Search found 4931 matches

by TedSwippet
Thu Mar 28, 2024 4:12 am
Forum: Non-US Investing
Topic: US -> UK Move - HSA Account Strategy
Replies: 15
Views: 6150

Re: US -> UK Move - HSA Account Strategy

Welcome to the forum. Adding to tubaleiter' s comments above ... 1. How did you handle the exit tax? I'm in the process of getting a green card (sponsored via my employer, they also did my work visa)? I dread any potential tax implications aside from usual income tax, intrest gains etc. Did you have any surprises? I left the US earlier than planned purely because of the exit tax. The 'surprise' for me was that congress ginned it up in the middle of the night some eight years after I'd received my green card, making me a 'covered expat' instantly the law passed, with virtually zero warning or chance to plan around it. Fortunately there was a couple of months between congress passing it and it being signed into law. It was a scramble, but we ...
by TedSwippet
Tue Mar 26, 2024 10:37 am
Forum: Non-US Investing
Topic: How to transition from wealth managers to self management
Replies: 11
Views: 2277

Re: How to transition from wealth managers to self management

Yes, because I'm sure my current advisors won't help me clean up my portfolio willingly. I have already discussed this with them, and they have said the only way to do this would be to change to an execution-only account, in which they would charge me a fee each time I instructed them to buy or sell any individual holding. Okay. What would they charge for trades? Remember that even the skimpy-charging IWeb still charges a flat £5/trade, so £10 round-trip to switch a fund holding. Perhaps it's a reasonable amount, say £10-£20 flat. Or maybe it's a hideous 0.x% of the value. (One of these is better for you than the other; the other is better for them.) Should my plan now be to: 1. Sell to hit 6k in realised gains. (I'm assuming I should sell...
by TedSwippet
Tue Mar 26, 2024 10:18 am
Forum: Non-US Investing
Topic: What is the difference between VFAWF and VWRP
Replies: 18
Views: 1059

Re: What is the difference between VFAWF and VWRP

kyleplaytime15 wrote: Tue Mar 26, 2024 8:03 am I see, then as a non resident living in the US, how can I invest in Irish domiciled ETFs?
Interactive Brokers?
by TedSwippet
Mon Mar 25, 2024 3:10 pm
Forum: Non-US Investing
Topic: What is the difference between VFAWF and VWRP
Replies: 18
Views: 1059

Re: What is the difference between VFAWF and VWRP

kyleplaytime15 wrote: Sun Mar 24, 2024 11:34 pm I can only see one in my fidelity app (VFAWF).
App from Fidelity US, or Fidelity international? Fundamentally, for US tax reasons (Google "PFIC" and weep), US investors cannot realistically use UCITS ETFs, so it's surprising if Fidelity US would offer this, or any, at all.

Either way, I think you want to avoid VFAWF. It's hard to find any information on it, not even trade volumes. Stick to VWRP, same as everyone else. To get it, you'll need a broker that gives you access to European exchanges (including the London Stock Exchange). It's entirely possible that (your current relationship with) Fidelity is not that broker.
by TedSwippet
Mon Mar 25, 2024 2:49 pm
Forum: Non-US Investing
Topic: How to transition from wealth managers to self management
Replies: 11
Views: 2277

Re: How to transition from wealth managers to self management

I quizzed my wealth manager on the confusing numbers regarding my realised and unrealised gains. They explained that investments are sold and their proceeds reinvested during the year as part of the ongoing management of the portfolio, so numbers do change. As of very recently, they informed me that my current 2023/24 Realised Gains = +£3,689. And my unrealised gains = +£55,705. I am a higher-rate taxpayer at 20%. If I were to sell all my positions, I would pay tax on a total of £59,394+. Meaning I would pay £5,878.80 in tax Again, not quite sure on your numbers. If you're in higher rate tax -- that is, earning above around £50k/year -- your marginal income tax bracket is 40%, and your capital gains tax bracket (after any CGT allowance) is...
by TedSwippet
Sun Mar 24, 2024 3:59 am
Forum: Non-US Investing
Topic: Question for Non-EU resident investors
Replies: 6
Views: 2105

Re: Question for Non-EU resident investors

I am based in Albania and have just opened an account at IBKR (automatically opened at IBKR LLC (USA)). Having read several posts here, I asked the support team to transfer my account in another non-US IBKR entity, since the cash account itself is classified as asset and therefore subject to 30% tax in the moment it reaches 60k balance, despite the fact of the Mutual Funds/ETFs invested being non US domiciled. What is this 30% tax on cash assets? I'm not familiar with this... Probably a slightly muddled expression of the threat of 26-40% US estate tax payable on a nonresident alien's cash balance over $60k in a US broker, if they have the poor judgement to die while holding that much USD cash. Details in the wiki: Are nonresident aliens at...
by TedSwippet
Sat Mar 23, 2024 2:07 pm
Forum: Non-US Investing
Topic: [As a G4 visa holder in the US - Looking for help with 1099-INT tax form, emergency fund]
Replies: 10
Views: 947

Re: [As a G4 visa holder in the US - Looking for help with 1099-INT tax form, emergency fund]

