Bogleheads.org

Here is a thread about an Allan Roth article on direct indexing. https://www.bogleheads.org/forum/viewtopic.php?t=400137 My favorite part.... "The 1099 tax form on my little $5,000 direct indexing experiment is 86 pages!" I had one very specific reason for using direct indexing, and Schwab’s version has addressed my need very well. It has also generated substantial capital losses through its harvesting algorithm. The 1099 is unlike anything I’d seen before, but that hasn’t actually had any consequence for me beyond using a little more storage space on a hard drive. I probably would not have looked into direct indexing but for a very specific circumstance, but the only negative I’ve actually seen is the cost (which is well worth i...

Here is a thread about an Allan Roth article on direct indexing. https://www.bogleheads.org/forum/viewtopic.php?t=400137 My favorite part.... "The 1099 tax form on my little $5,000 direct indexing experiment is 86 pages!" I had one very specific reason for using direct indexing, and Schwab’s version has addressed my need very well. It has also generated substantial capital losses through its harvesting algorithm. The 1099 is unlike anything I’d seen before, but that hasn’t actually had any consequence for me beyond using a little more storage space on a hard drive. I probably would not have looked into direct indexing but for a very specific circumstance, but the only negative I’ve actually seen is the cost (which is well worth i...

Blue456 wrote: ↑Sat Mar 25, 2023 9:08 am Take them to court. The IRS even tells you how to sue them:

https://www.irs.gov/newsroom/taxpayer-bill-of-rights-5

Two years, prior notice—by their standards it probably rises to the level of willful disregard of the law.

The jurisdiction of organization of the broker (or a parent entity) is an issue for the FBAR/8938 reporting of the account; the jurisdiction of organization of the fund is an issue for PFIC status of the investment.

I am in a similar situation: US citizen living in EU country. I opened a Interactive Brokers account, which was set up with Interactive Brokers UK. I have not yet funded this account because I am concerned about whether I would be buying a PFIC, a concern also raised by the poster below. Can I just suggest you review what you hold in this account, to make sure nothing in it falls foul of the US's spiteful PFIC tax rules? Holding a UCITS ETF would probably be easily done in this account, but it creates a raft of nasty US tax problems. Because of US tax laws, US citizens living in the EU and UK face an especially difficult investing landscape. I spoke to IB customer service, who said I can perform an in-kind transfer of my US domiciled Vangu...

I get it. Sometimes things just aren’t worth it, even when I don’t get know what the other uses for the money will be.

Stork wrote: ↑Wed Mar 22, 2023 7:39 am We are not US persons but have used Degiro for buying bonds from Germany, France, Spain and Portugal.

Be aware that some are not traded all that much (the German ones were by far the most liquid) and spread can be on the high side, this is of course the market and not Degiro.

We also have Danish mortgage bonds (AAA and linked to Euro), but they are different beasts and not accessible through our brokers, only through our Danish bank.

Thank you, Stork. It seems Degiro won't have me anyway; they decline to accept US persons as customers, at least in Italy.

Bumping my own thread and adding a request for feedback on DEGIRO for this use case. Thanks.

Florence Panini Toscani (I personally thought better than fratellini) Panini Toscani (the irony!) and i Fratellini are pretty good. I prefer the simplicity at i Fratellini (it’s closer to what you’d get if you went to a not-famous place for a schiacciata), and you may see some Fiorentini there. If you want to go to some places that are a step more local but still near the center, you could try Semel Street Food (and can go to Coffee Mantra easily from there), or i Fratelli di Mare (a cart), or the window at la macelleria Caterini Giorgio. If you want the famous-among-Fiorentini equivalent of the sandwiches at all’Antico Vinaio, you could try L’esclusiva da Francesco, by the stadium. If you really want pizza for lunch (not traditional), the...

While the Interactive Brokers branch in Ireland has been good for many of my investing needs as an Italian in Italy who is also a US citizen, it does not appear to be a great choice for buying other EU member states’ sovereign bonds, some of which are suitable for my particular investment purpose. Does one of you in a similar situation have a recommendation for a broker to serve that role? Thank you.

If you’re using an Iberia site aimed at Europe, and trying to use a U.S. credit card, it’s entirely possible that the merchant bank defaults to rejecting the card and the transaction never even advances to your bank. Although I live in Europe, I prefer the rewards of a card I acquired in the US (even with the costs of conversion through Visa), but it’s not so unusual for me to find web sites that just won’t process that card.

