Moving to the United States
A family is moving to the United States for a posting, a new business or for good. From the first day of U.S. residence the United States taxes worldwide income, and reporting duties attach to every foreign account, company, trust and pension. Much can be arranged in the months before arrival that cannot be arranged afterwards. The firm’s attorneys plan the move on the U.S. side and coordinate with the advisers at home.
Law stated as of October 2026
In brief.
- U.S. income tax residence begins on the residency starting date: the first day of presence in the year in which the substantial presence test is met, or the first day as a green card holder (section 7701(b)(2)). Earlier visits in the same year count.
- From that date the United States taxes worldwide income, and the foreign account report (FBAR), Form 8938, Form 3520 for foreign trusts and large gifts, and Form 5471 for foreign companies apply.
- There is no step-up in basis on arrival for the income tax: gains built up before the move are taxed in the United States when realized afterwards. Sales, restructurings and gifts are therefore considered before arrival.
- Estate and gift tax domicile is a separate question of intention. Until it is acquired, gifts of foreign assets and of U.S. securities are outside the U.S. gift tax (section 2501(a)(2)).
- A foreign trust funded within five years before arrival is treated as funded on the residency starting date (section 679(a)(4)); foreign funds become PFICs in U.S. hands; a foreign company may become a controlled foreign corporation.
What is happening
For the income tax a non-citizen becomes a U.S. resident under the green card test or the substantial presence test: 31 days in the current year and 183 weighted days over three years (section 7701(b)(1) and (3)). Residence begins on the residency starting date, which for the substantial presence test is the first day of presence in that calendar year, so that a house-hunting visit in March makes a family that settles in August resident from March, subject to a ten-day exception for days with a closer connection abroad (section 7701(b)(2)). From that date the United States taxes income from every source, in the United States and abroad, and the resident files the foreign account report with FinCEN for accounts whose aggregate value exceeds USD 10,000 (31 CFR 1010.350), Form 8938 for specified foreign financial assets above USD 50,000, or USD 100,000 for a couple (Treas. Reg. § 1.6038D-2), Form 3520 for interests in foreign trusts and for gifts and bequests from abroad above USD 100,000 (section 6039F), and Form 5471 for a foreign company the resident controls, alone or with other U.S. persons, or in which he or she acquires 10 percent or more. The basis of foreign assets does not change on arrival; the gain accrued abroad is U.S. gain when the asset is sold.
Three structures from home behave differently in the United States. A foreign trust the arriving person funded within the five years before the move is treated as if funded on the residency starting date, which makes the settlor its owner for U.S. tax purposes and brings in the foreign trust reporting (section 679(a)(4)). A foreign investment fund is, in U.S. hands, a passive foreign investment company whose income and gains are taxed under a punitive regime unless an election is made (section 1297); the fund is usually sold or exchanged before arrival. A family company abroad in which the arriving person and other U.S. persons hold more than half becomes a controlled foreign corporation, with inclusions of its income and Form 5471 (section 957). For the estate and gift tax the test is domicile, the intention to remain (Treas. Reg. § 20.0-1(b)); a person on a temporary assignment may remain a nonresident for years, while a family that arrives to stay is domiciled on arrival and taxed on its worldwide estate, with the exclusion of USD 15,000,000 in 2026. Gifts made before domicile is acquired are free of U.S. gift tax if the property is not U.S. real estate or tangible property here (section 2501(a)(2)). The home country adds its own rules: exit taxes on substantial shareholdings, and an inheritance tax that may follow its citizens for years after they leave, in Germany for five years (§ 2(1) Nr. 1 b ErbStG), or longer under the German convention’s ten-year rule.
| Before the residency starting date | After it |
|---|---|
| Realize gains on assets with a low basis, where the home country does not tax the sale | Gains accrued abroad are taxed in the United States when realized |
| Make gifts to family members at home, outside the U.S. gift tax | Gifts of worldwide property count against the U.S. exclusion once domicile is acquired |
| Sell or exchange foreign funds | PFIC regime on the foreign funds kept |
| Review trusts and foundations funded in the last five years | A foreign trust funded within five years is treated as funded on arrival (section 679(a)(4)) |
| Classify the family company; consider an election on Form 8832 | Controlled foreign corporation rules and Form 5471 |
| Collect the records of foreign accounts and pensions | FBAR, Form 8938 and Form 3520 reporting each year |
| Settle the home country exit tax and the departure filings | Treaty tie-breaker where both countries claim residence |
What has to happen, in order
- Fix the dates
The visa or green card, the planned moves of each family member and the visits already made: the residency starting date and the estate tax domicile follow from them.
- Inventory the assets abroad
Accounts, funds, companies, trusts and foundations, pensions, real estate and life insurance, with the basis of each and the records the U.S. returns will need.
- Plan the transactions before arrival
Sales and exchanges, gifts, the restructuring of funds and companies, and the review of trusts, each tested against the home country’s tax on the same step.
- Settle the home country side
The exit tax, the final returns, the continuing reach of the home inheritance tax and the treaty position for the first year.
- Prepare the U.S. estate plan
Wills, powers of attorney and health care directives under the law of the state of the new home; the plan for a spouse who is not a citizen.
- Set up the U.S. compliance
The first Form 1040 with the dual-status rules, the foreign account report, Forms 8938, 3520 and 5471, and the treaty disclosures.
- Review after the first year
Domicile, the structures kept and the plan for a return home or for naturalization.
How the firm helps
The firm’s attorneys plan the U.S. side of the move and work with the family’s advisers in the home country, in English, German or French.
- The pre-arrival plan: dates, transactions and structures, with the U.S. and home country effects of each step.
- The U.S. estate plan under the law of the new state of residence.
- The treatment of trusts, foundations, funds and companies brought to the United States.
- The first U.S. returns and the foreign asset reporting, prepared in the firm’s federal tax practice.
- The coordination with the home country adviser on the exit tax and the continuing taxes there.
What documents to prepare for the initial consultation
- The visa approval or green card documents, and the planned dates of the move for each family member
- A record of days spent in the United States in the current and the two preceding years
- Statements of all bank, brokerage and fund accounts abroad
- Documents on companies abroad: articles, shareholder lists, latest financial statements
- Trust deeds, foundation statutes and letters of wishes, with the dates of funding
- Pension and life insurance statements
- Deeds of real estate abroad and purchase records showing the cost
- The last two income tax returns in the home country
- Existing wills, marriage contracts and powers of attorney
Copies are sufficient. The firm sets up a secure portal for the documents and reviews them before the consultation.
The income tax conventions decide residence where both countries claim it, allow a green card holder to be taxed as a nonresident while treaty-resident at home, and allocate the pensions and the investment income of the first years. The estate tax conventions with Germany, France and four other countries contain a domicile fiction for citizens who have lived in the other country for fewer than a set number of years, ten under the German convention.
Describe the move in a few lines
The country of departure, the planned date, the family and the main assets are enough for the firm to say what should be done before arrival and in what order.
