EB5 Investors Magazine Volume 7, Issue 1 - Page 47

EB5INVESTORS.COM 45 associated with participation in the project. Earnings of a non-resident from a U.S. partnership are subject to U.S. tax withholding rules. The IRS requires the partnership to withhold tax, usually at a rate of 37% for 2019. Because the tax is being withheld at the maximum tax rates, the non- resident taxpayer is not required to present a U.S. non- resident tax return. However, in a significant number of cases, this tax rate may be significantly higher than the individual’s corresponding tax rate. Non-resident taxpayers may prepare a U.S. non- resident tax return to request a refund of any tax paid in excess. These taxes may significantly affect the investors return on investment because, in some cases, there may not be any tax due or at least tax rates can be lower between 10% and 30%. PLANNING TO BECOME A U.S. TAX RESIDENT Once an individual has decided to apply for an EB-5 immigrant visa, it is important to begin the tax planning process as soon as possible. The investor will usually need to engage with accountants and attorneys in the U.S. and his or her home country to be able to effectively organize and design to minimize the tax impact of becoming a U.S resident. Some strategies often include liquidation of passive investment companies, transferring financial assets to U.S. bank s, and disposition of certain assets. Additionally, the moment of becoming a U.S. tax resident is a moment where individuals may capitalize on certain tax rules that allow him or her to “step up” the cost basis in appreciated assets, significantly reducing taxes on capital gains when selling the assets. The strategies that apply to each individual vary on the particular circumstances, laws and regulations of a home country and any U.S. tax treaties with that country. COMMON REQUIREMENTS OF U.S. RESIDENTS WITH FOREIGN ASSETS There could be significant tax implications for U.S. residents with foreign assets. Certain documents needs to be filed once an investor becomes a U.S. resident for tax purposes, including form 1040, which is the Individual Income Tax Return Form that is used by citizens or residents of the United States to file an annual income tax return and worldwide income. They also need to file the FBAR (FinCEN) Form 114, which is the Report of Foreign Bank and Financial Accounts. According to the IRS, United States residents or citizens are required to file an FBAR if they have a financial interest in or signature authority over at least one financial account located outside of the United States and the aggregate value of all foreign