Immigration Status and Tax Planning

Using the title “American” as a status for tax purposes isn’t always accurate, especially for international businesses, investments and families. 

In recent Mexico news reports, Hone Maxwell LLP Managing Partner Josh Maxwell said tax planning is essential to understanding how citizenship and residency status affect U.S. tax reporting and regulatory compliance.

“The starting point for evaluating possible tax implications in the United States is to determine if a person is considered American for inheritance, gift and income tax purposes. This answer is not always uniform. Being considered an American not only determines the payment of taxes, but also defines whether it is taxed according to the regulations applicable to U.S. citizens or under the guidelines for non-resident aliens,” Josh said.

Discerning citizenship and residency statuses is made more complex by several factors — and these statuses could evolve and change, which can make long-term tax planning difficult. For example, to be deemed American for tax purposes concerning income taxes, a person would need to be a U.S. citizen, possess a residence card or satisfy the substantial presence criterion, Josh noted.

“Knowing when one considers oneself an American is essential to avoid defaulting on U.S. tax obligations and potentially being subject to severe penalties,” he added.

Read more from Josh about immigration status and tax planning in these prominent Mexico publications:


Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

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