Ever since the Foreign Account Tax Compliance Act (FATCA) was passed in 2010, we’ve been in an era of greater transparency, which has allowed the IRS to aggressively pursue people living in America with assets based outside of the US, that have either gone unreported or only partially reported on tax returns. Failing to understand all the rules and regulations of cross-border investment can have disastrous consequences, so here are some big mistakes to make sure you avoid…
Letting Complexity Deter your Plans
The US has a very complex tax system compared to many other developed nations, and foreign nationals coming to the country can often find themselves overwhelmed by all the little nuances they have to wrap their heads around. This can often result in them not investing at all. This keeps countless people from the massive potential of a diversified and well-managed portfolio. You should have every opportunity to make your capital work as hard as you have to gain it in the first place, so don’t let the complexity of the US tax system hold you back. Invest some time in learning about the basics of investing and retirement planning in the US, and network with people who have more experience in it.
Getting the Wrong Visa
It’s a big mistake to plan out your relocation thinking that there’s only one type of visa available. You have a range of different options here, and it’s essential to choose the visa that will give you the best possible support to your investment goals. For example, if you were to find a lawyer to help with your EB-5 investment immigration visa, you’ll have all the benefits and help that are given to other US residents, along with various others. Your access to moving freely in and out of the US, both for personal and business use, will be completely unrestricted, and you’ll have permanent green cards for you, and everyone else in your family. You can even obtain full citizenship following five years of residence. While getting approved for this kind of visa can take some doing, it’s still important to research all your options, and pursue residency documents that will mesh neatly with your plans.
Failing to Leave Assets in American Investment Accounts, Even When Leaving
In a lot of cases, leaving your financial assets in the US can be very advantageous for non-American investors. If you’re not a citizen, your assets will not be subject to capital gains tax. Your interest and dividends will be subject to a withholding tax, with a rate of up to 30%. However, this can often be reduced to 10 to 15 percent by way of a treaty. Remember, this withholding tax can often be recovered in the form of a tax credit in your country of residence. The overall effect is that foreign investors, even after returning to their home countries or another country, can carry on benefiting from the generous investment environment in the US. Greater options, low brokerage fees, and greater liquidity are all here for the taking!