Top Tax Mistakes Immigrants Make—and How to Avoid Them

Most immigrants don't realize they're making costly tax mistakes until it's too late. 

By then, the penalties for unreported foreign accounts or business interests can be devastating. 

We sat down with Mahmoud Abotteen, CPA who runs Abotteen & Co. in Los Angeles. What makes Mahmoud different from most CPAs? He's lived the immigrant experience himself - arriving in the U.S. in 2009, navigating different visa statuses, and ultimately becoming a citizen. 

His personal journey shapes how he serves clients at the intersection of immigration and taxes. The biggest misconception he sees constantly? "I'm not in the U.S. full-time, so I don't owe U.S. taxes." Clients assume that spending half the year abroad exempts them from U.S. tax obligations. It doesn't. 

Once you're a U.S. citizen or Green Card holder, you're subject to worldwide income reporting—regardless of where you physically are. This catches people off guard, especially if they're earning income or holding assets in their home country. The surprise isn't just philosophical. It comes with real financial consequences if you're not prepared. 

The costliest mistake? Failing to report foreign accounts and business interests on FBAR Form 8938, 5471, 3520. These mandatory disclosures come with with steep penalties for non-compliance. 

Mahmoud frequently works with clients who have foreign bank accounts, real estate, corporations, or trusts that they didn't realize needed to be reported. Many come to him after receiving notices from the IRS, at which point the penalties have already started accumulating. 

His advice? The best time to address this is BEFORE you become a U.S. tax resident. Restructuring businesses, realizing gains, or making gifts ahead of green card approval can save significant headaches later. 

Immigration status drives everything in tax planning. Whether someone is classified as a resident or nonresident for tax purposes changes the entire strategy, from how income is sourced to which treaty benefits apply. 

This is where Mahmoud's collaboration with immigration attorneys becomes critical. He works closely with legal counsel to align tax planning with the immigration timeline, particularly around residency start dates, Green Card status, or even expatriation planning. 

His clients often come from the Middle East (Egypt, Jordan, and the Gulf ); Canada; and Europe. He's handled cases across every immigration status: (H-1B, L-1, F-1, Green Card recipients, and naturalized citizens). 

What stands out most about Mahmoud's approach is that he doesn't just prepare returns-- he educates clients on the U.S. tax system before they make decisions that could create long-term complications. If you're working with clients who are U.S.-bound or already here on visas, Mahmoud's insight is simple but powerful: the best tax planning happens before someone becomes a U.S. tax resident.

What is something you wish you knew earlier in your US tax journey?

Do you need help understanding your U.S. tax obligations as an immigrant or visa holder? Avoid costly IRS penalties by getting the right advice early. Call (949) 940-6725, or book a consultation online.

DISCLAIMER: This post does not constitute legal advice, or make any guarantees as to a potential outcome. Consult with a qualified, licensed immigration attorney about the facts of your case before proceeding.