The best tax planning for a move to the United States happens before the move. Once you are a U.S. tax resident, the U.S. taxes your income from everywhere in the world, and many choices that were simple the day before become expensive or impossible. Here is how we walk families through it.
When do I become a U.S. tax resident?
For income tax, on the earlier of two dates (IRC §7701(b)):
- Green card test: generally the first day you are in the U.S. as a lawful permanent resident.
- Substantial presence test: at least 31 days this year, and at least 183 days counting all of this year’s days, one-third of last year’s and one-sixth of the year before. Someone here 150 days in each of three years counts 150 + 50 + 25 = 225 days and meets the test; someone here 100 days a year counts 150 and does not.
Under the substantial presence test, residency usually starts on the first day of presence that year. The year of arrival is normally a dual-status year: nonresident before, resident after. Students on F, J, M or Q visas and certain teachers and trainees do not count their days for a period. Someone who meets the test with fewer than 183 days this year and keeps a closer connection to a foreign country can file Form 8840.
Is estate tax residency the same thing?
No. Gift and estate tax look at domicile — living in the U.S. with no present intention of leaving. A new green card holder is usually also domiciled here, and from then on the U.S. taxes gifts and estates on worldwide assets, with a $15,000,000 exemption in 2026. Before that, as a non-domiciled person, only U.S.-situs assets are exposed. That gap is the planning window.
Should I sell appreciated assets before I move?
Often, yes. The U.S. does not reset your cost basis when you arrive. If you sell a Shanghai apartment or Chinese shares after becoming a resident, the U.S. taxes the whole gain, including the part that built up before you came, and the foreign tax credit only covers Chinese tax actually paid on it. Selling, or selling and buying back, before residency starts can reset the basis. The same thinking applies to bonuses and dividends you can take earlier.
Deductible expenses run the other way: if you can choose, incur them after residency starts, when they reduce U.S. tax.
Can I give assets to my children before I move?
While you are not domiciled in the U.S., gifts of foreign assets — cash in a foreign bank, foreign real estate, foreign company shares — are not subject to U.S. gift tax. After domicile, the same gifts count against your lifetime exemption. If the children are already U.S. persons, they will report large gifts from you on Form 3520, but they pay no tax on receiving them.
Gifts to a spouse who is not a U.S. citizen are limited: the marital deduction does not apply, and only $194,000 a year is excluded in 2026 (IRC §2523(i)).
What about a foreign trust set up before the move?
This is where many plans fail. If you transfer property to a foreign trust and become a U.S. resident within five years, IRC §679(a)(4) treats you as transferring that property to the trust on the day your residency starts. If the trust has any U.S. beneficiary, you become its owner for income tax — you are taxed on its income and must file Forms 3520 and 3520-A. Trusts meant to stay outside your U.S. taxes generally need to be settled more than five years ahead, or designed so that a non-U.S. family member is the grantor. And keeping benefits or control can still pull the assets into your estate (IRC §§2036–2038).
Does converting U.S. assets into foreign assets help?
Only for someone who will not become U.S.-domiciled. Once you are domiciled here, foreign and U.S. assets alike are in your estate. For a family member who stays abroad — say a parent who will never live here — keeping their investments outside U.S.-situs assets matters a great deal.
I own a company in China. What changes?
If U.S. persons own more than 50% of a foreign company, it becomes a controlled foreign corporation, and U.S. owners of 10% or more may be taxed each year on some of its profits even if nothing is paid out (Subpart F and GILTI rules), and must file Form 5471. Chinese mutual funds and many wealth-management products are passive foreign investment companies (PFICs) with punishing default rules and Form 8621 filings. Restructuring these before residency starts is usually far cheaper than after.
Does the U.S.–China tax treaty help?
For some income, yes — for example, it limits withholding on dividends and interest to 10% and gives limited exemptions to visiting students (Article 20) and teachers and researchers (Article 19). It does not cover estate or gift tax; there is no U.S.–China estate tax treaty. And the treaty’s saving clause means it rarely protects a U.S. resident from U.S. tax on Chinese income.
What filings start once I am a resident?
- Form 1040 on worldwide income (due April 15; extension to October 15).
- FBAR for foreign accounts over $10,000 combined, and Form 8938 above its thresholds.
- Form 3520 for foreign gifts over $100,000 and foreign trust activity.
- Forms 5471, 8865 and 8621 for foreign companies, partnerships and funds.
- California residents also file California returns on worldwide income. California has no estate or gift tax.
How early should we start?
Ideally a year or more before the green card interview or the planned move, and at least five years ahead for any foreign trust. Bring a list of assets, how each is owned, its cost, and where each family member lives and plans to live.
What about retirement accounts and pensions abroad?
Foreign pensions and retirement accounts are often not recognized as tax-deferred plans under U.S. law, so their annual growth may be taxable or reportable once you are a U.S. resident, unless the treaty provides otherwise. Some are reportable on Forms 3520 or 8938, and some may be PFICs. Review each plan before you move, because the answer varies by country and plan type.
Does a green card change anything compared with a visa?
Yes. A green-card holder is a U.S. income tax resident from the start date, regardless of days present, and remains one until the card is formally surrendered or revoked. Long-term holders who later give up the card may face the expatriation rules. Visa holders become residents only by meeting the days-present test, unless an exception applies.
Sources: IRC §§679(a)(4), 951–965, 1291–1298, 2036–2038, 2523(i), 6038, 6039F, 7701(b); Treas. Reg. §20.0-1(b); Rev. Proc. 2025-32 (2026 amounts); U.S.–China Income Tax Treaty, arts. 19–20. As of November 2026.
