Immigration Q&A: Parents’ Immigration & Overseas Account Tax Compliance Law

Immigration Q&A: Parents’ Immigration & Overseas Account Tax Compliance Law Q: My parents are going to immigrate to the United States from China and are currently dealing with their property in China. If they...

Q: My parents are going to immigrate to the United States from China and are currently dealing with their property in China. If they want to send money to the United States to buy a house, what are the procedures? How can we be both legal and tax efficient? They have heard from friends that immigrants are not taxed on how much money they bring to the United States for the first time, but they will be taxed the second time. Is this true? Answer: Before obtaining a green card, any legal after-tax income earned overseas does not need to be taxed in the United States. You only need to make normal remittances at the bank. When entering the United States, each person must fill in a form and declare as long as he or she has more than 10,000 US dollars.

Question: I heard that the United States has lost 100 billion US dollars in tax revenue due to overseas accounts, so is it true that the IRS is about to expand globally? Answer: President Obama has enacted a series of laws in the past, the "Foreign Account Tax Compliance Act" (FATCA), which will be implemented in January 2013. Currently, the law has been translated into 388 pages of rules. . The law has three elements. First, it requires foreign banks to find Americans’ accounts and report and disclose their balances, income and withdrawals to the IRS, otherwise the United States will deduct a 30% withhold tax (withhold tax) on the U.S. financial assets held by the foreign bank; second, if Americans have foreign assets exceeding $50,000, they need to declare Form 8938, and underreporting will be subject to a penalty of 40% of the assets; third, this method will plug the loophole that investors used to convert dividends into assets of equivalent value to avoid dividend taxes. After the law was passed, European banks have closed all brokerage accounts of U.S. customers since 2011, including German banks, Commerz Bank, HSBC, ING Group and UBS. Switzerland and Japan already comply with the US Foreign Account Tax Compliance Act, while France, Germany, Italy, Spain and the UK have agreed to cooperate. China's central bank, the People's Bank of China, said China's banking and tax laws and rules do not allow Chinese financial institutions to directly comply with the requirements of the Overseas Account Tax Compliance Law. The IRS will hire 800 new employees to work on international enforcement. The Joint Committee on Taxation estimates that the Foreign Account Tax Compliance Act will generate close to $1 billion a year for the government over the next decade. Many Americans began to feel that the cost of being an American was too high and wanted to give up their American citizenship.