The Intersection Of Immigration and Personal Finances – Visa Status

The intersection of immigration and finances. 

Your planning needs to take into consideration your immigration status – this was one of the themes of my recent presentation at the NAPFA spring conference (National Association of Fee-Only Financial Planners).

A lot of advisors had no idea about this – understandable, which is why you want to ask lots of questions about this before you choose to work with anybody.

So let’s jump into it – The intersection of immigration and finances.

Immigration Status And Foreign Roots

When you have roots and assets outside the US, your planning is way more than investment management, and a mistake here can be fatal (taxes, immigration status, etc.) – up to future generations.

So when you are comparing fees, please keep this in mind: it’s not about the cheapest option, but it’s the ones that take your status into consideration.

Before you move from one status to another, consider the financial implications, not just the immediate ones but also the future ones.

And by the way, your immigration status is not your tax residency status.

Four Immigration Status – Addressing Three

There are 4 distinct immigration statuses, but we work with three, and you are most likely in one of these. Each of these statuses impacts your finances differently.

Non-immigrant Visas

There are about 80 non-immigrant visa types, divided into about 20 categories. The main categories are.

Work Visas – The Intersection

H-1B, TN, O, L-1, E-3, etc. – The characteristics of each make a huge difference in how we plan. For example, if you are on an E-3 visa, your spouse can work.

But the visa is not dual-intent, so you want to work with a good immigration lawyer if pursuing the green card.

Please understand what happens with each of these visas if you lose your job.

This graphic provides an excellent overview of the different visa types.

More reading Kitces – Investing Challenges For Work Visa holders.

G-4 Visa

The G-4 visa is granted to foreign nationals who come to the US to work for International organizations such as the World Bank and the IMF.

You are a non-resident for tax purposes, but may still be required to file US taxes on other US income.

You are exempt from paying taxes on US wages and are therefore not eligible to use the Substantial Presence Test to determine the number of days spent in the country.

For estate planning purposes, you could be considered to have domicile in the US.

E-1/E-2 – Treaty Trader or Investor visas

The E-1 visa is granted to a foreign national who comes to the US to engage in international trade. E-2 is for those coming to the US and planning on investing a certain amount of money.

This assumes that the US and that country have a trade treaty agreement in place.

They don’t lead to a green card holder, so the planning on this visa needs to take this into consideration, that they are somewhat temporary from that point of view.

They do allow dependents to accompany them and, more importantly, find jobs, completely unrelated to the primary visa holder’s job. This is such a huge planning opportunity for the spouse, as the only limit is their ability.

The duration can be up to 5 years, but it depends on the home country’s treaty with the US.

Student visas: F-1/J-1.

Student visas are granted to international students and typically do not allow them to work off-campus without special permission.

But once they graduate and obtain an OPT visa, they can work, and with the STEM-OPT visa, they can work for up to 3 years.

Since the OPT is considered to be an extension of the F-1 visa, you still have to wait 5 years before using the SPT test to confirm US tax residency.

This is a fantastic time to take care of and organize your overseas assets, if any, and to ensure there are no tax mines or at least we get ahead of them.

Green Card Holder

This is the permanent residency, which is truly supposed to be permanent. Leaving the US for extended periods without special permission can result in the revocation of the green card and continued US tax obligations. 

I find it interesting that when people claim the difference between the green card and the US passport is that the green card holder cannot vote.

It’s way more than that; there are real tax implications in estate planning, including estate taxes.

For example, a US citizen can give their non-US citizen spouse (green card holder, non-immigrant visa holder) up to $194,000 this year before gift taxes kick in.

If both are US citizens, they can give each other unlimited amounts per year, with no tax implications.

Naturalized Citizen

If you are naturalized citizen, your technical financial planning is more or less the same as a natural born citizen.

Differences come in based on the following.

Does the other country allow dual citizenship? If dual citizenship is not an option, how does the home country treat you?

For example, India does not allow dual citizenship, but has “Overseas citizen of India”

What kind off assets do you have in the other country?

The cultural aspects is completely different, depending on where you grew up.

Where do you plan to be when you retire?

So it’s fair to say your planning will be completely different.

FAQs On The Intersection Of Immigration And Finances

      How is estate planning impacted by immigration status?

        Every aspect is impacted. For example estate taxes are determined by domicile. A big part of your domicile is determined by your immigration status.

  In this post, we answer the question, What is English For Domicile?

  More reading :  Do I Need a Trust If On A Work Visa?

                              Overseas Guardians For Immigrant Families.

How Elgon Financial Advisors Can Help You With Your Planning.

Financial and tax planning when you have to start with your immigration status is completely different.

What works for you in one visa status may not work in the next. If you are looking to build long-term wealth in the US, while dealing with your immigration status, we’d be very happy to walk this journey with you, as we help you avoid tax minefields.

As a fee-only Fiduciary advisor, our interests are aligned with yours, and everything we do is geared towards your interests.