1. Do you know where on schedule NEC I should be putting the 1099-INT amount? Just to be clear, none of my 1099-INT amount was withheld, and I dont want to pay tax on it. But I don't want the IRS asking me why I didn't pay taxes on the 1099 (I should have been issued a 1042-S). I thought you had some withholding on this. If not, well ... the standing instructions for NRAs state that there is no need to file a 1040-NR if withholding equals tax liability. If yours does, then technically you can simply not file anything. However, the fact that the provider issued a 1099-INT is mildly awkward. Have you asked them to correct it to a 1042-S instead? That aside, how much interest did you receive? If a smaller amount, then it's unlikely the IRS wo...
by TedSwippet
Sat Mar 23, 2024 12:07 pm
Forum: Non-US Investing
Topic: [As a G4 visa holder in the US - Looking for help with 1099-INT tax form, emergency fund]
Replies: 10
Views: 947

Re: [As a G4 visa holder in the US - Looking for help with 1099-INT tax form, emergency fund]

I understand that a 1040-NR might not be needed to file, but I am worried about the separate 1099-INT amount. Taxes on that haven't been (and shouldn't be) withheld. But since the IRS will be notified about this amount, what should I do? Should I reflect it in my 1040NR somehow? Probably on schedule NEC. The 1040-NR instructions on the "simplified" method for recovering overwithholding has an example. Under the G-4 visa and since I lived in the US for over 183 days, I don't get to benefit from the India tax treaty (I believe? Can someone confirm?) as I am a nonresident in both India and the US. Ah, I see. You could use a US estate tax treaty, since you probably remain domiciled in India, even if not resident . Except that India h...
by TedSwippet
Sat Mar 23, 2024 3:17 am
Forum: Non-US Investing
Topic: [As a G4 visa holder in the US - Looking for help with 1099-INT tax form, emergency fund]
Replies: 10
Views: 947

Re: [As a G4 visa holder in the US - Looking for help with 1099-INT tax form, emergency fund]

Welcome to the forum. I got issued a 1099-INT even though I am a non-resident alien who lives in US on G4 visa. I don't have to pay tax on it. How should I file my 1040NR now? Should I include this 1099-INT amount anywhere? Also, my other investments have been withheld at 30%, so I don't think I have to file a tax return otherwise. So 1. should I file a tax return and 2. Should I include this 1099-INT anywhere? There is some general information on US tax for nonresident aliens, including G4 visa holders, in the wiki: - Nonresident alien taxation - Bogleheads - US tax pitfalls for a non-US person moving to the US - Bogleheads You will indeed have to file a 1040-NR to claim a refund for over-withheld US tax. As a G4 visa holder -- that is, a ...
by TedSwippet
Fri Mar 22, 2024 4:14 am
Forum: Non-US Investing
Topic: Choosing Irish equity ETFs
Replies: 11
Views: 1750

Re: Choosing Irish equity ETFs

TedSwippet wrote: Mon Mar 18, 2024 10:42 am
OneTrickPony wrote: Mon Mar 18, 2024 7:44 am In the US, it seems you can cover the world with VTI+VXUS.
Is there a way to make the same split (US stocks + ex-US stocks) with Ireland-based funds?
So far I have not found an Irish fund that invests in combined ex-US stocks.
There is as far as I know no Ireland domiciled ex-US equity fund. The market for it would be too small to bother. The primary user of an ex-US fund would be a US investor, but because of heinous US tax rules, US investors realistically cannot use any Ireland domiciled ETFs.
Just seen this: Xtrackers MSCI World ex USA UCITS ETF 1C | EXUS | IE0006WW1TQ4

Launched on 6 March 2024, so currently extremely new and shiny, and consequently with a low AUM. TER is 0.15%.
by TedSwippet
Fri Mar 22, 2024 4:07 am
Forum: Non-US Investing
Topic: Irish UCITS vs US ETFs: Tax optimization
Replies: 5
Views: 998

Re: Irish UCITS vs US ETFs: Tax optimization

ramaj wrote: Thu Mar 21, 2024 4:00 am On the all-world stock fund, I will look at SWRD and also short-list some others. Seems there is a new one every year.
One very new one that might be worth a look:

Amundi Prime All Country World UCITS ETF DIST (D) | WEBG | IE0009HF1MK9

It follows a less common all-world index, but has a TER of just 0.07%. It was first listed on 24 Feb 2024, so net assets are very small at the moment, and this could be a concern. A currently unbeatable low TER though, so once 'discovered' it may grow quickly. Certainly one to watch.
by TedSwippet
Thu Mar 21, 2024 3:38 am
Forum: Non-US Investing
Topic: Irish UCITS vs US ETFs: Tax optimization
Replies: 5
Views: 998

Re: Irish UCITS vs US ETFs: Tax optimization

ramaj wrote: Thu Mar 21, 2024 3:11 am 1. Is my tax strategy sound?
Yes, entirely. See analysis in this wiki article: Nonresident alien's ETF domicile decision table
ramaj wrote: Thu Mar 21, 2024 3:11 am 2. Is the proposed two-fund portfolio a legitimate contender?
Again yes. More in these wiki articles:

- Simple non-US portfolios - Bogleheads
- Building a non-US Boglehead portfolio - Bogleheads
- EU investing - Bogleheads

Although VWRL is a decent all-world equity choice, it may be worthwhile looking to see if a more cost-efficient alternative is acceptable. For example, SWRD has a 0.12% TER.
by TedSwippet
Wed Mar 20, 2024 3:00 pm
Forum: Non-US Investing
Topic: Any suggestions?(Uruguay 22years old)
Replies: 6
Views: 921

Re: Any suggestions?(Uruguay 22years old)

naranjaverde wrote: Wed Mar 20, 2024 9:12 am 40% QQQM (or is CNDX better?)
QQQM is US domiciled, and as a general rule, because of unfavourable US tax rules you want to avoid US domiciled ETFs. Uruguay does not have any tax treaties with the US.

