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An EB-5 visa is also known as an investor visa. The EB-5 visa program, which has become very successful, originated with the Immigration Act of 1990 to encourage foreign investors to bring their money to the U.S. to create jobs and help grow our economy. In return these investors are fast-tracked for a green card and permanent U.S. residency. Interestingly, last year, 80 percent of the EB-5 visas were granted to Chinese nationals.
Non-U.S. citizens can apply for an EB-5 visa if they can prove that they will be investing at least $500,000 in a new business that will create at least ten jobs in the U.S., either directly or indirectly, over a two-year period.
The American government makes 10,000 EB-5 visas available annually to help encourage new businesses and employment. In return, the visa holders (sometimes known as "alien investors") receive permanent U.S. resident status.
In addition to the required job creation, applicants must be able to show that their commercial enterprise will increase regional productivity, capital investment in the U.S. and/or exports from our country.
Half of the 10,000 EB-5 visas granted annually are set aside for enterprises located in an approved "Regional Center." The U.S. Citizenship and Immigration Services designates a Regional Center as a public or private agency, entity or organization that creates jobs and promotes economic growth. These centers focus on a specific region of the country, with a particular emphasis on high unemployment areas.
The EB-5 visa program offers numerous advantages for those who qualify. One key incentive for many applicants is the opportunity for their children to be educated in the U.S. However, there are also reporting and tax obligations for EB-5 visa holders. When they become U.S. residents, their tax obligations will likely change. Resident aliens, which most EB-5 visa applicants are, are taxed just on income earned in the U.S. However, as U.S. residents, they must pay state and local taxes on income they've earned from anywhere in the world.
That's why it's important not to become a resident sooner than you intend to. That may sound strange. However, the government has something called a Substantial Presence Test. The formula is rather complicated, but basically, if the investor has been in the U.S. for at least 183 of the days measured over the past three years, he or she is considered a resident for tax purposes. These days can include vacations, business trips and any other time spent in the U.S. That's why it's essential to keep track of it.
It is also essential to seek experienced legal, financial and tax advice from professionals who are knowledgeable about the EB-5 visa program and the laws and regulations to which these visa holders must adhere. If you are planning to become a resident through the EB-5 program, the sooner you seek professional guidance, the lower your chances will likely be of accidentally running afoul of the law. People who do not file all of the proper tax forms can find themselves facing financial penalties and, in some cases, criminal charges.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified EB-5 Visa lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local EB-5 Visa attorney to discuss your specific legal situation.