AlwaysLearningMore wrote: ↑Sun Mar 19, 2023 2:10 pm

Tom_T wrote: ↑Sun Mar 19, 2023 1:23 pm Hire a good accountant to do your taxes. Why stress every year?

Exactly!

While it’s less work to check their work than actually do it, the aggravation in explaining their mistakes to them is significant.

jjmaddison wrote: ↑Wed Mar 15, 2023 4:32 am

The Client Assets Key Information Document from IBIE should answer your question.

According to this document, IBIE has a lot of freedom in how it keeps the money, and the money is insured only up to €20.000, right?

P.S. The inheritance question is still hanging, is it?
"Just don't die" is the most favorable option for sure

There’s something comical (in the painful sense) about US citizens who use IBIE filing form 8938 because of the possibility that it is “foreign,” while non-US citizens face the risk of US estate taxes because of the possibility that it’s “domestic.” Convoluted legislation really is in the government’s best interest.

viewtopic.php?t=399181

whodidntante wrote: ↑Mon Mar 13, 2023 10:46 pm He's not 100% stocks. He's 90/10. You said so yourself. Plus you estimate he has a net worth of 1.5 million, spends 40 grand/yr, and doesn't plan to retire yet. This dude is set. All he's missing is a place to write annoying blog posts.

How’s he going to decide exactly which month to start collecting social security?

aghusker wrote: ↑Mon Mar 13, 2023 9:46 pm

BernardShakey wrote: ↑Mon Mar 13, 2023 9:41 pm Three issues here.

1) Rollback of some of Dodd-Frank regulations back in 2018 that limited / minimized requirements and stress tests
2) Lack of attention / oversight from regulators
3) Inept and/or corrupt bank executives

Please cite which specific regulations that were rolled back would have prevented either bank failure. I don’t think you can.

It is impossible to say for sure what “would have prevented” any failure, but both banks had assets that would have subjected them to supervisory stress tests under the pre-2018 rules, but not under the rules as modified then ($50 billion became $250 billion).

See sec. 401: https://www.congress.gov/bill/115th-con ... /2155/text

Lazerr wrote: ↑Mon Mar 06, 2023 11:07 am Indeed. Only a big hassle if the account in question is the reason why you would have to file in the first place.

Yeah, for me it's the only reason I need to file an 8938. Grumble, grumble.

If you look at exhibit 21 to Interactive Brokers Group, Inc.’s 10-K (that’s the public company), you’ll see the Irish entity listed as a subsidiary of a Connecticut company. The problem is, is Interactive Brokers Group a financial institution? The US brokerage is Interactive Brokers LLC, itself a subsidiary of Interactive Brokers Group. So while Interactive Brokers Ireland is a subsidiary of a US corporation, it might not be a subsidiary of a US financial institution. That’s indeed what gives me pause and why I do report it, as noted above. However, why IBKR (Ireland) would issue a 1099 if it is a foreign financial institution, and what my 8938 adds if the IRS already has a 1099, are questions that make me suspect my approach is unnecessar...

If you look at exhibit 21 to Interactive Brokers Group, Inc.’s 10-K (that’s the public company), you’ll see the Irish entity listed as a subsidiary of a Connecticut company.

I believe you have received a 1099, which means the same info would have been reported directly to the IRS.

For these reasons, I don’t believe one is required to treat IBKR (Ireland) as “foreign” for either the FBAR or the 8938. However, I have not been able to get any conclusion from IBKR and out of an abundance of caution I include the account on my disclosures.

TarHeel2002 wrote: ↑Fri Mar 03, 2023 8:06 pm 42 yo married 3 kids
1.25 million investments
52k cash for car
150k 529
275k annual income
Savings rate
70k retirement annually
18k 529 annually
Debt 138k house 2.5% low payments

Started with -200k net worth out of school so it’s hard for me to part with 50k for a car

Do you still have ten years of “needing” this kind of car in front of you?

Ron Ronnerson wrote: ↑Fri Mar 03, 2023 9:15 am
There is no perfect solution, though. There are limited dollars in the bucket and a district that pays more benefits will have less available to go toward salaries.

I'm just curious, was this also how the district did it before ACA/subsidies?

