Interactive Pre-Immigration Tax Planning Guide

Pre-Immigration Tax Planning: Not an Option, a Necessity

The U.S. taxes its residents on their worldwide income and assets. A single strategic move before immigrating can result in tens of millions of dollars in tax savings. The chart below starkly illustrates the difference between Mr. X, who planned ahead, and Mr. Y, who did not.

Hover over the chart to see detailed amounts.

When Do You Become a U.S. Taxpayer?

The moment you become a 'resident' for U.S. tax purposes, your worldwide income becomes subject to U.S. tax. This happens if you get a Green Card or pass the 'Substantial Presence Test' below. Enter your estimated days of stay to check your potential residency status.

Substantial Presence Test (SPT) Calculator

Days in Current Year

Days in Last Year

Days in Year Before Last

Core Strategies for Tax Optimization

Discover the most powerful tax-saving strategies you can execute before becoming a U.S. resident. These strategies can dramatically reduce your future tax burden in both income tax and gift/estate tax domains.

Strategy 1: Step-Up in Basis

This is the most critical strategy to eliminate U.S. tax on pre-immigration asset appreciation. Just before becoming a U.S. resident, you can sell and repurchase assets (or perform equivalent transactions) to "step up" their cost basis to the current fair market value for U.S. tax purposes. The chart below shows the difference in taxable gains with and without this strategy.

Strategy 2: Gifting While a Non-Resident

U.S. gift tax is based on "domicile," not just residency. Before you establish a permanent home in the U.S. (i.e., while you are a non-domiciliary), you can take advantage of significant tax benefits. This is a once-in-a-lifetime window of opportunity.

Before Immigration (Non-Domiciliary)

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Exempt: Korean real estate, Korean stocks, bank deposits, i.e., all non-U.S. assets.
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Exempt: U.S. company stocks, U.S. bank deposits, i.e., U.S. intangible assets.
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Taxable: U.S. real estate, artwork located in U.S., i.e., U.S. tangible assets.

Conclusion: An unparalleled opportunity to transfer most financial assets to family gift-tax-free.

After Immigration (U.S. Domiciliary)

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Taxable: All worldwide assets, including all Korean property, stocks, and deposits.
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Benefit: A very high lifetime gift & estate tax exemption ($13.61M in 2024) applies.

Conclusion: Assets that would have been exempt are now subject to tax. While the exemption is high, the tax can be substantial for large estates.

Pre-Immigration Planning & Action Timeline

Successful tax planning requires systematic time management. Use the timeline below to see what you need to prepare and execute at each stage of your immigration journey. Click each item to expand for details.

12+ Months Before Immigration

Inventory all worldwide assets (cost basis, current value).
Assemble an advisory team of U.S./Korean tax experts.
Set basic strategic direction (step-up, gifting, etc.).

6-12 Months Before Immigration

Obtain appraisals for real estate, private stock, etc.
Analyze and divest complex assets like foreign funds (PFICs).
Design and establish foreign trusts if needed.

3-6 Months Before Immigration

Execute "step-up in basis" transactions (sell/repurchase).
Complete major gifts (leveraging non-resident status).
Accelerate income recognition (bonuses, stock options).

1 Month Before Immigration

Consolidate and simplify foreign financial accounts.
Organize and securely store all transaction documents.

Post-Immigration Compliance: FBAR & FATCA

Once you become a U.S. resident, you must report your foreign financial assets annually. FBAR and FATCA are the main reporting requirements, and failure to comply can lead to massive penalties. Simplifying your accounts before you immigrate is key to reducing compliance risk.

Item	FBAR (Report of Foreign Bank and Financial Accounts)	FATCA (Foreign Account Tax Compliance Act)
Main Purpose	Prevent financial crimes	Prevent offshore tax evasion
Reporting Threshold (Single)	Aggregate value of all foreign accounts exceeds $10,000 at any time during the year.	Living abroad, total assets over $200,000 at year-end or $300,000 at any time.
Reported Assets	Financial 'accounts' like bank, securities accounts.	Broader than FBAR; includes accounts plus non-account assets like stock, partnership interests.
Filed With	Dept. of Treasury (FinCEN) electronically.	IRS, attached to your income tax return.
Willful Non-Filing Penalty	Greater of $100,000 or 50% of account balance.	Up to $60,000 and potential criminal charges.