U.S. Taxation 101 for New EB-5 Green Card Holders

Welcome to the United States! As a new Green Card holder through the EB-5 Immigrant Investor Program, you gain permanent residency, but this status also brings immediate U.S. tax obligations. Understanding these requirements is crucial to maintaining compliance and avoiding penalties.

The Fundamentals: Residency and Worldwide Income

The most significant shift upon receiving your Green Card is the application of U.S. tax law. Unlike many other countries, the U.S. taxes based on citizenship and residency status, not just on where income is earned.

Resident Alien Status for Tax Purposes

For federal income tax purposes, a Green Card holder is generally considered a U.S. tax resident from the date the Green Card is issued. This means:

• You are taxed on your worldwide income, regardless of where you live or where the money is earned.
• You must file Form 1040 annually if your gross income meets the filing threshold.

Key Tax Forms You Will Encounter

Familiarize yourself with these essential forms:

1. Form 1040: U.S. Individual Income Tax Return.
2. Form W-2 or 1099: Reporting income received from U.S. employment or investments.
3. FBAR (FinCEN Form 114): Required if the aggregate value of your foreign financial accounts exceeds $10,000 at any point during the year.
4. Form 8938 (FATCA): Statement of Specified Foreign Financial Assets, required if foreign asset values exceed higher thresholds.

Tax Implications of Your EB-5 Investment

Your initial EB-5 capital investment and the subsequent operations of the New Commercial Enterprise (NCE) have specific tax considerations.

Taxation of Investment Returns

Any income generated from your investment—such as dividends, interest, or capital gains from the eventual sale of your stake—is taxable in the U.S. as worldwide income.

"The initial capital contribution itself is generally not a taxable event, but the profits derived from that investment are."

Understanding Pass-Through Entities

Many EB-5 projects are structured as partnerships or LLCs, which are often pass-through entities. This means:

• The NCE does not pay federal income tax itself.
• Profits or losses are "passed through" directly to you, the investor, via a Schedule K-1.
• You must report this income on your personal Form 1040, even if the funds are not distributed to you yet.

Foreign Bank Account Reporting (FBAR and FATCA)

Compliance with foreign asset reporting requirements is non-negotiable for Green Card holders.

FBAR vs. FATCA

While both report foreign assets, they serve different purposes and have different thresholds:

FBAR (FinCEN) Focuses solely on monetary accounts. Must be filed if the aggregate balance of all foreign accounts exceeds $10,000 at any time during the year. FATCA (Form 8938) Broader scope, including foreign trusts, stock, and financial interests. Thresholds are significantly higher and depend on filing status (e.g., single filers living in the U.S. generally start at $50,000 on the last day of the year).

Failure to file these forms can result in severe civil and potentially criminal penalties. Consult a tax professional familiar with international reporting requirements.

Conclusion and Next Steps

Becoming a U.S. tax resident is a significant change. While the EB-5 process focuses on investment, the tax obligations surrounding your permanent residency are immediate and comprehensive. It is highly recommended that new Green Card holders seek specialized advice to establish a compliant tax filing strategy, especially concerning the reporting of pre-immigration assets and ongoing foreign income generated by your EB-5 investment.