Ways for American immigrants to avoid double taxation
1. The meaning of double taxation
In international immigration and international investment, it is often encountered that after paying taxes in the home country, the immigrant country or the investment country also pays taxes. This situation is called "double taxation" in tax law. Whether the double tax burden is heavy or not depends on the tax rate of the home country and the country of immigration or investment.
2. The origin of double taxation
Due to the huge differences in tax systems between China and the United States, the people of the two countries have different tax habits. The American tax system is anthropomorphic, taxing the income of Americans (citizens, green card holders and tax law residents) all over the world, and levying American income on non-residents and foreigners. Although China also adopts a personal tax system, it only taxes its own residents according to the income of the whole world, and levies China income on non-residents. When immigrating or investing in the United States, double taxation is the most serious problem. Because the United States not only taxes Americans in the United States according to world income, but also taxes citizens and permanent residents living overseas. In other words, as long as you get a green card in the United States, even if you only go to the United States to declare once a year, your salary, interest, dividends, rental income and stock trading profits in China must be declared and taxed.
3. Ways to avoid double taxation
In international tax law, there are clauses of "foreign tax credit" or "foreign tax deduction" in individual tax law to avoid double taxation. "Foreign tax credit" means that when the United States declares its income in China, it first calculates the tax payable in the United States, and then uses the tax paid in China to offset the tax. Every tax of 1 USD paid in China can be deducted from the tax of the United States. "Foreign tax deduction" refers to the tax paid in China as an expenditure item, which is deducted from China's income and then multiplied by the US tax rate to calculate how much tax should be paid in the United States. Except income tax, other taxes paid in China can not be used as the deduction of American tax, but can only be counted as expenditure items. When filing personal tax returns, except property tax, other taxes unrelated to business cannot be reported. Income that has been taxed in China can be deducted in the above two ways if it is taxed in the United States. But the specific tax saving method will not be known until it is calculated later.
The global tax revenue in the United States is not as terrible as imagined. As long as we understand the characteristics of American tax burden and ask professionals to plan personal assets as soon as possible, we can avoid double taxation skillfully and reasonably.
Further reading: the rules that American immigrants should follow when buying a house
After the successful approval of American immigrants, don't forget that there are still many things that need to be dealt with as soon as possible after landing in the United States. Perhaps the first thing many people do after immigrating to the United States is to buy a house, but I want to remind you that buying a house in the United States needs to follow the following rules:
Buying a house is more cost-effective than renting. When you immigrate to the United States, you will find that the house price is not very expensive, but the rent and utilities are more expensive, so most people are more willing to buy a house. Moreover, buying a house is exempt from personal income tax. The federal, state and local governments in the United States have many laws and policies to encourage buying a house, providing tax-free and low-interest loans and other preferential policies for buyers.
Check out within 45 days after signing the contract. People who want to buy an American house can contact the real estate agent through the investment immigration company, or check all the information of the house they have chosen online, and then pay the corresponding deposit, so that they can hand over the house within a certain period of time. It will be easier to buy a house in cash. If all goes well, the contract will take effect in 45 days. In the meantime, the buyer can invite a company that specializes in inspecting the quality of the house to inspect the house. If there are quality problems, you can unilaterally terminate the contract. Buyers can check out at any time within 45 days even if they sign up for payment.
Trees outside the house yard can't be cut down. The internal structure of most houses in the United States is made of wood, but it can reach the 8-level seismic standard, and the bricks used for waterproof and heat insulation are only used as external decoration. After buying the land, the buyer can cut down trees to build a house with the approval of the government, but he can only cut down or trim the trees within his own scope. The trees outside the yard cannot be moved because they belong to the state property.
Owning property rights is different from owning residence rights. In the United States, buying a house is divided into buying property rights or having the right to live. Owners can freely buy, sell and rent houses with property rights, while houses with residency rights only have property rights for more than ten years. Rental and sale can only be through the property neighborhood Committee, and the price is much cheaper than the house with property rights.
Buying a house is not linked to American investment immigrants. In the United States, real estate management and immigration mechanisms are separate. Although there is no contradiction between applying for EB-5 investment immigration and buying a house in the United States, the money used by individuals to buy a house cannot be counted as the investment funds of EB-5 immigrants. Foreigners can invest and buy a house in the United States, but they can't get American identity. However, immigrant applicants who apply for a green card can buy a house.
New immigrants can only get loans if they have jobs. First-hand housing prices in the United States are much more expensive than second-hand houses. If you look at a new house, you can buy it before it is finished, otherwise the price will go up when the house is built. No job, no credit, no loan. But as long as you have a job, a stable income, a salary file and no bad record, you can easily get money from the bank.