If you are going to hold a Nasdaq 100 ETF, because it is Ireland domiciled you will get better returns from CNDX.
by TedSwippet
Wed Mar 20, 2024 6:49 am
Forum: Non-US Investing
Topic: Moving US → UK as a US NRA, UK citizen.
Replies: 5
Views: 1418

Re: Moving US → UK as a US NRA, UK citizen.

... It seems very hard assuming that the US penalizes you for having non-US domiciled funds but UK brokers won't let you buy US domicile. There is of course no silver bullet. Very little is outside both annoying UK/EU restrictions and US punitive taxation. Passively managed individual stocks are fine, but not simple. A single holding of BRKB can sometimes be an option; it is 'fund-like' but is not actually a fund, so it escapes UK non-reporting and PRIIPs, and also the US's awful PFIC tax regime. Also, no dividends means simple annual tax reporting. One possible thought. The UK tax pain for holding non-reporting funds and ETFs only rears its head when you sell. Other than that, it's merely dormant. If it is extremely probable that your fri...
by TedSwippet
Mon Mar 18, 2024 5:47 pm
Forum: Non-US Investing
Topic: Choosing Irish equity ETFs
Replies: 11
Views: 1750

Re: Choosing Irish equity ETFs

Am I missing something here? Could these be due to higher tax on dividends withheld by ex-US companies to Ireland rather than to the US? Possibly. I don't think you're missing anything, just that there are a lot of moving parts to this comparison. For example, VWRD's OCF (TER) erodes the dividend yield, since that's what it comes out of. And VWRD has a high-ish OCF, 0.22%(*), compared to VTI's 0.03% and VXUS's 0.08%. Then there's the matter of the timing/period over which these yield numbers have been calculated. And there may well be some difference in the tax withholding on ex-US stocks when they pay dividends to Ireland compared to the US. That would all depend on the specifics of a (large number of) tax treaties. To really understand t...
by TedSwippet
Mon Mar 18, 2024 10:42 am
Forum: Non-US Investing
Topic: Choosing Irish equity ETFs
Replies: 11
Views: 1750

Re: Choosing Irish equity ETFs

The dividend WHT rate between US and Cyprus is 15%, same as with Ireland. So regarding US stocks, holding a US fund or an Ireland fund is effectively the same. It's ... complicated . I don't know how local country tax works in Cyprus, but in the UK (which has the same 15% US dividend tax treaty rate as Cyprus), a US domiciled fund can sometimes be a little better. The reason is that the UK allows a full tax credit for direct US tax paid on a US domiciled ETF, but not for the indirect tax paid by an Ireland domiciled ETF. So where the UK tax rate is above 0%, for Ireland domiciled ETFs, UK investors get to pay tax to the UK on the 85% of dividends that remain, but for US domiciled ETFs they can claim a credit of up to 15% that reduces or ev...
by TedSwippet
Mon Mar 18, 2024 7:05 am
Forum: Non-US Investing
Topic: Portfolio for move to UK
Replies: 29
Views: 5033

Re: Portfolio for move to UK

alwaysonit wrote: Mon Mar 18, 2024 6:54 am I assume there are no obvious flaws with this plan given the lack of discussion.
I don't see any (if that makes you feel any better!).

Re your plan to sell and repurchase equivalent ETFs on April 5, I assume that your move "next month" to the UK will be after this date, not before it. That is, you want to reset your cost basis for UK CGT before becoming a UK resident. Afterwards is too late.
by TedSwippet
Mon Mar 18, 2024 6:58 am
Forum: Non-US Investing
Topic: Choosing Irish equity ETFs
Replies: 11
Views: 1750

Re: Choosing Irish equity ETFs

OneTrickPony wrote: Mon Mar 18, 2024 6:45 am On which exchanges is it preferable to buy UCITS ETFs, if they trade on multiple venues simultaneously?
LSE, Xetra, Amsterdam?
Generally, just the simplest, the most convenient, and/or the cheapest for you. Each traded listing is just another view of the exact same underlying fund, so the results will be identical no matter which exchange or which listing of the fund you use.

