~ Immigration Tax Planning ~
Gift Taxes
A person who has a U.S. domicile is subject to gift tax on gifts of any property regardless of where it is located. While certain transfers are exempt from gift tax (such as the first $10,000 of gifts to the same individual each year or certain gifts made directly to a service provider for education or medical purposes), and each resident has a lifetime credit against the first $650,000 of transfers, once this amount is exceeded gift tax is imposed on all gifts at rates that range from 37% to 55%.
On the other hand, a person who does not have a U.S. domicile is generally subject to U.S. gift tax only with respect to gifts of property located within the United States, even if that person is a U.S. resident for income tax purposes. This gives the person much more flexibility to rearrange their worldwide assets to meet changing conditions.
Individuals with large holdings outside the United States often find it necessary to reallocate assets among members of their family based upon business needs, changes in local law, family matters (births, deaths, marriages), forced heirship and other considerations. The threat of a large U.S. gift tax liability based upon transfers of non-U.S. property can seriously disrupt this planning. For this reason, the avoidance of U.S. gift taxes is another reason not to become a U.S. domiciliary.