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Accounting and Tax Advisory

  As I always say to my clients, “planning is much more than a science, it's an art”. The official move to the United States requires lot's of caution, financial, tax and immigration planning, preferably BEFORE DECIDING TO LEAVE THE COUNTRY.

  There are many cases of Brazilians (first) arriving in Uncle Sam's land and (then) start looking for answers on how to adjust their immigration visa, or what the tax implications are in the United States and also in Brazil, etc. As i always tell them, it might be a little late, remember? We plan, then act! 

  This conversation needs to be broken down into two parts: Accounting and Tax Advisory and Immigration Advice.

  This article refers to income tax, taxes, legacy and inheritance and can be divided into the following categories:

  • income tax (in life). Objective calculation.

  • and the complex part of patrimonial legacy (in case of death). Subjective calculation.

  The formula for calculating income taxes is objetiva, black on white. The first calculation is the Green Card Test. Receiving the Green Card, in theory, we are tax residents for the purposes of the same.

  The second calculation refers to the “Substantial Presence Test”.

  If in 2016 I stayed in the country for 183 days, I became a tax resident from the date of my entry stamped on my passport, with some exceptions to the rule. However, the calculation goes a little further. Now imagine that I stayed 120 days in 2016, 120 days in 2015 and 120 days in 2014. Did I become a tax resident? This calculation is retroactive to the last 3 years.

The formula is as follows: number of days in the current year + 1/3 of the days of the previous year, + 1/6 of the days of the penultimate year, where the sum of these last 3 years cannot exceed 183 days.

See below:


120 Days in 2016

120 Days in 2015

120 Days in 2014

Current Number of Days

= 120 days

(+ 1/3 of 2015 days) = 40 days

(+ 1/6 of 2014 days) = 20 days

Total Sum of 3 Years

180 days

  The sum of days is 180 days, so in the example above I would not become a tax resident for income tax purposes. Obviously there are exceptions and for that you need to consult with an accountant,  CPA.

  In the part now referring to the famous inheritance tax upon death, the specter of lack of knowledge generates great doubts on the part of clients who come to us.

  This is a more subjective test, where it is necessary to demonstrate to American Immigration the permanent “INTENT” to reside in the United States. Several topics are analyzed here, such as: where do children study? where is the main house? where were the plans for the eventual death made? where are most of the assets located? That is, again, an extremely subjective calculation.

  Let's imagine that, for the purposes of calculation, we died with a green card in hand where it was proved by the American tax authorities that my main house intention is the United States. Now, yes, I am taxed worldwide on my global equity in the maximum table of up to 40% federally. It is a progressive calculation, which can reach more than 40%, because, as I said, it is a progressive table. This is federal tax only, depending on where we live. In NY, for example, we still pay state and municipal taxes, reaching almost 70%.

  There are, of course, “gift” exceptions and exclusion limits for this calculation. In general terms, each green card holder, like each American citizen, has a limit of exclusion of these taxes in the amount of $12,060,000 adjusted annually for inflation, that is, up to over $24,000,000 (husband and wife) in wealth can be protected through proper  Planning, with professionals who understand what they are doing and the compolexity of it.


Needless to say how complex the entire system is, in December 31st of 2025 Under the current tax law, the higher estate and gift tax exemption will “Sunset”. Starting January 1, 2026, the exemption will return to $5.49 million adjusted for inflation. With inflation, this may land somewhere around $6 million. Do you see why you must plan? 

  Imagine that I am a member of a family with $100,000,000 (One Hundred Million Dollars) of Equity and I leave Brazil permanently to legally reside in the United States, I get my green card without knowing these details. Imagine how much future taxes are at stake? Believe it or not, the number of people who come to us saying they didn't know all of the details is alarming. Back to my example, now I have a big problem on my hands: if I die today, my heirs can protect roughly $12,000,000 from my estate, the balance would be transferred to a Q-dot (Qualified Domestic Trust) for the benefit of my wife and hers but ultimately millions of dollars will be due to US government just because proper planning lacked! 

"That's why, I always say, each case is a case to be thought about in a coherent way, knowing the goals of each family, plans for the future, permanent residence, etc."

  As I always joke with my clients, being rich is a privilege, but rushing to get a green card with a lot of wealth can be a very expensive “mistake” for our heirs.

  Nothing like consulting professionals specialized in the area.

  Check out the interview with my great friend João Gomes, CPA of Accounting Ally, where he explains with simplicity all the details of the text above. The income tax part is very complex, so I recorded this interview.

  Hope you like it!

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