Trump’s Immigration Gold Card: Potential Tax Implications for Foreign Individuals

At a glance

• The main takeaway: President Trump recently shared plans to create a new, $5 million visa for high-income-earning foreign individuals who want to become United States citizens.
• Impact on you and your business: If the “gold card” program is approved by Congress and other standard federal channels, it could raise new tax questions and implications for affluent individuals relocating to the U.S.
• Next steps: Aprio’s Global Mobility Specialists are staying abreast of news about the gold card program as it unfolds. If you want to learn more about how this program could impact you and your business, schedule a consultation with our team.

The full story:

Recently, President Trump shared his intention to create a new type of visa for high-income-earning individuals interested in moving to the United States. This visa — which the new administration has dubbed the “gold card” — would give foreign individuals and their families a pathway to citizenship and permanent residency in the U.S. for the price of $5 million.

To be clear, the establishment of a new immigration program will need to be approved and vetted through standard federal channels, including Congress. It’s also worth noting that a similar (cheaper) visa already exists in the form of the EB-5 visa program, which generally requires a financial investment and the creation or preservation of a minimum number of jobs. (It’s important to clarify that the EB-5 program is different than the new program President Trump is proposing.)

If the “gold card” program is approved, its tax implications will be significant for affluent foreign individuals looking to become U.S. citizens. Here is a preliminary breakdown of the key details you need to know.

Tax impacts of Trump’s immigration “gold card”

U.S. citizens living abroad and green cardholders are considered U.S. residents for tax purposes and are therefore required to pay U.S. taxes on their worldwide income. Consequently, green cardholders may be subject to tax in their home country; foreign tax credits and treaty benefits may be available to help them mitigate double taxation.

Although it is still unclear how this tax treatment would change for “gold cardholders,” one could assume they would be subject to regulatory compliance under the Foreign Account Tax Compliance Act (FATCA). FATCA requires foreign financial institutions to report information about financial accounts held by U.S. taxpayers.

Currently, under FATCA green cardholders are required to report the following assets to the IRS (note that each comes with its own set of taxation requirements):

• Closely held businesses set up in their home country (even if the entity is not technically doing business in the U.S., it still may be subject to U.S. tax)
• Foreign partnerships
• Foreign-owned trusts

Additionally, green cardholders and foreign individuals relocating to the U.S. also need to file the Foreign Bank and Financial Accounts (FBAR) report on an annual basis. This report discloses important details about individuals’ worldwide bank accounts to FinCEN and is critical to maintaining legal and regulatory compliance.

At this moment, it is unclear if and how Trump’s gold card program would address these existing tax requirements and how they may evolve over time.

Expatriation tax implications for gold cardholders

Aside from President Trump’s initial announcement, we do not know much about the inner workings of the gold card program, much less if the administration and the federal government will treat it like a typical green card. Regardless, all foreign individuals relocating to the U.S. should be aware of expatriation (or “exit”) tax liabilities, which currently are imposed on green cardholders.

The exit tax is intended for long-term U.S. residents who have been green cardholders for a minimum of eight of the prior 15 years and who are formally relinquishing their citizenship or green card through immigration. These individuals may be subject to an exit tax and are required to complete Form 8854 with their final U.S. tax return.

By filing Form 8854, the taxpayer would determine if they will be taxed on the fair market value of their total worldwide assets, including cash properties, 401(k) plan assets, investments, and pensions.

As we mentioned above, we don’t know if gold cardholders will be subject to the exit tax. In the meantime, you can read our previous article on the topic to bring yourself up-to-speed and learn more about the most meaningful exit tax implications should you be required to adhere to them. Aprio’s Global Mobility Specialists will be staying on top of all the updates related to this, as well.

The bottom line

As the gold card program makes its way through the proper federal channels, you can count on Aprio’s Global Mobility team to keep you informed of all important changes that may affect you and your tax situation.

If you have any questions about the gold card program or want to learn more about its potential implications, schedule a consultation with a member of our team today.

Related Resources

Aprio’s Global Mobility Services

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