Presumably you will want to trade in EUR rather than in USD or GBP, so some listings will be of more interest to you than others (you have no reason to convert your EUR into (say) USD when not needed).
OneTrickPony wrote: Mon Mar 18, 2024 6:45 am Also is it correct that Irish and/or British stamp duties do not apply to transactions involving ETFs?
Yes. Neither of these apply.
by TedSwippet
Sun Mar 17, 2024 9:03 am
Forum: Non-US Investing
Topic: Three fund portfolio and index funds, non-US
Replies: 5
Views: 1126

Re: Three fund portfolio and index funds, non-US

Paullmas wrote: Sun Mar 17, 2024 7:32 am Is living and retiring in the US unique with regards to three-fund portfolio and passive index investing?
Not at all. These wiki articles (and others) outline one, two, three, and four-fund portfolios and widely used non-US domiciled index ETFs that residents of any non-US country can use:

- Simple non-US portfolios - Bogleheads
- Building a non-US Boglehead portfolio - Bogleheads
by TedSwippet
Sun Mar 17, 2024 5:19 am
Forum: Non-US Investing
Topic: Federal Tax Residency, Resident Alien left the US Mid-Year (W-9/W-8BEN)
Replies: 4
Views: 1156

Re: Federal Tax Residency, Resident Alien left the US Mid-Year (W-9/W-8BEN)

Am I considered a resident alien in the US for 2024 or do I need to file as dual status for 2024 ? Is this a choice one makes or is there a rule that determines which one to choose exactly? The IRS is very keen on providing examples of first year tax residency, but notably poor on final year guidance. What little they provide is this (which I imagine you have already found, quoted here only for the benefit of casual readers!): Residency Ending Date Under the Substantial Presence Test In general, if you meet the substantial presence test, your residency ending date is your last day of presence in the United States followed by a period during which: You are not present in the United States, You have a closer connection to a foreign country t...
by TedSwippet
Sat Mar 16, 2024 6:02 pm
Forum: Non-US Investing
Topic: Choosing Irish equity ETFs
Replies: 11
Views: 1750

Re: Choosing Irish equity ETFs

Welcome to the forum.
OneTrickPony wrote: Sat Mar 16, 2024 5:38 pm What's the preferable equity funds here?
We have some wiki articles that offer suggestions for ETFs and portfolios for non-US investors. For example:

- EU investing - Bogleheads
- Simple non-US portfolios - Bogleheads
by TedSwippet
Sat Mar 16, 2024 4:56 pm
Forum: Non-US Investing
Topic: Moving US → UK as a US NRA, UK citizen.
Replies: 5
Views: 1418

Re: Moving US → UK as a US NRA, UK citizen.

pelican2 wrote: Fri Mar 15, 2024 12:51 pm Open a brokerage account with IBKR. ... I see two options for what funds she should buy when setting up the IBKR account:
  • Option 1: Only buy funds that are HMRC reporting, US-domiciled, and not PFICs (i.e. these). That way the portfolio can be ACATS-transferred to a US broker if she moves back to the US, and she doesn’t have to liquidate and rebuy.
Accessibility issues with these ETFs?

Anecdotal reports suggest that Interactive Brokers is following PRIIPs regulations, under which UK residents cannot (currently, under review) buy US domiciled ETFs.
by TedSwippet
Sat Mar 16, 2024 1:42 pm
Forum: Non-US Investing
Topic: SIPP tax relief advice
Replies: 5
Views: 1229

Re: SIPP tax relief advice

To answer your core question, there is nothing stopping you from putting money (which must be from your earnings) into a pension in one year (living off your savings in the meantime) and drawing it the next. That is, there is no minimum holding period for a pension contribution. (There are some squirrelly technical rules around both contributing to and drawing from pensions at the same time, but it sounds like you don't plan to do this .) The "squirrelly technical rules" are a real trap. Can be. For example, the borderline unintelligible grey area that is the ' pension recycling ' rules. I believe the limit on contributions if you are drawing a pension is £4k pa - but I may be out of date on that. You are. The MPAA is £10k as of ...
by TedSwippet
Sat Mar 16, 2024 3:38 am
Forum: Non-US Investing
Topic: SIPP tax relief advice
Replies: 5
Views: 1229

Re: SIPP tax relief advice

Just realised my doh!!!! moment. I would obviously need to pay income tax on withdrawals above my personal allowance. But that doesn't mean there is absolutely no tax advantage to you. You may save higher rate (or even additional rate) tax on contributions, but end up paying only basic rate tax on withdrawals. Or even if in the same tax bracket, provided your pension is below £1,073,100, 25% of what you withdraw is tax-free. This equates to 15% basic rate tax, or 30% higher rate, potentially both lower than what you would have paid had you taken the contributions as tax. On top of this, if your employer offers 'salary sacrifice' into pensions, you avoid paying employ ee NI on contributions, and some employers also refund some or all of the...
by TedSwippet
Fri Mar 15, 2024 12:43 pm
Forum: Non-US Investing
Topic: Reporting IRA distribution/Roth conversion with a 1042-S instead of 1099-R
Replies: 4
Views: 1310

Re: Reporting IRA distribution/Roth conversion with a 1042-S instead of 1099-R

For future reference; I dug into this a little more and it turns out that Form 1099-R needs to be filed/attached with the return "only if federal income tax is withheld in Box 4"; which typically wouldn't be the case for a Roth conversion. Which platform or provider is this? Vanguard have recently decided that they will ride roughshod over the US/UK treaty, and state that they will now withhold 30% for US tax on Roth IRA withdrawals . Although I haven't queried it directly (yet), there's a strong possibility then that they will also start withholding 30% for US tax on Roth conversions . In which case, if there is no viable route to recover some or all of that on a 1040-NR, things become extremely difficult. * File a mock 1099-R i...
by TedSwippet
Fri Mar 15, 2024 9:08 am
Forum: Non-US Investing
Topic: Gold As An Emergency Fund In A Country With Insane Inflation
Replies: 32
Views: 4744

