If you are in the United States on an E-2 investor visa, it’s important to understand how your visa status intersects with U.S. tax laws. While the E-2 visa itself does not dictate your tax obligations, your physical presence in the United States can create significant tax consequences.
E-2 Visa Status Does Not Equal Tax Residency
The E-2 visa allows you to live and work in the U.S. to develop and direct your investment, but it does not automatically make you a U.S. tax resident. U.S. tax residency is determined by the Internal Revenue Service (IRS), based on how much time you spend in the country, not the type of visa you hold.
The Substantial Presence Test
One of the primary factors the IRS uses to assess tax residency is the Substantial Presence Test. If you spend 183 days or more in the U.S. in a calendar year, you may be considered a tax resident. This means you could be taxed on your worldwide income, not just income earned in the U.S. The test also uses a weighted formula that considers your presence over a three-year period, so it’s possible to meet the criteria even if you are under the 183-day threshold in a single year.
U.S. Taxation for E-2 Visa Holders
Depending on your tax residency status, the implications differ. If you are not considered a U.S. tax resident, you are typically taxed only on U.S.-source income. However, if you meet the Substantial Presence Test, you are subject to U.S. tax on worldwide income.
Tax Planning Is Essential
Because the E-2 visa does not create fixed tax obligations by itself, understanding your individual circumstances is key. Factors such as your travel history, income sources, and ties to other countries can significantly impact your tax responsibilities. For individuals spending extended periods in the U.S., consulting both an immigration attorney and a tax advisor is strongly recommended. To get started, schedule a consultation with us to discuss your immigration status.
