E-2 Visa Taxes and Health Insurance: What Investors Need to Know

Most E-2 investors become U.S. tax residents soon after they move, which means U.S. tax on worldwide income and reporting of foreign accounts and companies. Health coverage is a separate gap: the E-2 gives no access to public programs and there is no employer until your own business hires, so families need a marketplace, private or group plan from day one. This guide gives the general picture; your specific position belongs with a cross-border CPA and a licensed health insurance broker.

Immigration status and tax residency are different things

The E-2 is a nonimmigrant visa. The Foreign Affairs Manual expects you to intend to leave when your status ends, but that has nothing to do with taxes. For federal income tax, a non-citizen is either a nonresident alien or a resident alien, and for E-2 holders the decisive rule is the substantial presence test.

Unlike F-1 students or J-1 researchers, E-2 holders are not “exempt individuals”, so every day you are physically in the U.S. counts.

How the substantial presence test works

You are a resident alien for a calendar year if you were present in the U.S. for:

• at least 31 days in the current year, and
• at least 183 days over three years, counting all days this year, one third of the days last year and one sixth of the days the year before.

Year	Days present	Weight	Counted days
Current year	150	1	150
Last year	90	1/3	30
Two years ago	30	1/6	5
Total			185: resident alien

Someone who arrives in spring and stays usually becomes a resident alien in the year of arrival. The arrival year is often a dual-status year: nonresident before residency starts and resident afterwards, with special filing rules. Elections made on that first return, such as the first-year choice or treating a spouse as a resident to file jointly, can affect later years, so do not leave it to a generic tax preparer.

A closer connection exception (Form 8840) can keep someone who spends fewer than 183 days in the U.S. in the current year a nonresident, which sometimes helps in the year of the visa interview or the first exploratory trips.

What changes when you become a resident alien

Worldwide income

Resident aliens report income from everywhere: salary or dividends from a company at home, rent from property abroad, interest, pensions and capital gains. Two tools prevent double taxation:

• Foreign tax credit. Tax paid abroad on foreign income generally offsets U.S. tax on the same income.
• Income tax treaties. The U.S. has income tax treaties with many E-2 countries, including Japan, Korea, Canada, the United Kingdom, Germany and France. These are different agreements from the commerce treaties that create E-2 eligibility, and some E-2 countries, such as Argentina, Colombia and Singapore, have no comprehensive income tax treaty with the U.S. Treaties also contain tie-breaker rules for people treated as resident by both countries.

Foreign asset reporting

• FBAR (FinCEN Form 114): required when the combined balance of your foreign financial accounts exceeds $10,000 at any time in the year.
• Form 8938: required when specified foreign financial assets exceed thresholds that start at $50,000 for a single filer living in the U.S.
• Form 5471 and related forms: may apply if you own or control a foreign corporation, and U.S. anti-deferral rules can tax some of its income to you each year even if it is not paid out.
• Foreign mutual funds are often treated as passive foreign investment companies with punitive tax treatment.

Penalties for missing these forms can exceed the tax itself, so review your foreign holdings before the first U.S. return.

Timing asset sales and restructuring

Gains on assets you sell after becoming a resident can be taxable in the U.S. Many investors review property sales, company restructuring and family gifts with advisers in both countries before arrival. Check your home country’s exit or departure rules at the same time.

How your E-2 company and your pay are taxed

The entity you choose determines how business income reaches your return. A single-member LLC passes income to Schedule C, a multi-member LLC files a partnership return, an S corporation is only possible once all owners are U.S. tax residents, and a C corporation pays its own 21% federal tax. Our E-2 LLC or corporation guide compares them.

You may pay yourself a salary, take distributions, or both. Salary runs through payroll with Social Security and Medicare withholding; pass-through profit is generally subject to self-employment tax. A documented salary is also helpful at E-2 renewal, because it shows you are actively running the business. Remember that the principal investor can work only for the E-2 enterprise: see the E-2 work rules.

The U.S. has totalization agreements with many treaty countries, which can stop you paying into two social security systems at once and can combine credits for benefits.

State and local taxes

State tax can be a bigger number than many investors expect.

State group	Personal income tax	Examples
No broad personal income tax	None on wages and business income	Texas, Florida, Nevada, Tennessee, Washington, Wyoming, South Dakota, Alaska
Moderate	Flat or graduated, mid single digits	Many Midwest and Southeast states
High	Top rates above 10%	California, New York (plus New York City tax)

States also differ on franchise and gross receipts taxes, sales tax and property tax. Choose the business location for market reasons first, but include taxes in the comparison. Our E-2 cost guide covers the visa and setup budget.

Health insurance options for E-2 families

There is no universal public coverage for working-age residents in the U.S., and E-2 holders generally do not qualify for Medicaid or Medicare. You have four realistic routes.

Option	Who can use it	Pros	Watch out for
ACA marketplace plan	E-2 holders, as lawfully present nonimmigrants	Covers pre-existing conditions; standard benefits	Enroll during open enrollment or within the special period after moving; subsidy rules are changing
Group plan through your company	Businesses with at least one eligible employee who is not an owner or owner’s spouse, in most states	Premiums deductible; family coverage	Not available while the company is only you and your spouse
Private off-marketplace or short-term plan	Anyone	Quick to start, useful as a bridge	Short-term plans can exclude pre-existing conditions and cap benefits
International expatriate plan	Depends on insurer	May continue from home country	Check U.S. network, deductibles and whether it covers routine care in the U.S.

Marketplace coverage and subsidies

E-2 investors, spouses and children are lawfully present, so they can buy marketplace plans. Moving to the U.S. normally opens a special enrollment period, so you do not have to wait for open enrollment. Premium tax credits depend on income and immigration category, and Public Law 119-21 (2025) narrows credit eligibility for many lawfully present nonimmigrants, with key changes taking effect in 2026 and 2027. Plan your budget on the assumption that you may pay full price, and have a licensed broker confirm current rules for your state.

Budgeting

Unsubsidized family premiums vary widely by state, age and plan level. In our clients’ experience, a mid-level plan for a family of four often costs more than $1,500 a month before dental and vision. Put a realistic figure into your personal budget and the business plan’s owner compensation.

Children, school and college

Children in E-2 status attend public school free of charge and can enroll at U.S. colleges. Whether they pay in-state tuition depends on each state’s residency rules for nonimmigrants. Children lose derivative status at 21: see E-2 spouse and children.

Checklist before you move

1. Engage a cross-border CPA who works with both countries.
2. Map your expected days in the U.S. for the arrival year and the next two years.
3. Decide on asset sales, company restructuring and gifts before residency starts.
4. Choose the entity type with tax residency and the S corporation rule in mind.
5. Set up payroll before you or anyone else is paid.
6. Arrange health coverage that starts on your arrival date.
7. List foreign accounts and companies for FBAR, Form 8938 and Form 5471 review.

Next steps

We are not tax advisers or insurance brokers. We build the E-2 business with these points in view, from entity selection to the first payroll, and coordinate with your CPA and your attorney. Use the E-2 investment calculator to size your budget, then book a consultation to plan the move.