Moving to the United States presents a world of opportunity.
Yet, wherever you’re from, expatriating to the U.S. provides significant financial hurdles to overcome. With careful planning, however, you can handle each of these complexities and embrace your journey with confidence.
Here are 7 Finance Tips for Expats to Keep in Mind:
1. Reporting Non-US Financial Accounts
If you have worked throughout your life, you have also likely developed investment accounts overseas. While these non-US accounts are certainly allowed in the United States, expats must follow a crucial reporting rule as stated by the Internal Revenue Service (IRS).
In the event the aggregate value of your accounts exceeds $10,000 (or did so at any point throughout the calendar year in question), it’s required that you report them to the US Treasury Department. Failing to do so can incur steep financial penalties.
Click here to view the IRS requirements and download the relevant forms.
Before you tackle these issues by yourself, however, we recommend hiring a financial professional who understands the complexities of handling foreign accounts. This will also play a vital role in helping manage your retirement and college savings accounts.
2. Navigating Tax Laws
The U.S. tax code is incredibly complex. Most American citizens struggle to make sense of all the evolving laws, and the code remains even more complicated for expats.
Save yourself time and money by working with a tax professional who is well versed in expat tax laws. Rather than hiring a standard U.S. tax planner or accountant, you’ll gain the most by working with experts who specialize in international tax laws.
These same professionals will also help you manage your offshore investments and ensure you aren’t unnecessarily taxed on your regular distributions and withdrawals.
3. Managing Pension Transfers
There’s a third area that makes tax specialists invaluable for expats: managing pension transfers.
As with foreign investment accounts, the IRS maintains very rigid rules that effectively prevent pension “rollovers”—or the transfer of foreign pensions to U.S. tax-deferred accounts.
Given the complexity of this subject, expats need very specific guidance to not only grow and access their pensions, but to ensure they don’t leave themselves vulnerable to unexpected taxes or fines.
4. Establishing Credit & Accessing Loans
There’s no such thing as a global credit score, only the one you hold in your current country. While it’s true that some lenders might review your foreign credit history before providing a loan, that remains an exception to the rule.
When you move to the United States, you essentially start your credit from scratch.
This particular challenge requires patience to establish a paper trail and grow your credit score in the United States. Fortunately, you can make progress quite quickly by accessing things like credit builder loans, and secured credit cards.
As long as you’re prepared for the journey and carefully manage your finances, you’ll be well on your way to building a strong credit history here in the United States.
5. Handling Currency Fluctuation
Fluctuation in currency can make a big impact on your total financial health.
Depending on the value of your home currency, however, you could gain additional leverage in handling recurring expenses. For example, if you have a home mortgage or a credit card bill, money earned in your foreign currency could potentially offer additional spending power in the U.S.
Whatever your circumstances and home currency may be, it’s important to closely watch all shifts and market trends. Click here to follow market and currency shifts in real time.
Additionally, be mindful that banks usually charge high rates for any and all currency exchange. While this will add up over time with small purchases, such fees will be particularly punitive for larger payments made across countries.
Protect your money by managing and preparing for currency fluctuation.
6. Neglecting Insurance
Health insurance remains one of the greatest defenses against financial trouble. Unfortunately, many expats make the mistake of moving abroad without having a health insurance plan in place. Worse yet, they may rely on their foreign policy and wrongly assume that it will protect them in the United States.
Defend yourself from the prohibitive costs of unexpected injury or illness, and make sure you and your loved ones are properly insured in the United States.
7. Securing Estate Planning
Whether you’re in the process of moving or are already adjusting to life in the United States, the far off future may not seem overly important.
Before you settle in, take a moment to ensure that your estate plans are properly in place. This includes everything from your living will, your powers of attorney, and having the correct beneficiaries listed on all of your accounts and property.
Given the complex tax laws at play, as well as the different ways probate and inheritance laws are handled across the world, it’s important to have a plan that will fulfill your intentions no matter where you and your family are living.
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