Tax and residency

Pre-immigration tax planning

Also called Pre-immigration planning, Pre-arrival tax planning, Pre-residency planning.

Pre-immigration tax planning is the practitioner label for steps an intending immigrant takes before the residency starting date, after which the same steps are taxed as those of a United States resident.

What it decides

No statute or regulation defines the phrase. The window it names is set by 26 CFR 301.7701(b)-4(a) and it closes for good on the residency starting date. It matters because becoming a United States resident brings no step-up in basis: 26 U.S.C. 1001(a) measures gain on a later sale against the historic adjusted basis, so appreciation that built up abroad long before arrival is still taxed by the United States when the asset is sold as a resident. The usual moves are selling or restructuring appreciated holdings, accelerating income and distributions into the pre-residency period, and reviewing foreign entities and trusts. One escape route shuts early: the closer connection exception at 26 U.S.C. 7701(b)(3)(B) is unavailable to anyone with an adjustment of status application pending or who has taken other affirmative steps toward permanent residence, listed non-exhaustively at 26 CFR 301.7701(b)-2(f). This is general information and not tax advice.

Governed by No authority defines the phrase, which is practitioner usage, and the list of usual moves is practice rather than government text. The timing rests on 26 CFR 301.7701(b)-4(a) and 26 U.S.C. 7701(b)(2)(A); the cost of missing the window rests on 26 U.S.C. 1001(a) read with 26 CFR 1.1-1(b); the closing of the closer connection exception rests on 26 U.S.C. 7701(b)(3)(B) and (b)(3)(C) with the non-exhaustive list at 26 CFR 301.7701(b)-2(f).

Where this is explained properly

Pages here that go into pre-immigration tax planning rather than mentioning it.

Related terms

Residency starting dateThe residency starting date is the day a foreign national becomes a United States resident for income tax purposes, so that worldwide income is taxed from that day on: the first day of presence as a lawful permanent resident under the green card test, the first day of presence in the year under the substantial presence test, or the earlier of the two where both tests are met.
Substantial presence testThe substantial presence test is the day count at 26 U.S.C. 7701(b)(3) that makes a foreign national a United States resident for income tax purposes: at least 31 days of presence in the current year, and 183 days across three years counting the current year in full, one third of the first preceding year and one sixth of the second. No green card is needed to meet it.
Worldwide incomeWorldwide income is the rule that a United States resident for tax purposes, including a green card holder whose residence is still conditional, is taxed on income from every source anywhere in the world and not only on income arising inside the United States.
Exit tax and expatriationThe exit tax is the mark to market charge under 26 U.S.C. 877A that treats all property of a covered expatriate as sold at fair market value on the day before they give up US citizenship or long-term US permanent residence.
US estate tax and domicileUS estate tax reaches the worldwide estate of a decedent who was a US citizen or a US domiciliary, and domicile is acquired by living in a place with no definite present intention of later leaving it, which a green card may evidence but does not by itself decide.

Checked against primary sources on 10 August 2026. Back to the glossary