Global nomad advice/newbie alert

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hermano
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Global nomad advice/newbie alert

Post by hermano » Wed Nov 29, 2017 6:13 am

Hi Bogleheads,

I just joined this forum after reading Andrew Hallam's book, The Global Expatriate's Guide to Investing.

Like him I am a teacher working abroad, currently in Shanghai, China. I have just opened and transferred some funds into an Interactive Brokers account. I was wondering if you could help me...

I am 32 years old, British. My wife is also 32 and American. We have no debt and manage to save approximately 60% of our net income. We want to invest for our retirement. I have no idea which country I will want to retire in (maybe in Asia), and I will most likely be paid in RMB for next 4 years at least. We have no plans to work or live in the UK or USA.

Our investable assets:
$20,000 in my IB account (not invested at the moment)
$30,000 in USD cash in my mothers house in the UK (which I have to convert into GBP and then deposit in my IB account as USD)
$15,000 in RMB in my Chinese bank account.
We can also add about USD$5000 more every month from our salary in RMB.

I want an 25/75 bond/stock allocation in some type of Couch Potato style portfolio with low cost index funds (not sure I understand EFTs).

I am thinking:
25% bonds (for stability)
25% S&P 500 (US exposure)
25% Europe???
25% Worldwide excluding USA??

I would re-balance my portfolio each month by purchasing the lagging fund.

My questions are:
  • Is there any point having USA, Europe and Worldwide separately, or should I just have 75% in a worldwide tracker?
  • I am not sure how to choose a suitable bond. How do I decide this?
  • As the currency I will earn in is currently RMB and likely to change in the future, and I have no idea where I will retire, should I always convert my money into USD and only buy funds that are listed in USD?
I hope these questions don't sound too basic... TIA!

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Ethelred
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Re: Global nomad advice/newbie alert

Post by Ethelred » Wed Nov 29, 2017 8:23 am

I'm not going to offer too much info here, just to point out that the biggest financial issue here may be the fact that your wife is a US citizen. The US is the only country in the world to tax on the basis of citizenship - everywhere else only taxes on the basis of residency. This means your wife may be liable to US taxation for the rest of her life. There are all sorts of investment rules she will need to be very careful about, such as avoiding PFICs.

Others can give you more info on the portfolio questions, but I do wonder why your $30k needs to be converted into GBP and then back into USD. I'd have thought there should be a way to get that into a USD account directly while in the UK, and avoid exchange fees. It's not something I've done, but I'd imagine there are several ways to do it. Do you still have a UK bank account, where the bank might be able to help you?

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robolove
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Re: Global nomad advice/newbie alert

Post by robolove » Wed Nov 29, 2017 11:50 am

[quote=hermano post_id=3639260
  • As the currency I will earn in is currently RMB and likely to change in the future, and I have no idea where I will retire, should I always convert my money into USD and only buy funds that are listed in USD?
[/quote]
Can only tell you what I do.

I’m 42, American, in Japan, no idea where I will retire . and convert JPY to USD. I though about IB but
decided to open a taxable account with Vanguard because I have a U.S. address and bank. I’ve had a 3 fund portfolio since 2009. I have a 529 for my seven year old.

Besides investing, save for an imminent exit or an emergency and keep your walking costs low. Sounds like you don’t have any children yet...

hermano
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Re: Global nomad advice/newbie alert

Post by hermano » Wed Nov 29, 2017 10:55 pm

Ethelred wrote:
Wed Nov 29, 2017 8:23 am
I'm not going to offer too much info here, just to point out that the biggest financial issue here may be the fact that your wife is a US citizen. The US is the only country in the world to tax on the basis of citizenship - everywhere else only taxes on the basis of residency. This means your wife may be liable to US taxation for the rest of her life. There are all sorts of investment rules she will need to be very careful about, such as avoiding PFICs.

Others can give you more info on the portfolio questions, but I do wonder why your $30k needs to be converted into GBP and then back into USD. I'd have thought there should be a way to get that into a USD account directly while in the UK, and avoid exchange fees. It's not something I've done, but I'd imagine there are several ways to do it. Do you still have a UK bank account, where the bank might be able to help you?
Good points. You're right, as my wife is a US citizen, she is supposed to report her foreign income to the IRS, however the threshold for paying tax on this income is quite high (around $100,000) and as far as I am aware, if you owe nothing, they can't pursue it. I will tell her to start filing, but I'm not going to do it for her!!!

