- 1 Financial Tips for Americans Retiring Abroad
- 2 Cost of Living Comparison
- 3 Green Card (Reentry Permit)
- 4 International Medical Insurance
- 5 Are you Legally Allowed to Purchase Real Estate?
- 6 Access to Education
- 7 Opening Bank Accounts
- 8 Foreign Investments and IRS Reporting
- 9 Already Retired Abroad but Out of U.S. Tax Compliance?
- 10 Current Year vs Prior Year Non-Compliance
- 11 Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
- 12 Need Help Finding an Experienced Offshore Tax Attorney?
- 13 Golding & Golding: About Our International Tax Law Firm
Financial Tips for Americans Retiring Abroad
When it comes to deciding whether to retire overseas or not, taxpayers who are considered Americans have several twists and turns to be aware of to ensure that everything goes smoothly. Typically, one of the most pressing issues when going abroad involves understanding the tax implications of being a resident in a foreign country while still being an American. But, in addition to the tax implications of retiring abroad, taxpayers have other hurdles that they should be aware of as well to try to ensure that they can have a seamless transition when going abroad. Let’s look at seven important financial tips for Americans who are going abroad as a U.S. expat.
Cost of Living Comparison
One of the first issues to consider is what the cost of living will be in a foreign country. Oftentimes, taxpayers are thrilled to learn that the overall cost of living in the foreign country they have selected will be less — but that does not always include all types of foreign assets. For example, in some countries, the cost of living may be less expensive but the price to acquire real estate in that country (in a desirable location) is much higher than expected.
Green Card (Reentry Permit)
For Americans considered lawful permanent residents, it is important to remember that they must reside in the United States for a certain amount of time each year to maintain their Permanent Residency status. Therefore, taxpayers who are considering living out of the country for most of the year but still intend to keep their green card will want to be sure to apply for a re-entry permit before leaving the United States. There is also the side issue of making timely IRS Form 8833 elections, if applicable, to stave off Long-Term Lawful Permanent Resident status (which may result in the Taxpayer paying an exit tax).
International Medical Insurance
The availability and quality of medical insurance will vary depending on which country a taxpayer decides to reside in, but frequently taxpayers can buy international insurance as a temporary solution. Depending on which provider the taxpayer selects the duration of time for international medical insurance may vary.
Are you Legally Allowed to Purchase Real Estate?
Expanding upon the first point above, some countries do not allow taxpayers who are not considered to be citizens of that foreign country to purchase real estate within their borders. Therefore, taxpayers who are planning on becoming expats — and also purchasing property in a foreign country — will want to be aware of the real estate acquisition rules before making the move.
Access to Education
Especially for Americans who are going abroad and have children who are still in school, it is important to note that some countries may offer free education and others do not. Likewise, the public systems in some countries may not be up to par for certain Americans who may be used to a certain level of education — so they will want to investigate before making the transition. And, if the Americans intend on sending their children to private school they will want to assess the costs along with the application procedures and wait lists.
Opening Bank Accounts
Opening bank accounts overseas can be much more difficult than one would think. Here in the United States, a taxpayer can just walk into their local bank (or online) and open an account. In many foreign countries, because of FATCA, Foreign Financial Institutions (FFIs) do not want to allow taxpayers to open accounts at their institution when they are considered Americans because that means the institution has additional reporting requirements to the US government in conjunction with the IGA between the U.S. and the Foreign Country.
Foreign Investments and IRS Reporting
In addition to difficulties in opening foreign accounts, there is also the concern of having to report the ownership of foreign assets on their U.S. tax return and other international information reporting forms. For example, if the taxpayer is going to open a foreign business or trust — or invest in foreign mutual funds or ETFs — there may be additional reporting requirements that can become very ‘taxing’ depending on the types of assets they invest in.
Already Retired Abroad but Out of U.S. Tax Compliance?
For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.
Current Year vs Prior Year Non-Compliance
Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.
Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties.
Need Help Finding an Experienced Offshore Tax Attorney?
When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.
Contact our firm today for assistance.