Cross-Border & Residency

Establish Status Before Anything Else

Mechanism. The US taxes citizens and green card holders on worldwide income by status, and moving abroad changes nothing — globally, that is a rare rule. Holders of other visas become tax residents too if they meet the substantial presence test: at least 31 days in the US this year, and "days this year + prior year ÷3 + year before that ÷6" of at least 183. F/J students and scholars have a limited number of years as "exempt individuals" whose days aren't counted. On the China side: 183 days of residence in a tax year makes you a tax resident, and for individuals without a domicile there is also the "six-year rule" — only after six consecutive years of 183-plus days with no single absence over 30 days does China tax foreign-source income paid from abroad.

Executable. Before touching any account, write down three things: (1) how many days you spent in each country this year (keep entry/exit records — you can't reconstruct this later); (2) your status category and its start and end dates; (3) whether your moving year is a "dual-status year" (part of it non-resident, part resident, with different rules for each). The date you move is itself a tax decision — landing in December versus January can decide whether a year of worldwide income is reportable at all.

Three Reporting Regimes: FBAR, FATCA, CRS

Mechanism. The three get conflated constantly. FBAR (Report of Foreign Bank and Financial Accounts, FinCEN Form 114): if the foreign accounts you own or hold signature authority over exceed $10,000 in aggregate at any point during the year, you report all of them. FATCA (the Foreign Account Tax Compliance Act, Form 8938) is filed with your return, at higher thresholds that vary with filing status and where you live (a single filer in the US: over $50,000 at year end or over $75,000 at any point; thresholds for those living abroad are considerably higher). CRS (the Common Reporting Standard) is not your obligation at all, it's the bank's: over a hundred jurisdictions including China exchange non-resident account information. The US doesn't participate in CRS; it runs its own FATCA agreements. Either way, the account information is already moving.

Executable. Run an account census at year end, and don't count only investment accounts: checking and time deposits, brokerage, payment-app balances, an account you hold signature authority over for a parent, and the cash value of foreign insurance can all count toward the FBAR aggregate. For each, note the institution, the account number, and the highest balance of the year — that last number is the only one you need. Already behind: non-willful cases have official correction procedures, far gentler than being found out, but the eligibility conditions are strict and this is worth paying a professional for once.

The Cost of the Wrong Container: PFICs and Non-Resident Estate Tax

Mechanism. For a US taxpayer, nearly every non-US-registered fund or ETF (domestic Chinese funds, money market funds, Hong Kong funds, and some foreign insurance products with an investment component) is classified as a PFIC (passive foreign investment company). The default "excess distribution" regime allocates gains back across the years you held it, taxes them at each year's top ordinary rate, and adds an interest charge; long holding periods earn no preferential rate, and each fund needs its own annual form. A QEF election can in theory soften this, but it requires the fund to issue a specific annual statement, which foreign funds generally don't. There's a symmetric trap in the other direction: a non-US tax resident holding US-situs assets (US stocks being the obvious case) gets only a $60,000 estate tax exemption at death, and there is no US–China estate tax treaty to invoke.

Executable. The rule is simple enough to tape to a wall: if you're a US taxpayer, build your global allocation out of US-registered funds and ETFs (want China exposure? Buy a US-listed ETF, not a fund bought locally); if you're not a US tax resident, be careful about holding US-situs assets. If you're already in it, don't rush to liquidate — redemption is itself a taxable event; get a PFIC-literate accountant to sequence it. Individual stocks generally aren't PFICs; what causes the damage is almost always a fund-shaped container.

Remittances, Currency, and Cross-Border Families

Mechanism. The two constraints are different in kind. China's side is exchange control: individuals have an annual facilitation quota equivalent to $50,000, and its permitted uses are current-account purposes (study abroad, travel, medical care); buying property or securities abroad is a capital-account use and falls outside that quota, and splitting a transfer across relatives' quotas is a clear violation. The US side isn't control, it's reporting: your own money moved in, or a gift from family, is not income and isn't subject to income tax — but gifts from foreign persons totaling over $100,000 in a year require Form 3520. Pure reporting, with penalties that are anything but light. Two more that get overlooked: if your spouse is not a US citizen, the unlimited marital deduction doesn't apply and deferral at death requires a QDOT (qualified domestic trust); and there is no US–China totalization agreement for social security.

Executable. Large cross-border transfers, in three steps: (1) establish the character first (your own funds repatriated / a gift / income / proceeds from selling property) — character determines the form and the tax; (2) keep the full documentary chain (source of funds, family relationship, tax clearance), because a bank's compliance question may arrive years later; (3) spread it across years and use compliant channels. Exchange rates are a real cost too: convert assets in both countries into one currency before reading your net worth, or "it went up" may be nothing but the currency moving.

One calibration in passing: "save X times your annual income" and similar income-anchored rules of thumb shouldn't be used as a progress benchmark — they systematically overshoot for high earners, high marginal brackets, and equity-heavy pay (pre-tax income overstates what's actually disposable), and across a border the income and tax systems belong to different currencies and different regimes entirely. Use a spending basis instead: net worth ÷ annual spending, computed against the spending and tax system of the country you actually plan to live in. Savings rate = (income − spending) / income, where savings means money not spent and actually invested, not money sitting in a bank.