Moving to the US: Tax Checklist for Your First Year
Moving to the United States is exciting, but it comes with significant tax responsibilities that catch many newcomers off guard. Your first year in the US is important for following tax rules. Mistakes made now can lead to problems later.
This checklist will help you with important tax steps in your first year as a US resident. It will help you avoid common mistakes and make sure you meet all your IRS obligations.
Understanding Your Tax Residency Status
Before diving into specific actions, you need to understand when you become a US tax resident. This isn't always the day you arrive.
The Substantial Presence Test
The IRS uses the substantial presence test to determine your residency status. You're considered a resident alien if you meet these criteria:
You're present in the US for at least 31 days during the current year, AND
You're present for 183 days during a 3-year period that includes the current year and the two preceding years
The 183-day calculation counts:
All days in the current year
1/3 of days in the first preceding year
1/6 of days in the second preceding year
Example: You arrived on July 1, 2024, and stayed through December 31 (184 days). You meet the substantial presence test for 2024, but your residency start date is July 1, not January 1.
Dual-Status Tax Year
Most newcomers experience a "dual-status" tax year - part of the year as a nonresident, part as a resident. This affects how you file and what income you report.
During your nonresident portion, only US-source income is taxable. During your resident portion, worldwide income becomes taxable.
Before You Leave Your Home Country
Smart tax planning starts before you board the plane.
Close Out Home Country Tax Obligations
File final tax returns in your home country
Obtain tax clearance certificates if required
Understand if your home country has a tax treaty with the US (this can save you significant money)
Cancel ongoing tax payment arrangements
Gather Critical Documentation
Bring these documents with you - you'll need them:
Last 3 years of tax returns from your home country
Bank statements showing account balances on your departure date
Proof of income sources (employment letters, business records)
Documentation of assets you're bringing (real estate deeds, investment statements)
Gift or inheritance documentation if you received funds recently
Why this matters: The IRS may question large deposits in your US accounts. Having proof that these funds came from legitimate sources in your home country protects you from scrutiny.
First Month in the US: Immediate Actions
Week 1-2: Get Your Tax Identification Number
You cannot file taxes without a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
If you have work authorization:
Apply for an SSN at your local Social Security office
You'll need your passport, visa, and I-94 arrival record
Processing takes 2-3 weeks
If you don't have work authorization:
You'll need an ITIN instead
Apply using Form W-7 when you file your first tax return
Cannot apply for ITIN in advance - must file with your tax return
Week 3-4: Set Up Your Financial Infrastructure
Open US bank accounts, but be strategic about timing:
If possible, wait until after you receive your SSN
Some banks allow account opening with just a passport, but this can complicate tax reporting
Keep initial deposits moderate and well-documented
Important: If you maintain bank accounts in your home country with a combined balance over $10,000 at any point during the year, you'll have reporting obligations. Learn more about FBAR and FATCA compliance.
Months 2-3: Understanding What You Owe
Determine Your State Tax Obligations
Federal taxes are just the beginning. Most states also impose income tax, and rules vary significantly:
Some states (like Texas, Florida, Nevada) have no income tax
Others tax worldwide income for residents
Your state residency date may differ from your federal residency date
Research your specific state's requirements or consult with a tax professional familiar with your state.
Set Up Estimated Tax Payments (If Required)
If you're self-employed, receive investment income, or your employer doesn't withhold enough tax, you'll need to make quarterly estimated payments.
First-year consideration: You may qualify for exceptions to estimated tax penalties if your income was unpredictable. However, it's safer to pay estimates if you expect to owe more than $1,000.
Quarterly deadlines:
April 15
June 15
September 15
January 15 (of following year)
Track Your Income Sources Meticulously
From your residency start date forward, maintain detailed records of:
All employment income (W-2s, pay stubs)
Self-employment income
Foreign income (you're now taxed on worldwide income)
Investment income from both US and foreign sources
Rental income from property anywhere in the world
If you're self-employed, review available tax deductions for small businesses to maximize your tax savings.
Pro tip: Keep a simple spreadsheet with dates, amounts, and sources. This makes tax filing infinitely easier.
Months 4-8: Ongoing Compliance
Monitor Foreign Account Thresholds
As a US tax resident, you have ongoing reporting requirements for foreign financial accounts. Keep running totals of your foreign account balances.
If at ANY point during the year your combined foreign accounts exceed $10,000, you'll need to file additional forms. Learn more about FBAR and FATCA compliance.
Consider Tax Treaty Benefits
If your home country has a tax treaty with the US, you may be eligible for:
Reduced tax rates on certain income types
Credits for taxes paid to your home country
Exemptions for specific income categories
Special treatment for retirement account distributions
Review the specific treaty between the US and your country, or consult with a tax advisor who understands international treaties.