No need to do anything different. My father, a former CFO and Wharton graduate, is worth approximately the same as you and has not added anything new to his portfolio. Just stay the course. No need to venture into direct indexing. Thanks - I have reached the stage where I really need to be careful about adding additional complexity to my investments. I don’t see the extra complexity. The tax filing issue I have already debunked. The several hundred individual stock positions at any given time…well it is all contained to a single account. Just imagine the account is a fund unto itself. If you were to look into your mutual fund holdings, you would find plenty of “complexity” there as well Lots of people eat sausage, but few make their own.

Many years ago, I did give Vanguard my foreign address and had no problems with that, either (but I kept a lot more money at Vanguard then). I bet when you used your foreign address you didn't call VG and say, "Hey, guys! Don't you realize I have a foreign address? Are you OK with that? I thought The Vanguard Group was only for US investors." In fairness, he did say it was many years ago and could have been before financial institutions started being strict about it. But, yeah, these days if you try that at best you can expect a letter telling you you have 30 days to switch to another brokerage or your accounts will be liquidated and a check mailed to you; or at worst they immediately close your accounts. I never got around to th...

Marseille07 wrote: ↑Fri Mar 03, 2023 1:11 am

EddyB wrote: ↑Fri Mar 03, 2023 12:51 am I would switch everything possible to e-delivery and change the address to a mail-forwarding service now, to have a test period.

One problem is that those mail forwarding services give you a commercial address, not residential. The USPS database knows this and the financial institutions sometimes sweep-check the customer addresses on file.

I use a service popular with liveaboard boaters; I have never had this problem with Vanguard. It was my mailing address for a couple of years while I did have a US residential address. Early in the pandemic, I switched it to being my only address.

Many years ago, I did give Vanguard my foreign address and had no problems with that, either (but I kept a lot more money at Vanguard then).

Marseille07 wrote: ↑Thu Mar 02, 2023 11:42 pm

plats wrote: ↑Thu Mar 02, 2023 11:17 pm I strongly recommend not calling Vanguard asking about their current policy--you'll force them to adapt one. After leaving just go on their website and change your address to your foreign one.

They should call today. The last thing they want is to go abroad without calling, update their address then find out Vanguard is closing their account.

Calling them today won't force them to adapt one since they haven't moved.

I would switch everything possible to e-delivery and change the address to a mail-forwarding service now, to have a test period.

My account is now held in the Irish branch, but until two hears ago I had an account with the US branch and could indeed send and receive SEPA payments.

H-Town wrote: ↑Thu Mar 02, 2023 1:38 pm

mrmass wrote: ↑Thu Mar 02, 2023 1:33 pm To me, if your W2 shows 1M or more.

According to the U.S. Census Bureau, it's less than 0.5 percent of the U.S. the earn > 1M. It's an elite group.

And the ones that don’t do it on a W-2 are, apparently, disqualified.

OkanePlease wrote: ↑Thu Mar 02, 2023 12:56 pm

plats wrote: ↑Thu Mar 02, 2023 12:38 pm I got on Japan's national health insurance my first week here even with being on a tourist visa. That was a while back, things may have changed. It also covers overseas' medical bills, but it's always good to have back-up travel insurance or a credit card with insurance when out of Japan.

Thanks, plats. How long ago was this? My partner is from Japanese and we go there often. There hasn't really been a "tourist visa" as we typically think of it for a long time. No need for a visa for up to 90 days.

I think Japan only grants visa-free entry to tourists from about 1/3 of the world’s countries.

I have only been on one cruise (Disney). One of my kids was sick by the third day. I understand that is very common, although my sources are purely anecdotal. If one of your party became ill, such that your group would not fully enjoy the cruise, how much would you regret the expenditure?

Be sure that your estimated cost reflects transit, character costumes (or other cruise-motivated purchases) and shore excursions, if any.

While I think you could reasonably afford this one-time expense, it’s significant and you should consider the hedonic adaptation risks.

Matt212 wrote: ↑Tue Feb 28, 2023 11:50 pm Typical Investor: After testing, I have chosen to take this course of action: FEIE + remove ROTH + 5329 tax on ROTH gains
Again: my thanks to all for the many constructive suggestions.

Just curious, but would the FTC not have zeroed out her US tax liability (while letting her make her IRA contribution)? I have never heard of such an outcome for a UK tax resident, although I know that the ones I’m familiar with likely have higher incomes and generally also have children.

I’m just going to suggest that you retest the alternative, using FTC, not just this year but as a projection for the next five. I understand the appeal of the FEIE, but does she owe any US tax if she uses FTC instead?

