Moving Money to the U.S. as a New Immigrant: Taxes and Reporting Rules

(UNITED STATES) New immigrants sending money into the United States now face a tighter mix of tax, banking, and reporting rules. The biggest change is the 1% federal remittance tax on certain cash-based transfers, alongside strict disclosure duties for foreign accounts and foreign assets.

For a New Immigrant settling in the United States, these rules shape the first months of financial life. A transfer that looks simple at the counter can trigger extra costs, filing duties, or later tax trouble if records are weak.

The first decision: how the money enters the country

The transfer method now matters as much as the amount. Exchange rates often differ by 1% to 3% between providers. Transfer fees can run from $5 to $50 or more. Some services move money in minutes. Others take 3 to 5 business days.

That means the same $5,000 transfer can land very differently depending on the channel. A bank wire, digital platform, card-based transfer, or cash pickup service each carries its own cost, speed, and reporting profile.

The new federal remittance tax, which began on January 1, 2026, applies to transfers funded with cash, money orders, or cashier’s checks through licensed money transfer providers. It came from the One Big Beautiful Bill Act, signed by President Trump on July 4, 2025.

The 1% remittance tax and how it works

The tax is straightforward. For every $100 sent with a covered physical instrument, the sender pays $1 to the U.S. government. The provider collects it at the point of transfer and forwards it to the IRS on a semimonthly schedule.

This tax applies to everyone using those payment methods, regardless of citizenship or immigration status. That includes U.S. citizens, green card holders, H-1B workers, students on F-1 visas, and undocumented immigrants.

The key rule is the funding source. If the transfer is funded from a U.S. bank account, debit card, or credit card, it is generally exempt. The same is true for electronic transfers through services such as Wise, Remitly, PayPal, and similar platforms when the money comes directly from linked U.S. accounts or cards.

Cash changes the picture. So does a money order. A cashier’s check does too. Providers will refuse to process the transfer unless the full amount, including the tax, is paid.

Safer transfer routes for new arrivals

Bank wire transfers remain one of the most secure ways to move larger sums. When funded from a U.S. bank account, they avoid the 1% remittance tax. They usually take 1 to 3 business days and often cost $15 to $50 in bank fees.

Digital platforms such as Wise, Remitly, Xoom, and ICICI Money2India are often cheaper. They usually charge 1% to 3% in fees and use competitive exchange rates. When funded electronically, they stay outside the new cash-based tax.

Debit and credit card payments also avoid the tax. That makes them useful for immigrants who are still opening accounts or waiting for a full banking setup. Credit card issuers, however, may treat the payment as a cash advance and add interest.

Money transfer operators like Western Union and MoneyGram remain useful for urgent cash needs. They are also the most expensive when paired with cash funding, because provider charges combine with the new federal tax.

What the government watches

Money services businesses now face stronger monitoring. They must file suspicious activity reports for cross-border transfers of $2,000 or more in most places. In certain border counties covered by Geographic Targeting Orders, the threshold drops to $200.

That does not mean ordinary transfers are banned. It means the government is paying closer attention to cash movement across borders, especially where money laundering risks are higher.

The Remittance Transfer Rule also forces providers to tell customers the total cost before the transfer is authorized. They must disclose fees, exchange rates, third-party charges, the exact amount the recipient will receive, and the expected delivery date. The timing estimate must be realistic, including bank delays, weekends, and holidays.

Foreign accounts and the two reporting systems

Money moved to the United States is only part of the compliance picture. Many new immigrants also keep accounts or investments abroad. That triggers Reporting Rules that often surprise first-time filers.

The first filing is the FBAR, or FinCEN Form 114. It applies if the combined value of foreign financial accounts exceeds $10,000 at any time during the year. The report goes to FinCEN, not the IRS, and is due by April 15 of the following year, with extensions available. File through the official FinCEN FBAR e-filing portal.

The second filing is Form 8938, the Statement of Specified Foreign Financial Assets. It goes with the annual tax return. The IRS explains the form in its official Form 8938 guidance, and broader filing help is available on the IRS international taxpayers page.

When Form 8938 applies

For people living in the United States, the thresholds are:

• Single or married filing separately: report if foreign assets exceed $50,000 at year-end or $75,000 at any time
• Married filing jointly: report if foreign assets exceed $100,000 at year-end or $150,000 at any time

For expats living abroad, the thresholds are higher:

• Single or married filing separately: report if foreign assets exceed $200,000 at year-end or $300,000 at any time
• Married filing jointly: report if foreign assets exceed $400,000 at year-end or $600,000 at any time

Form 8938 reaches beyond bank accounts. It covers foreign brokerage accounts, life insurance with cash value, annuity contracts, hedge funds, private equity, mutual funds, foreign pensions, trusts, stocks, bonds, partnership interests, ownership in foreign corporations, and certain digital assets on non-U.S. exchanges.

Why FBAR and Form 8938 are not the same

Both forms deal with foreign money, but they serve different purposes. FBAR focuses on foreign financial accounts and uses the $10,000 trigger. Form 8938 covers a broader set of assets and uses much higher thresholds.

Many taxpayers must file both. A New Immigrant with a foreign bank account and foreign mutual funds may need one report for the account and another for the asset list.

Penalties are steep. Failing to file Form 8938 can bring penalties of up to $10,000 per year, plus another $10,000 for each 30 days after IRS notice, up to $60,000. FBAR penalties can reach $10,000 for non-willful violations and the greater of $100,000 or 50% of the account balance for willful violations.

Gifts, income, and the paperwork that separates them

Money sent from abroad is not always income. Sometimes it is a gift. That distinction matters.

A gift is generally not taxed as income to the recipient. The donor may face gift tax issues if the transfer exceeds the annual exclusion of $18,000 per recipient in 2026. Gifts between spouses are unlimited.

Income is different. Salary, wages, self-employment earnings, interest, dividends, and capital gains are taxable in the United States and must be reported. Investment returns from foreign assets are taxable too.

Clear records help. A donor letter stating that the transfer is a gift and not a loan or payment for services protects both sides. For larger sums, keep bank records, transfer receipts, and any written explanation together.

Records that make later filings easier

Keep every transfer receipt, exchange-rate notice, and confirmation number. Save them for at least seven years. That record set helps if the IRS asks questions, and it also supports FBAR or Form 8938 filings.

According to analysis by VisaVerge.com, most problems start when immigrants mix personal transfers, family support, and foreign savings without keeping clean records. The money itself is often lawful. The paperwork is what breaks down.

A practical sequence for the first transfer

The process is simpler when handled in order.

1. Choose the transfer method and avoid cash if you want to avoid the 1% tax.
2. Gather identification and account details, including any donor letter.
3. Check FBAR and Form 8938 duties before the year ends.
4. Compare fees, rates, and delivery times from at least three providers.
5. Save every receipt and confirmation after the transfer completes.

The rules reward planning. A New Immigrant who uses electronic transfers, keeps clean records, and files the right forms avoids the most common mistakes in the United States system.