Keep Proof of Your Arrival Date
Your residency start date determines your tax obligations. Maintain evidence:
Passport stamps
I-94 arrival/departure record (available at cbp.gov/i94)
Flight itineraries
Initial lease agreement or hotel receipts
Months 9-12: Preparing for Tax Filing
Understand the Dual-Status Return
Your first tax return will likely be a dual-status return, which is actually two returns in one:
Form 1040NR (for your nonresident period)
Reports only US-source income
Different deductions and credits apply
Filed for the portion of the year before your residency start date
Form 1040 (for your resident period)
Reports worldwide income
Standard deductions available
Filed for the portion of the year after your residency start date
Special note: You cannot use tax software for dual-status returns. You'll need to file by paper or work with a tax professional experienced in dual-status situations.
The "Choice to be Treated as Resident" Option
In some cases, you can elect to be treated as a resident for the entire year. This might benefit you if:
Your spouse is a US citizen or resident
You had minimal foreign income during your nonresident period
Being a resident for the full year provides better tax treatment
This election is made by attaching a statement to your tax return. Consult with a tax advisor before making this choice - it's irrevocable for that tax year.
Organize Your Documentation
By December, start gathering:
All income statements (W-2s arrive in January, but collect pay stubs now)
Foreign income documentation
Foreign bank account statements showing year-end balances
Records of estimated tax payments made
Receipt for any tax-deductible expenses
Common First-Year Mistakes to Avoid
1. Assuming You're Not a Tax Resident Yet
Many newcomers think they're not US tax residents during their first partial year. If you meet the substantial presence test, you ARE a resident from your arrival date forward.
2. Not Reporting Foreign Income
Once you're a resident, ALL worldwide income is taxable. This includes:
Salary from your previous job (even if earned before moving)
Rental income from property abroad
Interest from foreign bank accounts
Capital gains from selling foreign investments
3. Ignoring State Tax Filing Requirements
Some people file federal returns but forget state returns. Most states require separate filings with their own deadlines and rules.
4. Missing the ITIN Application Deadline
If you need an ITIN and miss the tax filing deadline while waiting for it, you'll face late-filing penalties. Apply early or file for an extension.
5. Not Keeping Adequate Records
The IRS can audit returns up to 3 years after filing (6 years for substantial underreporting). Keep all supporting documentation for at least 7 years.
6. Depositing Large Sums Without Documentation
Large deposits in your US accounts may trigger bank reporting to the IRS. Always have documentation showing the legitimate source of funds transferred from abroad.
Your First-Year Tax Timeline
Here's a month-by-month action checklist:
Month 1 (Arrival):
✓ Document your exact arrival date
✓ Apply for SSN/ITIN
✓ Research your state tax requirements
Month 2:
✓ Open US bank accounts
✓ Set up income tracking system
✓ Determine if you need to make estimated payments
Month 3:
✓ Review tax treaty benefits
✓ Monitor foreign account balances
Month 4-6:
✓ Make first estimated tax payment (if required, by April 15)
✓ Make second estimated payment (if required, by June 15)
Month 7-9:
✓ Make third estimated payment (if required, by September 15)
✓ Start gathering tax documentation
Month 10-12:
✓ Review year-end foreign account balances
✓ Consult with tax professional about dual-status filing
✓ Decide if "choice to be treated as resident" benefits you
✓ Organize all documentation for tax filing
Following January:
✓ Make fourth estimated payment (by January 15)
✓ Receive W-2s and 1099s
✓ File dual-status return (or extension) by April 15
When to Seek Professional Help
Your first year's tax situation is almost always complex enough to warrant professional assistance. Consider hiring a tax professional experienced with international taxation if:
You have income from multiple countries
You own foreign financial accounts or assets
You're self-employed or own a business
You're unsure about your residency status
You have foreign retirement accounts
You received gifts or inheritances from abroad
The cost of professional help is far less than the penalties for incorrect filing.
Resources for First-Year Taxpayers
IRS Publication 519: US Tax Guide for Aliens - your bible for dual-status returns
IRS Publication 901: US Tax Treaties - understand benefits from your home country's treaty
Your state's tax authority website: for state-specific requirements
Tax treaty documents: Available on irs.gov under "International Taxpayers"
Conclusion
Your first year as a US tax resident sets the foundation for all future years. Take the time to understand your obligations, maintain meticulous records, and file correctly.
The US tax system is complex, especially for newcomers navigating dual-status returns and international reporting requirements. But with proper planning and attention to deadlines, you can ensure full compliance while minimizing your tax burden.
Remember: the IRS expects you to understand the rules, even as a newcomer. "I didn't know" is not an acceptable excuse for non-compliance. When in doubt, consult with a qualified tax professional who understands the unique challenges faced by new US residents.
Need help with your first-year tax filing? Welfo specializes in tax services for immigrants and international taxpayers. Contact us for a consultation to ensure you're meeting all your US tax obligations correctly.
Phone: (279) 999-2788
Email: info@welfo.us
Website: welfo.us