As the investment is in my name only, my wife's income should never exceed $100,000 - us lowly teachers dont make that much....

As for the money conversion, unfortunately, banks in the UK do not accept USD cash deposits due to money laundering regulations. So I have to convert it into GBP first and then deposit it. Stupid, I know, but I don't make the rules...

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Tyler Aspect
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Re: Global nomad advice/newbie alert

Post by Tyler Aspect » Wed Nov 29, 2017 11:15 pm

It seemed that your wife should own only US domiciled ETFs, while you own only non-US domiciled ETFs, with everything being separate accounts.

On the bond side, hold US and European bond ETFs. On the stock side I would recommend slight overweight US and Europe, but otherwise cover world wide.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

Diogenes
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Re: Global nomad advice/newbie alert

Post by Diogenes » Thu Nov 30, 2017 2:35 am

hermano wrote:
Wed Nov 29, 2017 10:55 pm


Good points. You're right, as my wife is a US citizen, she is supposed to report her foreign income to the IRS, however the threshold for paying tax on this income is quite high (around $100,000) and as far as I am aware, if you owe nothing, they can't pursue it. I will tell her to start filing, but I'm not going to do it for her!!!

As the investment is in my name only, my wife's income should never exceed $100,000 - us lowly teachers dont make that much....
Welcome to the forum!

So you are both under a teaching contract? Do you plan to move from country to country in this fashion? It's true that your income and your wife's are low, but don't discount the U.S. tax obligation. Do you have a U.S. passport, or do you plan to apply for one? Even if you are below the $100K FEIE, filing a U.S. tax return is required for U.S. citizens if income is over about $10k (single) or about $20K (joint). You only get the FEIE if you file, it's not automatic. It's easy with Turbotax. Downside if you don't file can be significant for many reasons (especially if you have U.S. accounts or plan to get them, or to renew a U.S. passport). There are also FBAR and FATCA requirements for foreign accounts that are easy to comply with and she should not ignore them. Since you're married to a U.S. citizen, it matters to you also. Since you have what I assume is a joint account in RMB valued at $15,000, your wife is required to electronically file FBAR. And there are consequences for not doing so.

As far as the investment questions:

- Perhaps I'm biased, but if you can hold everything in a U.S. investment account in USD, I would think that is the best way to go. The USD is by far the most stable global currency long-term. I've been an expat for 10 years or so and still do that, other than foreign convenience accounts. Since you have an IB account, perhaps you also can get one at Fidelity or Schwab. Keep in mind that to do that one of you will need to qualify as a U.S. person with a U.S. address and SSN.
- At your age and account size, don't buy individual bonds, for simplicity use a target date fund at Fidelity/Schwab etc. Since you are at least 30 years from retirement, you can select perhaps a 2045 fund and forget about it. If you want to individually manage, 25% in a bond fund at age 32 is probably too much.
-From trial and error on my part, I can also suggest not getting too many different funds. Search the BH site for the 'Three Fund Portfolio'

Good luck.

TedSwippet
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Re: Global nomad advice/newbie alert

Post by TedSwippet » Thu Nov 30, 2017 6:06 am

Diogenes wrote:
Thu Nov 30, 2017 2:35 am
- Perhaps I'm biased, but if you can hold everything in a U.S. investment account in USD, I would think that is the best way to go. The USD is by far the most stable global currency long-term. I've been an expat for 10 years or so and still do that, other than foreign convenience accounts.
But you are (presumably?) a US citizen, and so have no real choice but to hold US domiciled accounts and funds thanks to the US's civil-war era citizenship based taxation rules and its horrific PFIC treatment of non-US domiciled investments. So this is perfect advice for the OP's wife, as are your remarks on filing US tax and claiming the FEIE.

That noted, the OP is not a US citizen. He is British and lives in China, a country that lacks an estate tax treaty with the US, making the decisions here much more nuanced. Non-US citizens holding US-situated accounts and investments risk a heap of US tax problems that it is generally wise to avoid. And the OP and his wife will almost certainly want to keep their finances separated so as to quarantine IRS involvement in their lives to the smallest area possible. This may include holding any home or real estate title in his name only

To your other point, stability of US currency, a USD-denominated mutual fund that holds non-USD assets is just as exposed to exchange rate fluctuations as if it were denominated in EUR, GBP, or Zimbabwean dollars for that matter. A fund's currency of denomination is really just an accounting device. The stability (or otherwise!) of the currency of the mutual fund's underlying assets is what should matter to you.

hermano
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Re: Global nomad advice/newbie alert

