The E-2 nonimmigrant classification offers foreign investors from treaty countries the opportunity to be admitted to the United States upon investing a substantial amount of capital in a US bona fide enterprise.
In this article, you will discover whether E-2 visa holders pay taxes.
Do E2 Visa Holders Pay Taxes? – The Verdict
As long as an E-2 visa holder meet the conditions established by the United States Citizenship and Immigration Services (USCIS), he or she can indefinitely apply for renewals of status. During their stay, E-2 visa holders must file tax returns with the Internal Revenue Service (IRS) on all qualifying income.
The tax amount due is determined by the tax status of the E-2 investor. The IRS distinguishes foreign E-2 investors between two categories for tax purposes – resident aliens and non-resident aliens.
The federal agency relies on the “substantial presence test” to determine each investor’s tax status. In essence, the core of the test is to determine the amount of time spent by a visa holder in the United States in the past three years.
Resident aliens must pay taxes on all the income generated in the United States and internationally. Conversely, non-resident aliens only pay taxes on their US-based income. Ultimately, the tax status determines the extent to which an E-2 investor must pay taxes in the United States.
Understanding the intricate rules involved in this process is considerably challenging and requires the guidance of a well-versed immigration attorney.
What Factors Determine How Much an E-2 Visa Holder Must Pay to the IRS?
The total amount of taxes paid on the income generated by an E-2 visa holder depends on several factors. The first is the existence of specific tax treaties between the US and the treaty investor’s country of origin. USCIS defines a “treaty country” as a country:
- “With which the United States maintains a treaty of commerce and navigation
- With which the United States maintains a qualifying international agreement, or
- Which has been deemed a qualifying country by legislation”
If there is an agreement between the two governments, the rates applied to the applicant’s case can be lower than the average US tax rate. The second factor depends on the sources of income of an E-2 visa holder.
Resident aliens must pay US taxes on all their income – whether generated nationally or internationally. Non-resident aliens are exempted from US taxes on sources of income originating from abroad.
Determining the tax rate applied to the income of an E-2 visa holder requires a full assessment of the details of his or her immigration status and travel itinerary.
It is interesting for E-2 visa holders to consult with a legal advisor to find international tax strategies tailored to one’s case. This way, it is possible to lower the tax burden through legal and ethical methods.
Generally, optimized tax strategies require treaty investors to structure their businesses and income sources to lower the total amount due on taxes.
Waste No Time with Uncertainty – Immediately Contact Immigration Attorney Romy B. Jurado
A well-versed legal advisor in US immigration and tax laws, Attorney Romy B. Jurado willingly wants to help you succeed. Contact us today by calling (305) 921-0976 or emailing [email protected] to find the best E-2 tax strategy for your case.
