Taxation of Persons Under an E-2 Visa

The E-2 "treaty investor" visa is available to individuals making a substantial business investment in the United States, for example, contributing more than 50 percent to a business venture. You can only apply for an E-2 if you come from a country that has a mutual tax treaty with the United States. If you spend time in America under an E-2, you'll have to pay tax on the income you earn while you're there.


Resident Status

An E-2 visa does not make you into a permanent resident or immigrant, as you can only stay in the United States as long as you continue your investment activities. Even so, if you spend enough time in the country, the IRS may qualify you as a resident alien. Determining whether you've spent enough time can become complicated, depending on whether you spent an entire year there or just part of the year, and the Internal Revenue Service (IRS) rules for temporary absences, medical trips and other possible issues.


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If you qualify as a resident alien, you pay taxes on all your income, whether earned in the United States or in your native country. Non-resident aliens pay tax on any American income. If the income isn't connected with an American trade or business you pay 30 percent, unless your home nation's tax treaty mandates a lower rate. If you're a resident alien for part of the year, you pay tax on your non-US income if you receive it while you are a resident, even if you earned the money when you were a non-resident.



If you're paying tax as a non-resident alien, the IRS has tests you can use to determine whether your income is connected to an American trade or business. Qualifying income includes income from assets used in your business; dividends or fees produced by your business; and profits or losses from the sales of American business property or real estate. If you have foreign income linked to your U.S. business, that may also qualify.



The terms of the tax treaty between your home nation and the United States trump federal tax laws, which can affect your tax payments. Most tax treaties, the IRS states, will allow you to tax some of your income at a lower rate and may exclude some income completely. If you're French and working in the United States as a resident alien, for instance, any French Social Security benefits you receive, under the treaty, are exempt from American taxes.


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