Post by hermano » Mon Dec 04, 2017 4:29 am

TedSwippet wrote:
Thu Nov 30, 2017 6:06 am
Diogenes wrote:
Thu Nov 30, 2017 2:35 am
- Perhaps I'm biased, but if you can hold everything in a U.S. investment account in USD, I would think that is the best way to go. The USD is by far the most stable global currency long-term. I've been an expat for 10 years or so and still do that, other than foreign convenience accounts.
That noted, the OP is not a US citizen. He is British and lives in China, a country that lacks an estate tax treaty with the US, making the decisions here much more nuanced. Non-US citizens holding US-situated accounts and investments risk a heap of US tax problems that it is generally wise to avoid. And the OP and his wife will almost certainly want to keep their finances separated so as to quarantine IRS involvement in their lives to the smallest area possible. This may include holding any home or real estate title in his name only
I think you're right TedSwippet, since my wife is US citizen, and I am British, it is in our advantage to hold all our assets in my name only, that way we avoid all the complications of US tax law. We have no property, nor do we intend on buying anything. I will only hold an IB account in my name only and UK cictizens don't have to report any forign income if they are non-resisdent (which I am).

My wife has been living abroad for 9 years now, and she has never filed taxes or had any problems with getting a passport. I agree she should still file her taxes to avoid any potential future problems.

As to our income, I'm pretty sure it's legitimate that all my wife's salary can go on our monthly spending (with any left over given as a gift to me) and all my salary into my IB investment account. Can anyone tell me otherwise?

ivk5
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Re: Global nomad advice/newbie alert

Post by ivk5 » Mon Dec 04, 2017 4:54 am

hermano wrote:
Mon Dec 04, 2017 4:29 am
As to our income, I'm pretty sure it's legitimate that all my wife's salary can go on our monthly spending (with any left over given as a gift to me) and all my salary into my IB investment account. Can anyone tell me otherwise?
This sounds fine. However:
hermano wrote:
Mon Dec 04, 2017 4:29 am
My wife has been living abroad for 9 years now, and she has never filed taxes or had any problems with getting a passport. I agree she should still file her taxes to avoid any potential future problems.
I would strongly urge her to get on top of these delinquent tax returns asap, both because it's the law and because the possible eventual consequences of non-compliance could be quite severe. Likewise if she has any non-US accounts/assets in her name or may at any time in the future, she needs to get familiar with the IRS and Treasury disclosure requirements (IRS Form 8938 and FinCEN FBAR / Form 114) and potentially the voluntary disclosure program for filers who want to remedy their past non-compliance.

hermano
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Re: Global nomad advice/newbie alert

Post by hermano » Mon Dec 04, 2017 5:01 am

ivk5 wrote:
Mon Dec 04, 2017 4:54 am

I would strongly urge her to get on top of these delinquent tax returns asap, both because it's the law and because the possible eventual consequences of non-compliance could be quite severe. Likewise if she has any non-US accounts/assets in her name or may at any time in the future, she needs to get familiar with the IRS and Treasury disclosure requirements (IRS Form 8938 and FinCEN FBAR / Form 114) and potentially the voluntary disclosure program for filers who want to remedy their past non-compliance.
Yep, I've told her to do so. I don't know anything about the US tax system nor do I want to, I can onyl encourage her to do so. But, she has no assets at present, not likely to earn over $100,000 and all her future 'asset's will be in my name only. We have no intention of ever living in the USA, or buying property or anything like that.

We plan on living entirely abroad as global nomads. She has no problem with all her assets being in my name.

Caduceus
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Re: Global nomad advice/newbie alert

Post by Caduceus » Mon Dec 04, 2017 6:19 am

hermano wrote:
Mon Dec 04, 2017 4:29 am

As to our income, I'm pretty sure it's legitimate that all my wife's salary can go on our monthly spending (with any left over given as a gift to me) and all my salary into my IB investment account. Can anyone tell me otherwise?
I think this is something you should probably pay someone one time to figure out. It's never good to make assumptions about the reach of US tax law, and I think there might be tax traps or things people wouldn't ordinarily figure out when one spouse is a U.S. citizen and the other is a UK citizen.

There might be filing requirements but not actual tax. For instance, it may be that you are a non-resident alien for tax purposes in any tax return that your wife files to the U.S. There may or may not be tax levied on her/your joint income, but failure to file/disclose might be a completely separate thing with separate penalties.

