Moving to the United States: When does one become a US tax resident?
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Moving to the United States is often presented as a business decision: opening a subsidiary, developing the American market, getting closer to customers, raising funds, recruiting locally.
But for a French executive, another question arises very quickly: at what point does the American tax administration consider you to be an American tax resident?
The answer doesn't depend solely on your visa, your address, or your intention to stay. It depends on specific, sometimes rigid, rules that can change your situation sooner than expected.
And this shift changes a lot of things.
Once you become a US tax resident, you enter a system where your worldwide income may have to be declared in the United States: salaries, dividends, rental income, capital gains, financial accounts, investments held in France or elsewhere.
choosing where to locate its subsidiary in the United States
For an entrepreneur who keeps assets, a company or income in France, the issue must therefore be anticipated before leaving.
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Visa, Green Card, taxation: three different topics
The first source of confusion often stems from the visa.
A visa gives you the right to enter, live, or work in the United States under certain conditions. It does not, on its own, determine your tax residency.
A French entrepreneur, for example, can leave the US with an E-2, L-1, or other immigration status. This does not automatically mean they are a US tax resident from day one. Conversely, they can become a tax resident even without a Green Card, simply by spending enough days in the United States.
US tax residency is based primarily on two tests:
The Green Card Test
The Substantial Presence Test
These two mechanisms must be looked at separately.
The Green Card Test: Tax residency by status
The first case is quite straightforward.
If you obtain a Green Card, you are generally considered a US tax resident from the moment you are a lawful permanent resident of the United States.
It may seem obvious, but timing matters.
An executive who obtains their Green Card mid-year may have a unique tax year. They may be a non-resident U.S. citizen for part of the year and a U.S. tax resident for the other part.
This situation must be handled with precision, as it can change the income to be reported in the United States and how to complete the US tax return.
For a founder or executive, this point becomes even more sensitive if the year of departure coincides with:
a dividend distribution;
the sale of securities;
the exercise of stock options;
the collection of rental income in France;
a restructuring between a French company and an American company.
The problem isn't just where you live. The real issue is when your US tax liability actually begins.
The Substantial Presence Test: The Trap of the Number of Days
The second test is often less well understood.
The Substantial Presence Test is based on the number of days physically spent in the United States. It doesn't just look at the current year; it also takes into account a portion of the days spent in the United States in the two preceding years.
To complete this test, you generally need to:
have been present in the United States for at least 31 days during the current year;
reaching 183 days according to a calculation formula weighted over three years.
The calculation takes into account:
100% of the days of attendance in the current year;
1/3 of the days of attendance from the previous year;
1/6 of the days of attendance from the second previous year.
Simple example
➡️ You have passed:
140 days in the United States this year;
120 days last year;
90 days ago two years ago.
➡️ The calculation gives:
140 days for the current year;
40 days for the previous year;
15 days for the second previous year.
Total: 195 days.
Therefore, you can be considered a US tax resident even if you have not spent 183 days in the United States during the current year.
This is precisely where many executives go wrong. They think they're reasoning in terms of calendar years: " I haven't spent six months in the United States, therefore I'm not a US tax resident. "
The American calculation is more subtle. Repeated back-and-forth trips may be enough to tip the situation.
Leaders are particularly exposed
The topic rarely concerns only "traditional" expatriates. It also concerns French executives who are gradually developing their business in the United States.
Initially, they make a few exploratory trips. Then they extend their stays. They open a local office. They spend more time in Miami, New York, Austin, or San Francisco. They meet with clients, investors, and partners. Yet they keep their French company, their family home, their bank accounts, and their income in France.
On paper, the situation still seems “between two countries”.
From a tax perspective, it may have already changed.
It is often in this grey area that errors appear: not through intent to defraud, but because the manager does not track their attendance days with sufficient rigor.
An approximate schedule is not enough. You have to follow the entry and exit dates, previous years, visa statuses, any exceptions, and the concrete consequences on the declarations.
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The year of arrival may be a hybrid year
Another difficulty arises from the year of departure.
When you move to the United States during the year, you may be considered a non-US resident for part of the year and then a US tax resident for the other part.
This is what is called a dual-status taxpayer situation.
In practical terms, this means that the year must be divided. The applicable taxes before and after the date of US residency are not necessarily the same.
For an expatriate employee, the subject is already technical. For a manager, it can become strategic.
Why? Because the year of departure is often the year in which several events overlap:
change in remuneration;
implementation of an American payroll system;
dividends paid by the French company;
re-invoicing between companies;
income retention in France;
buying or renting a home in the United States;
partial transfer of commercial activity to the American market.
Misinterpreting the tax calendar can lead to inconsistencies between the French and American tax returns.
Becoming a US tax resident does not make France disappear.
Another important point: becoming a US tax resident does not mean that France disappears from the subject.
A manager who leaves France may remain taxable in France on certain French-source income: property income, capital gains, salaries related to an activity carried out in France, dividends where applicable, or other income covered by the applicable tax treaty.
The question must therefore be addressed from both perspectives.
From the American perspective: Have you become a US tax resident? On what date? What income must be declared?
From a French perspective: have you become a non-resident for tax purposes in France? Do you still have taxable income in France? What forms or declarations are still required?
Between the two: how to avoid inconsistent double declarations, omissions, or processing errors?
This is where international support becomes essential. The issue is not just tax-related. It also touches on executive compensation, group structuring, the flow of financial resources, and the documentation of decisions.
Questions to ask yourself before leaving
Before setting up a business in the United States, an executive should at least answer a few simple questions:
What will my actual move-in date be in the United States?
How many days have I already spent in the United States this year and the two previous years?
Does my visa have a particular impact on the attendance calculation?
Have I obtained or applied for a Green Card?
What income will I continue to receive in France?
Do I have bank accounts, investments, life insurance policies, securities or real estate in France?
Will my remuneration be paid by the French company, the American company, or both?
Are there any dividends, bonuses, capital gains or asset transactions to anticipate before departure?
These questions must be asked before the first US declaration. Ideally, they should be addressed even before installation.
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Plan ahead before the calendar decides for you
US tax residency is not simply an administrative decision. It can be triggered by a status, a Green Card , or an accumulation of days of presence .
For a French leader, the main risk is addressing the issue too late .
When revenues have already been paid, dividends distributed, intercompany flows established, and declarations expected on both sides of the Atlantic, the room for maneuver is reduced.
Moving to the United States can be an excellent business decision. But this decision must be accompanied by a clear tax plan.
At Blendy, we support executives and companies structuring their development between France, Canada and the United States, particularly during an American establishment or a change of tax residence.
Before leaving, recruiting locally or transferring part of your business to the USA, one question deserves to be asked very early on: from what date will the United States consider you a US tax resident?
The answer can change your personal taxation, your remuneration, your reporting obligations and how your group should be structured.
Sources:
With Blendy , International chartered accountant: take advantage of all the benefits of digital accounting and international financial advice to accelerate your finance process and grow your business.
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