4 ms·

You're right, that's an important thing to consider! Usually you just have the "substantial presence test" to determine if you are a us taxpayer. which is : If

by vmarsy 10y ago

You're right, that's an important thing to consider! Usually you just have the "substantial presence test" to determine if you are a us taxpayer. which is : If you spent >180 days in the US this year, you are considered resident for tax purposes. Otherwise you're non resident. Visa like the Student visa give you a 5 year exemption, where during that time you only have to report money made in the US, it would be great if that entrepreneur parole status had the same rules. I tried quickly looking for keywords (IRS, tax, substantial, resident, non-resident) in those 155 pages of proposal but couldn't find anything. People writing comments to the DHS docket should discuss this.

arcticbull 10y ago
That's not how substantial presence test works exactly. SPT only counts time spent on a qualifying visa type (TN, O1, H1B, L1, etc) and not time spent on F/J/M/Q/A/G, which is I think what OP was alluding to. It's also not >180 days, it's if: QualifyingDaysThisYear > 31 AND QualifyingDaysThisYear + 1/3(LastYear) + 1/6(YearBefore) > 183 For further information: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test https://www.irs.gov/individuals/international-taxpayers/subs...
- vmarsy 10y ago
  you're right, I was making the assumption of a simple case: you're coming as an Entrepreneur, you spend the full year in the US, so 365 > 183 , there's no need to even count further 1/3 and 1/6 as you weren't in the US before this. Running a start-up by spending only a few hundred days a year in the US could be challenging, but if the law allows you to, why not. F/J (Idk anything about M/Q/A/G) are only exempt 5 years. I have friends who did their undergrad and are on their Phd on F-1 who are still on F-1 but are now considered "us resident for tax purposes" because the 5 exempt calendar years are now used up, so they fall back to the 183 days rule.
  - beagle3 10y ago
    Optimizing start day and end day could make a huge difference: Starting on 1/jan and finishing on 31/dec would make you a taxpayer each of the 2..5 years. Starting on 1/jul and finishing on 30/jun, taking strategically timed trips outside the US could easily make the first year, and in some cases the last year, fail the substantial presence test. I always find it surprising that people rarely optimize tax when moving between countries (or for that matter, even when starting a business in their country). Some do, of course, but as a general rule most don't -- even though to a person in technology, taxes are by far the largest expense, often 30-50% of the take home. Especially when being a business owner (much less so as a salaried employee), changing your tax jurisdiction is likely to result in much worse taxation than you'd expect unless you optimize for it. Even when there are tax treaties, you can easily get doubly taxed by differing classification -- e.g. something that is regarded as a capital gains in one jurisdiction but ordinary income in the other, or e.g. preferential treatment to 401K-equiv in one jurisdiction causes PFIC-equiv treatment in the other.

by vmarsy 10y ago

arcticbull 10y ago

That's not how substantial presence test works exactly. SPT only counts time spent on a qualifying visa type (TN, O1, H1B, L1, etc) and not time spent on F/J/M/Q/A/G, which is I think what OP was alluding to. It's also not >180 days, it's if: QualifyingDaysThisYear > 31 AND QualifyingDaysThisYear + 1/3(LastYear) + 1/6(YearBefore) > 183 For further information: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test https://www.irs.gov/individuals/international-taxpayers/subs...

vmarsy 10y ago
you're right, I was making the assumption of a simple case: you're coming as an Entrepreneur, you spend the full year in the US, so 365 > 183 , there's no need to even count further 1/3 and 1/6 as you weren't in the US before this. Running a start-up by spending only a few hundred days a year in the US could be challenging, but if the law allows you to, why not. F/J (Idk anything about M/Q/A/G) are only exempt 5 years. I have friends who did their undergrad and are on their Phd on F-1 who are still on F-1 but are now considered "us resident for tax purposes" because the 5 exempt calendar years are now used up, so they fall back to the 183 days rule.
- beagle3 10y ago
  Optimizing start day and end day could make a huge difference: Starting on 1/jan and finishing on 31/dec would make you a taxpayer each of the 2..5 years. Starting on 1/jul and finishing on 30/jun, taking strategically timed trips outside the US could easily make the first year, and in some cases the last year, fail the substantial presence test. I always find it surprising that people rarely optimize tax when moving between countries (or for that matter, even when starting a business in their country). Some do, of course, but as a general rule most don't -- even though to a person in technology, taxes are by far the largest expense, often 30-50% of the take home. Especially when being a business owner (much less so as a salaried employee), changing your tax jurisdiction is likely to result in much worse taxation than you'd expect unless you optimize for it. Even when there are tax treaties, you can easily get doubly taxed by differing classification -- e.g. something that is regarded as a capital gains in one jurisdiction but ordinary income in the other, or e.g. preferential treatment to 401K-equiv in one jurisdiction causes PFIC-equiv treatment in the other.