Re: Gold As An Emergency Fund In A Country With Insane Inflation

SheetrockBobby wrote: Fri Mar 15, 2024 6:11 am
Thesaints wrote: Fri Mar 15, 2024 1:51 am Funny thing: gold prices has floated since 1971 and in these 50 years and change it has been as likely to go up than to go down during periods of above average inflation.
Not a good hedge in my book.
I know what you mean and I don’t disagree with the general point, but gold priced in Turkish lira has had a much better return than gold/USD, ...
Most if not all of this return disparity will be down to the hugely volatile USD/TRY exchange rate. Currently at 459% gain over five years, and 2,079% since 2006.
by TedSwippet
Fri Mar 15, 2024 3:44 am
Forum: Non-US Investing
Topic: Understanding taxes for retired US citizen living in UK
Replies: 24
Views: 3445

Re: Understanding taxes for retired US citizen living in UK

I guess one potential method of hedging, if the USD/GBP rate is favorable at the point of retirement, would be to withdraw all of my USD Roth funds in one fell swoop and transferring the lot to GBP... Theoretically there should be no taxes on either side, but I'd want to wait for a really good exchange rate.... If you are determined to fully hedge to GBP in one single event (that is, to fix a given USD/GBP rate), better would be to move your Roth holdings into GBP assets, but leave them inside the Roth. You could use a UK stocks ETF (perhaps EWU or FLGB ), or at the extreme a GBP cash or ultra-short GBP bond fund. Keeping everything inside the Roth wrapper means you don't face US and UK tax on subsequent gains. That aside, if you hold a gl...
by TedSwippet
Thu Mar 14, 2024 5:49 pm
Forum: Non-US Investing
Topic: Reporting IRA distribution/Roth conversion with a 1042-S instead of 1099-R
Replies: 4
Views: 1310

Re: Reporting IRA distribution/Roth conversion with a 1042-S instead of 1099-R

Welcome to the forum.
salocin wrote: Wed Mar 13, 2024 3:39 pm I am now preparing my US tax return (1040-NR) and trying to complete Form 8606; but all the instructions I can find seem to suggest that I need a 1099-R (and TaxAct requires it to complete Form 8606). As an NRA, my broker does not issue 1099s but rather a 1042-S, which is of no use to trigger/file Form 8606.

How would one go about reporting the nondeductible IRA contribution and the Roth conversion in the absence of a 1099-R?
I don't know, sorry. But I'm hoping that someone else does. (Worst case, perhaps form 4852? Just a guess, I'm afraid.)
by TedSwippet
Thu Mar 14, 2024 5:40 pm
Forum: Non-US Investing
Topic: UK Vanguard user FSCS
Replies: 3
Views: 1070

Re: UK Vanguard user FSCS

Welcome.
Dj11111 wrote: Thu Mar 14, 2024 4:35 pm Hello, I’m considering using VWRP ETF for my SIPP. Compared to the index funds on vanguard’s platform, are their ETFs covered by the Financial Services Compensation Scheme (FSCS)?
In short, no. The FSCS covers UK domiciled OEICs and unit trusts, but nothing non-UK domiciled. All of Vanguard's ETFs marketed to UK investors will be domiciled in Ireland. (Also, be aware that a few of Vanguard's OEICs are Ireland domiciled, not UK domiciled, and so will presumably similarly lack FSCS protection.)

For more, see: Maximising FSCS protection for your investment portfolio - Monevator
by TedSwippet
Wed Mar 13, 2024 4:48 am
Forum: Non-US Investing
Topic: Understanding taxes for retired US citizen living in UK
Replies: 24
Views: 3445

Re: Understanding taxes for retired US citizen living in UK

Thanks for the explanation, that does all make sense. By which I assume you mean that you see the how of things. The why , of course, makes no sense at all. :-) So let's say at the point I retire the UK personal allowance is £20k, and the "basic" 20% tax rate goes up to £90k. If my expenses at that point are around £120k, I can use a combination of SS (around £60k), £30k from my Traditional funds, and £30k from my Roth funds to at least keep my tax burden to £14k (20% of the £70k taxable income above the personal allowance). Is that correct? Really shows the advantage of putting as much of my retirement money as possible in Roth accounts... Too many assumptions and far too much extrapolation and speculation to be in any way sure ...
by TedSwippet
Wed Mar 13, 2024 4:02 am
Forum: Non-US Investing
Topic: Understanding taxes for retired US citizen living in UK
Replies: 24
Views: 3445

Re: Understanding taxes for retired US citizen living in UK

Yes, it's incorrect. The culprit is the treaty 'saving clause' (treaty Article 1 paragraph 4). This negates nearly all the treaty for US citizens specifically. How does the saving clause negate the treaty? I've read that in a few places but I've never seen any details on it... Article 1 paragraph 4 of the US/UK treaty reads: 4. Notwithstanding any provision of this Convention except paragraph 5 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if this Convention had not come into effect. In plain English, if you are a US citizen or green card holder, for you specifically, the US is free to entirely ignore the treaty and so apply its ...
by TedSwippet
Tue Mar 12, 2024 6:58 pm
Forum: Non-US Investing
Topic: Understanding taxes for retired US citizen living in UK
Replies: 24
Views: 3445