Stork wrote: ↑Sun Feb 26, 2023 3:39 pm
It should be noted that have you held the asset for more than 2 years, the purchase price is adjusted for inflation by multiplying by a factor found in this table: https://www.economias.pt/coeficientes-d ... -da-moeda/

I love it.

Turning more specifically to investment portfolio considerations for US citizens who are tax residents of another country, I noticed the wiki has a long list of IRS forms that may be required to be filed, depending on what foreign assets one holds: https://www.bogleheads.org/wiki/US_tax_pitfalls_for_a_US_person_living_abroad#Locally_tax-free_savings_and_investment_accounts e.g. Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company (PFIC). Extremely time-consuming, but required if you hold any non-US domiciled funds or ETFs. The IRS's estimated time to complete this form is over 48 hours Perhaps this is a good reason to avoid initiating investments in non-US domiciled funds if one has the ability to invest i...

Not a lawyer, just curious if US double taxation treaties will shield a US citizen from being taxed by the resident country on income derived from social security and other tax advantaged accounts or investments in US. I know rules vary from country to country, but perhaps a few in Europe would actually provide an advantage for a US citizen/or double citizen, from income generated from US sources. Obviously, this leaves some interesting questions on how Roth income is considered, but then again, this is perhaps where each DTT (double taxation treaty) comes into question. It depends on so many factors! In addition to every treaty being different, many distinguish government pensions from private pensions, treat social security differently d...

I'm ready to retire financially but am having trouble pulling the trigger. Reasons: job is fine. Income is nice. And not really sure what I want to do with myself in retirement. But I fear that with this set of circumstances, I could well stay stuck in place until I'm dead. You often don't get a warning sign, after all, that the end is near, and if you do, you probably won't have much energy to travel or explore yourself in retirement. Colleague of mine is a case in point. Kept coming to work until 70. Heart attack. Triple bypass, and now he's just home, all the time. Anyone else find themselves in my situation and retire anyway--by forcing yourself, if necessary? If so, how did it go, and how did what you found compare with what you expec...

OverseasBH writes: You should leave your investments in the US, deal with US taxes only I'm not sure that there is any country in Europe where you can reside there, have US investment income, and not pay tax on it to that country. Re Britain I have heard of "non-dom" status, which has roughly that effect, but you have to apply for it and pay a hefty annual fee in lieu of taxes on the foreign income. Also, if you leave any investments in the US, you need to be aware that custodians often have policies which limit what people outside the US can hold with that custodian or what they can do with their holdings. Yeah, I chuckled at the tax advice. If I’m going to start ignoring tax laws, why not just ignore them all! What an ignorant ...

OverseasBH writes: You should leave your investments in the US, deal with US taxes only I'm not sure that there is any country in Europe where you can reside there, have US investment income, and not pay tax on it to that country. Re Britain I have heard of "non-dom" status, which has roughly that effect, but you have to apply for it and pay a hefty annual fee in lieu of taxes on the foreign income. Also, if you leave any investments in the US, you need to be aware that custodians often have policies which limit what people outside the US can hold with that custodian or what they can do with their holdings. Yeah, I chuckled at the tax advice. If I’m going to start ignoring tax laws, why not just ignore them all! My capital gains ...

chinchin wrote: ↑Fri Feb 24, 2023 1:53 pm Seems like it would be cheaper to brew loose leaf tea in a pot. Extra tea could be put in a thermos and consumed later.

Just the water is cheaper still.

A major concern as a US citizen overseas will be how the country you are living in taxes your US-based investments. Also, potential investments in the country where you live may be marketed because of their tax benefits in that country, but for a US citizen who also has to pay US taxes, those benefits may be nonexistent. In particular, mutual funds based outside the US pay as I understand it the US PFIC tax, which most people want to avoid. At a more basic level, you need to report your non-US financial accounts to the US government. I forget the name of this requirement -- FBAR I think. You fill out FinCEN form 114. I hope you already know this. ADDED: there is good information here: https://www.bogleheads.org/wiki/Non-US_investor%27s_gui...

mega317 wrote: ↑Fri Feb 24, 2023 3:40 am

Sprucebark wrote: ↑Fri Feb 24, 2023 3:08 am If the IRS doesn’t lose sleep over the issue, neither will I.

I think the reason the IRS doesn’t care is because in the long term a wash sale doesn’t really matter. When you do sell the investment down the road you’ll have a larger gain.

And why is there no outrage over “tax gain harvesting”?

Well except if you donate or die. And you can be offsetting ordinary income along the way.

