certain foreign trusts. https://www.law.cornell.edu/uscode/text/26/6048
[13] Legal Information Institute, Cornell Law School, 26 U.S. Code § 6677 – Failure to file information with respect to certain foreign trusts. https://www.law.cornell.edu/uscode/text/26/6677
[14] Internal Revenue Service, Comparison of Form 8938 and FBAR requirements. https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
[15] Internal Revenue Service, Instructions for Form 5471 (Rev. December 2025). https://www.irs.gov/instructions/i5471
[16] Internal Revenue Service, Instructions for Form 3520 (Rev. December 2025). https://www.irs.gov/instructions/i3520
[17] Internal Revenue Service, International information reporting penalties. https://www.irs.gov/payments/international-information-reporting-penalties
[18] Legal Information Institute, Cornell Law School, 26 U.S. Code § 951A – Net CFC tested income included in gross income of United States shareholders. https://www.law.cornell.edu/uscode/text/26/951A
[19] Congress.gov, Text – H.R.1 – 119th Congress (2025-2026), enacted as Pub. L. 119-21. https://www.congress.gov/bill/119th-congress/house-bill/1/text
[20] Internal Revenue Service, Instructions for Form 8621 (Rev. December 2025). https://www.irs.gov/pub/irs-pdf/i8621.pdf
[21] Legal Information Institute, Cornell Law School, 26 U.S. Code § 1291 – Interest on tax deferral. https://www.law.cornell.edu/uscode/text/26/1291
[22] Legal Information Institute, Cornell Law School, 26 CFR § 1.1-1 – Income tax on individuals. https://www.law.cornell.edu/cfr/text/26/1.1-1
[23] U.S. Government Publishing Office, 26 U.S.C. § 901 – Taxes of foreign countries and of possessions of United States. https://www.govinfo.gov/link/uscode/26/901
[24] U.S. Government Publishing Office, 26 U.S.C. § 6114 – Treaty-based return positions. https://www.govinfo.gov/link/uscode/26/6114
[25] Legal Information Institute, Cornell Law School, 26 CFR § 301.7701(b)-2 – Closer connection exception. https://www.law.cornell.edu/cfr/text/26/301.7701(b)-2
[26] Office of the Federal Register, eCFR, 26 CFR 20.0-1 – Introduction. https://www.ecfr.gov/current/title-26/chapter-I/subchapter-B/part-20/subject-group-ECFR35852b717cc1e9d/section-20.0-1
[27] Legal Information Institute, Cornell Law School, 26 CFR § 25.2501-1 – Imposition of tax. https://www.law.cornell.edu/cfr/text/26/25.2501-1
[28] Internal Revenue Service, Estate tax for nonresidents not citizens of the United States. https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax-for-nonresidents-not-citizens-of-the-united-states
[29] U.S. Government Publishing Office, 26 U.S.C. § 2501 – Imposition of tax. https://www.govinfo.gov/link/uscode/26/2501
[30] U.S. Government Publishing Office, 26 U.S.C. § 2511 – Transfers in general. https://www.govinfo.gov/link/uscode/26/2511
[31] Legal Information Institute, Cornell Law School, 26 U.S. Code § 877 – Expatriation to avoid tax. https://www.law.cornell.edu/uscode/text/26/877
[32] Financial Crimes Enforcement Network, New Due Date for FBARs. https://www.fincen.gov/news/news-releases/new-due-date-fbars-0
[33] U.S. Government Publishing Office, 26 U.S.C. § 6072 – Time for filing income tax returns. https://www.govinfo.gov/link/uscode/26/6072