Re: Understanding taxes for retired US citizen living in UK

Scrabo wrote: Tue Mar 12, 2024 6:53 pm For US citizens in the UK, I thought that 401k withdrawals were taxed only by the UK, due to the US-UK tax treaty. Is that incorrect?
Yes, it's incorrect. The culprit is the treaty 'saving clause' (treaty Article 1 paragraph 4). This negates nearly all the treaty for US citizens specifically.
by TedSwippet
Sat Mar 09, 2024 2:28 am
Forum: Non-US Investing
Topic: Understanding taxes for retired US citizen living in UK
Replies: 24
Views: 3445

Re: Understanding taxes for retired US citizen living in UK

Further thoughts ... 1) 401k/IRA withdrawal. Is it taxed at 20% UK and 12% US, i.e. a net taxation of 32%? Or is it taxed at 12% US and the net taxed as income at 20% UK? Does FTC apply? Something else entirely? The US/UK treaty generally reserves primary tax rights to the country of residence (UK), so this example should come out to 20% UK and 0% US, by taking a US FTC equal to 12% using income 're-sourcing'. As a rule, on your income and gains you will end up with the lowest of the two countries' tax allowances, and paying the highest of the two countries' tax rates. The culprit is the US's treaty 'saving clause', Article 1 paragraph 4, which effectively nullifies most of the treaty specifically for US citizens (and US green card holders)...
by TedSwippet
Fri Mar 08, 2024 4:53 pm
Forum: Non-US Investing
Topic: Understanding taxes for retired US citizen living in UK
Replies: 24
Views: 3445

Re: Understanding taxes for retired US citizen living in UK

The income tax treaty and the foreign tax credit should avoid double tax. The application of the UK inheritance tax is complicated. You may wish to consult with UK trusts and estates counsel. Whenever we do planning for U.S. persons living in the UK, we coordinate with UK counsel. Thanks for the reply. Inheritance tax is not of concern and your comment on the tax treaty, "should avoid double taxation" is exactly the issue as I keep reading conflicting info on this as it relates 401k and IRA withdrawals... The "secret sauce" you are looking for is " certain income resourced by treaty ". Essentially, the process makes you 'pretend' that enough of your US source income is actually non-US (in this case, UK) source...
by TedSwippet
Fri Mar 08, 2024 5:29 am
Forum: Non-US Investing
Topic: Vanguard makes life difficult for NRAs in the UK and India
Replies: 13
Views: 4686

Re: Vanguard makes life difficult for NRAs in the UK and India

bagle wrote: Fri Mar 08, 2024 3:55 am
TedSwippet wrote: Thu Mar 07, 2024 10:21 am And now Vanguard have answered. Yes, they will withhold 30% for US tax on every Roth IRA withdrawal.
Do you mean every Roth IRA held with Vanguard irrespective of the client's country of residency (or only for residents of the UK or India)?
I only asked in the context of my own situation; that is, Roth IRA holder, US nonresident alien, and UK resident.

Because Vanguard's original mail was directed at residents of both the UK and India, it's reasonable to assume that they plan to withhold 30% of all Roth IRA withdrawals for residents of the UK and India. No idea what they'd do for other countries, treaty or otherwise, so we can't extrapolate or infer anything beyond what they've stated.
by TedSwippet
Thu Mar 07, 2024 11:19 am
Forum: Non-US Investing
Topic: Is there a European version of Vanguard?
Replies: 6
Views: 4196

Re: Is there a European version of Vanguard?

To me that begs the question: If the US insists on taxing gains for someone who is a green card holder and not even a citizen, does Austria insist on taxing for money invested "abroad" (EG in the US)? As long as your wife is not resident in Austria, she won't have to pay Austrian tax on any non-Austria sourced income. Only the US and Eritrea(*) tax the worldwide income of their non-resident citizens -- and in the case of the US, also their non-resident green card holders. Austria follows the rest of the world in taxing only residents and, in limited circumstances, income paid to nonresidents that arises in Austria. Austria - Individual - Taxes on personal income (*) Eritrea's tax regime for its expat citizens is benign by compari...
by TedSwippet
Thu Mar 07, 2024 10:21 am
Forum: Non-US Investing
Topic: Vanguard makes life difficult for NRAs in the UK and India
Replies: 13
Views: 4686

Re: Vanguard makes life difficult for NRAs in the UK and India

TedSwippet wrote: Sun Mar 03, 2024 7:49 am
ebeb wrote: Sun Mar 03, 2024 6:48 am How about roth ira, which are supposed to be tax free withdrawal. Will they withhold 30% since India considers all retirement accounts in US same whether pretax or aftertax doesnt matter.
Don't know. I asked - they have so far not answered.
And now Vanguard have answered. Yes, they will withhold 30% for US tax on every Roth IRA withdrawal. Insane, not to mention pointless.
by TedSwippet
Sun Mar 03, 2024 7:49 am
Forum: Non-US Investing
Topic: Vanguard makes life difficult for NRAs in the UK and India
Replies: 13
Views: 4686