There are no rules about purchases within 30 days of realizing a gain so why would there be any “outrage” over gain harvesting?

Also fantastic for offsetting “chunky” gains (e.g., in real estate) and then managing more-easily-fragmented gains (e.g., stocks) to be taxed at the 0% rate.

I'm in agreement that the issue is a poorly defined "substantially identical" which is, as noted in the article, incredibly outdated with how the majority of investments are made these days. I couldn't, in good faith, say voting and nonvoting shares of the same company weren't substantially identical. That's really pushing the envelope. If that would steer your behavior, you may want to look at the SEC no-action letters to Crawford & Co. (1991) and Turner Broadcasting System (1990), both of which conclude that meaningful differences in voting rights prevent two nominally different securities from being treated as a single class of securities for securities law purposes. At least one federal court case (Greenfield v. Criterion...

Presumably though you would also pay US tax? So would you really keep all the tax savings? Yeah, I don’t understand the circumstances in which going to Andorra opens the door to US social security and big tax savings. I don’t think there’s a US totalization agreement with Andorra, nor a US tax treaty. As I said, it's sort of a unique situation for us. We're planning to move from the US to Northern Europe (possibly Norway) next year for a two-year postdoc for my wife. If I can keep doing my current self-employment from there, we'll pay a sizable tax over there, which will give us a large Foreign Tax Credit (FTC), which can be carried forward up to 10 years. We probably don't want to return to the US after the postdoc, but if we go to Andorr...

FWIW, I've been to Andorra many times (I used to live in Barcelona), but I've never heard it described as a "Montana" in Europe. I don't think that view is shared by everyone, but let's not discuss politics. Anyway, it's a really beautiful place and I'm glad you like it! I think you should have more than enough money to retire early, if that's what you want to do. As already mentioned, I would do calculations on how much pension you and your spouse will receive, even if meager. And also make sure you qualify for free health insurance in retirement. Andorran citizenship might offer you additional security too. Buying your property makes sense if you plan to stay there long term - it's also a great hedge against inflation. Mortgage...

My wife has the mirror angled such that she sees some of the back of her car (along the side). I've pointed out to her that the location of the back of her car should not be in doubt -- so angling the mirror out and seeing wider is better but I lost that argument. There are some Youtube videos about how to adjust side mirrors to minimize blind spots that prove your point and may persuade her. Hmmm…. I’m not in the US, so surely there are different norms, but the logic I’ve heard for being able to see the car at the edge of the mirror (which is the legal standard here) is that without a fixed reference point, one cannot definitively know where one is looking with the mirror. Interestingly, for those who criticize others’s “reliance” on blin...

Jack FFR1846 wrote: ↑Sun Feb 19, 2023 8:53 pm

jebmke wrote: ↑Sun Feb 19, 2023 5:23 pm I don't really have a blind spot in my RAV4 because I point the mirror such that I cannot see my car but can see the lane beside me. So I really have no blind spot.

That's the correct way to adjust mirrors….

Do you have a really firm view on “how much international do I need?” too?

Before the electronic-filing window closes in late November.

I would only do it if the job was really the best way to get something important to me. E.g., if I wanted to improve my French, maybe I’d work in a low-level, but high contact job in France.

guyfromct wrote: ↑Sat Feb 18, 2023 1:23 pm

fishnhunt wrote: ↑Thu Feb 16, 2023 12:46 pm I've never heard of that and it does not seem realistic (too high) based on what properties and rent go for in my area.

The 1% rule I have heard of is budgeting 1% (sometimes higher, 2-3%) of the house value for yearly maintenance and repairs.

That just means from a landlord’s point of view they are unattractive assets. Plenty of wonderful places to live are horrid real estate investments.

Many landlords who bought in anticipation of appreciation rather than reliance on rental income feel like they definitely had good investments notwithstanding being on the wrong side of this “rule.”

idc wrote: ↑Fri Feb 17, 2023 8:28 am Your savings are in USD. Doesn’t IBKR offer US Treasuries on the secondary market? Safest investment possible with decent interest rates and not taxed (by US if you’re not a US resident)

OP, are you a US citizen or resident?

Italy’s BancoPosta offers a 3,0% 270-day term deposit.

snackdog wrote: ↑Wed Feb 15, 2023 10:32 pm If you can cross the river for shopping, you can avoid sales tax as well.

But doesn’t that trigger the obligation to report and pay use tax?