Re: Vanguard makes life difficult for NRAs in the UK and India

ebeb wrote: Sun Mar 03, 2024 6:48 am How about roth ira, which are supposed to be tax free withdrawal. Will they withhold 30% since India considers all retirement accounts in US same whether pretax or aftertax doesnt matter.
Don't know. I asked - they have so far not answered.
by TedSwippet
Wed Feb 28, 2024 6:54 am
Forum: Non-US Investing
Topic: Moved out of the US - Vanguard requires USCIS form I-407 for IRA
Replies: 10
Views: 4556

Re: Moved out of the US - Vanguard requires USCIS form I-407 for IRA

I'm just tempted to collapse my plan early in the year ... and pay the penalty. I never thought I'd write this, but I've been having similar thoughts. I have a cell in my finance spreadsheet that shows me the (usually insanely large) tax cost of " bugging out " on something. That is, of deciding to sell up entirely and pull out of some investment; UK pensions, US pensions, current stock fund holdings, and so on. The aim is for its terrifying magnitude to dissuade me from taking any hasty decisions. With each erosion in the usefulness of US accounts though, the annoyance to tax cost ratio edges closer to just wanting rid of the entire thing. I'm not there yet, probably not close, but I can certainly feel the attraction building. A...
by TedSwippet
Tue Feb 27, 2024 9:36 am
Forum: Non-US Investing
Topic: Using up wife's ISA allowance
Replies: 17
Views: 3798

Re: Using up wife's ISA allowance

If you’re not living together or the asset involved is trading stock , any asset transferred between you is treated as transferred at its market value at the time of the transfer. Is this the conflicting part? It's the bit that has always bugged me. Ie my ETF I want to minimise CGT on would be classed as "trading stock"? Multiple non-HMRC sites all seem fairly clear and in agreement on share transfers between spouses not being taxable to capital gains, so ... I did a bit more digging. It seems that HMRC's casual use of "trading stock" actually has a specific meaning: 504-050 Disposals between spouses and civil partners | Croner-i Tax and Accounting Exceptions to the no gain/no loss rule apply where (TCGA 1992, s. 58(2))...
by TedSwippet
Tue Feb 27, 2024 5:39 am
Forum: Non-US Investing
Topic: Using up wife's ISA allowance
Replies: 17
Views: 3798

Re: Using up wife's ISA allowance

The base cost for CGT purposes is what the husband originally bought the shares at. As with anything involving CGT, good records are key. I don't know the precise answer to this -- never been in a position to do it personally -- but whenever I've looked there seem to be conflicting answers. For example: Splitting assets with your other half can reduce Capital Gains Tax | St. James’s Place Can giving assets to my spouse or civil partner cut our CGT bill? If the sale of an asset is going to take you over your £6,000 CGT allowance and land you with a tax bill, you can give the asset to your spouse or civil partner – so long as they haven’t already used up their allowance. They can then sell it and use their own £6,000 annual allowance. This m...
by TedSwippet
Tue Feb 27, 2024 3:28 am
Forum: Non-US Investing
Topic: Using up wife's ISA allowance
Replies: 17
Views: 3798

Re: Using up wife's ISA allowance

alwaysonit wrote: Tue Feb 27, 2024 3:10 am The only way to use up her allowances is to transfer her the funds (tax free gift) to invest?
This might apply: Marriage Allowance: How it works - GOV.UK
Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.

This reduces their tax by up to £252 in the tax year (6 April to 5 April the next year).
alwaysonit wrote: Tue Feb 27, 2024 3:10 am From my understanding we cannot be jointly assessed (which would mean I can use up her allowances without transferring the funds to her name)?
Right. Aside from the above, you have to finagle ways to transfer income to your wife. Gifting, joint accounts, that sort of thing. (Or become an MP so you can then "employ" your wife.)
by TedSwippet
Mon Feb 26, 2024 2:39 am
Forum: Non-US Investing
Topic: UK Investor - portfolio review
Replies: 38
Views: 5856

Re: UK Investor - portfolio review

Welcome. A few comments below. Overall, I feel okay to overweight US equity exposure up to 70-75% of equity. My understanding is that it is a sound strategy to even ignore everything except the US, at least for US investors. There could be some nuances for non-US investors (e.g. withholding tax, currency risk), but I don’t think they apply to my case. What is it that you think does not apply? That is, why do you think it may be appropriate for you to invest as if you are US based? Global Small Caps are removed in favour of US Small Cap Value because I wanted to place a small bet on small cap value premium. My thinking is that even if it does not work it seems unlikely that US Small Cap will lose to Global Small Cap. In other words I won’t l...
by TedSwippet
Sun Feb 25, 2024 3:37 am
Forum: Non-US Investing
Topic: Tax-Loss Harvesting if Moving Abroad
Replies: 6
Views: 2620

Re: Tax-Loss Harvesting if Moving Abroad

Underscore wrote: Sat Feb 24, 2024 5:56 pm I'm wondering if the Czech government will not respect my US-accrued capital losses, ...
Almost certainly it will not, although to be sure you would have to fully research Czech domestic tax law and also the US/Czech tax treaty.

As a general rule, countries will happily tax capital gains realised after you become resident, but not capital gains realised before becoming resident. Symmetrically, they will recognise and credit losses realised after you become resident, but not losses realised before becoming resident.

In countries with territorial and residence based taxation -- that is, practically everywhere except for the US and Eritrea -- only what you do when you are a tax resident counts.
by TedSwippet
Fri Feb 23, 2024 10:21 am
Forum: Non-US Investing
Topic: Interest on cash balance vs. short term bonds
Replies: 7
Views: 3564

Re: Interest on cash balance vs. short term bonds

Hyperborea wrote: Fri Feb 23, 2024 9:50 am Cash held at a brokerage is subject to US estate tax. It won't impact you (you have to be dead for the estate tax issue) but it will impact your heirs (spouse, children, parents, etc.). This will also depend on if your country of residence has an estate tax treaty with the US. If not try to keep the cash balance below US$60K.
Right. The OP's sig suggests UAE, which has neither US income tax treaty nor US estate tax treaty.
The Planner wrote: Thu Feb 22, 2024 11:35 am Yea or nay?
Nay, then. (Although, perhaps shaded by which IB country the account is based in.)
by TedSwippet
Thu Feb 22, 2024 4:34 pm
Forum: Non-US Investing
Topic: Moved to the US. Didn't know about PFICs
Replies: 1
Views: 2315

Re: Moved to the US. Didn't know about PFICs

Welcome to the forum. I moved to the US in November 2022. I had 3 ETFs with Degiro and decided to sell them this year because Degiro doesn't provide a 1099-int/div form and it was going to be annoying to deal with taxes. If you haven't already seen it, this wiki article might be a useful read: US tax pitfalls for a non-US person moving to the US It is too late now for any pre-immigration planning, but some things (like PFIC) worsen with time, so even if you've missed something, knowing about it now might save you a lot of trouble later on. - My broker still considers me an EU resident (I think I have to file a special form with them but haven't done so). I plan to close the account anyway, do I need to update this? Not sure what this is. A ...
by TedSwippet
Thu Feb 22, 2024 4:56 am
Forum: Non-US Investing
Topic: Vanguard makes life difficult for NRAs in the UK and India
Replies: 13
Views: 4686

Re: Vanguard makes life difficult for NRAs in the UK and India

What is the definition of a non-lump sum distribution then? Precisely. The original aim of the 'lump sum' clause was to close off a "loophole" whereby the UK traditionally did not tax (foreign?) whole-pension lump sums, and under other clauses neither would the US. Clearly the US couldn't possibly accept this, hence this special 'lump sum' clause. This UK tax loophole is apparently long since closed, but the treaty clause remains. The following discussion with HMRC is one that covers this area. It is notable for the confusion it generates. HMRC appears to reverse its position several times, cannot accurately address detailed scenarios provided, conflates interest with pension withdrawals, attempts what may be an authoritative rep...
by TedSwippet
Wed Feb 21, 2024 10:26 am
Forum: Non-US Investing
Topic: Vanguard makes life difficult for NRAs in the UK and India
Replies: 13
Views: 4686

Vanguard makes life difficult for NRAs in the UK and India

Just received, by email: We're writing to inform you of an update to the U.S. tax withholding rate for distributions from your IRA at Vanguard. A nonresident alien is an individual who's not a U.S. citizen or a resident of the U.S. Nonresident aliens are subject to U.S. income tax on income from sources within the U.S. In general, nonresident aliens who are citizens of the United Kingdom and India are subject to a 30% tax withholding rate on IRA withdrawals. The income tax treaties between the U.S. and the United Kingdom and India do permit plan administrators to apply a reduced withholding rate to distributions that aren't lump-sum distributions; however, there's no clear definition of a lump-sum distribution. So, to be conservative, as of...
by TedSwippet
Wed Feb 21, 2024 6:58 am
Forum: Non-US Investing
Topic: How to invest while living in Japan as a dual Japanese/US citizen without getting into major tax trouble?
Replies: 9
Views: 3822

Re: How to invest while living in Japan as a dual Japanese/US citizen without getting into major tax trouble?

Not Japanese or a resident of Japan, but ... a few pointers below that might help. So I'm a Japanese/US dual citizen and after living my whole life in the US, I finally decided to move and live in Japan for good. I understand the importance of saving for retirement, and I have about 150K saved so far in an IRA, Roth, and HSA. However, after doing some research, it seems that I might not really have any options for saving for retirement anymore now that I have moved to Japan. The following wiki page hasn't been updated in quite a while, but might be a useful starting point: - Investing from Japan for US citizens and US permanent residents - Bogleheads More generally: - US tax pitfalls for a US person living abroad - Bogleheads - Taxation as ...
by TedSwippet
Tue Feb 20, 2024 7:50 am
Forum: Non-US Investing
Topic: Non-Resident UK Citizen – My Plan for consolidating small pensions[UK]
Replies: 12
Views: 3284

Re: Non-Resident UK Citizen – My Plan for consolidating small pensions[UK]

The actual text from that page reads: You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. ... You’ll then have 6 months to start taking the remaining 75% , which you’ll usually pay tax on. It does. And I think it's either misleading, or just plain wrong. From other (admittedly, non-government) sources: Pension Drawdown Rules | How Does Pension Drawdown Work? Choosing your income in drawdown You’re in control of how much income you take and when. You might decide you don’t need an income straight away, or even at all. You might just want to take your tax-free cash. If you do want an income, you can choose to take regular withdrawals or just dip into the pot as and when you need to - it’s up to you. W...