I think it's best to pay once for a professional well versed with your specific situation (US-UK tax law, plus binational residency for couples) and then you will be OK doing your own tax returns going forward.

ivk5
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Re: Global nomad advice/newbie alert

Post by ivk5 » Mon Dec 04, 2017 6:28 am

A US citizen may gift up to $149K (2017 exclusion amount) to a non-US citizen spouse without filing a gift tax return - ie before the lifetime exemption of $5.49M (2017) comes into play. This is in contrast to unlimited exclusion for gifts to a US citizen spouse.

Edited to add: there are estate planning implications to consider here as well. I'm no expert but for example OP's assumption that his US citizen spouse will never have any assets obviously does not consider what happens in the event of OP's death.

TedSwippet
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Re: Global nomad advice/newbie alert

Post by TedSwippet » Mon Dec 04, 2017 3:30 pm

Caduceus wrote:
Mon Dec 04, 2017 6:19 am
I think this is something you should probably pay someone one time to figure out. It's never good to make assumptions about the reach of US tax law, and I think there might be tax traps or things people wouldn't ordinarily figure out when one spouse is a U.S. citizen and the other is a UK citizen.
Broadly yes, but you might be painting a grimmer picture here than is required. Or perhaps a more expensive one. Given that the OP and his wife live in China, there isn't any real need to involve UK tax in things at the moment. Unlike the US, the UK does not believe that it fully owns its citizens no matter where they might live on (or off!) the planet. So for now only China and the US are relevant.

As already mentioned by ivk5 upthread, US tax kicks in on much lower limits where there are inter-spouse gifts and bequests and the receiving spouse is not a US citizen. However, on available information it seems that the OP and his wife will not exceed them. And as long they do not own any joint accounts or property (including a residence), keep all other finances entirely separate, and his wife files her US tax return using 'Married Filing Separately' status then nothing of his should ever need to be reported to the IRS.

It is unfortunate that things have to be this way, but that's US tax law for you. Once done though, the IRS is quarantined here. There's clearly no harm in involving professionals if the sums at stake are high, but I don't see any immediate problems or traps once these normal steps are taken. A good rule of thumb for the OP would be, simply: cut the IRS out of your lives to the fullest extent possible.

For more, this decent primer on the issues from Thun Financial Advisors appears to cover most of the low-lights of US tax for mixed-nationality couples.

hermano
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Re: Global nomad advice/newbie alert

Post by hermano » Tue Dec 05, 2017 1:33 am

Thanks for the perspective TedSwippet. Everyone is making a big fuss about it. Again I agree she should file, but the IRS won't ever pursue anyone who earns so little, and has no assets

As for my assets, the USA has no legal right to ask about them.

Now, back to the investment portfolio questions, if anyone can help me with those... (first-time investor, a little nervous about doing this with our savings!!!)

So I understand as a non-US citizen I should only buy non-US domiciled funds/EFTs, right?

Can someone suggest low cost funds/EFTs for my portfolio?
  • 25% bonds (for stability)
    25% S&P 500 (US exposure)
    25% Europe
    25% Worldwide - VWRD - this has a low ER, any others I should consider?
Should I lower my bond allocation, as I am only 32 and prepared to have more risk?

If I'm not sure what bonds to choose, should I just choose global government bonds (if they exist) or UK government bonds (gilts) (from my home country)?

Any advice on these matters is greatly appreciated!

Tylenol Jones
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Re: Global nomad advice/newbie alert

Post by Tylenol Jones » Tue Dec 05, 2017 2:04 am

If you've never invested before, I'd go few years with a bit more conservative approach especially given the current high market valuations. I'd do 50:50 bonds:VWRD. I wouldn't slice but I'd just stick with VWRD. Bond part should include emergency fund. If you have already separate emergency fund, then go with 25:75 bonds:VWRD. After you know how you handle market fluctuations, you can go more aggressive or more conservative.

msk
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Re: Global nomad advice/newbie alert

Post by msk » Tue Dec 05, 2017 2:48 am

Stocks: you need to invest in an ETF or a Mutual Fund that is NOT run from the USA (to avoid dividend withholding tax and estate tax). UK or Ireland are fine. Simplest would be a worldwide ETF by free market weight, my choice after decades of investing. For myself I chose 90% in iShares IWDA + 10% in iShares EIMI. IWDA covers markets in the developed world while EIMI covers emerging markets. Both are accumulative so you never have to worry about re-investing dividends, done automatically. Both run from Ireland so no fears about US estate taxes for a Brit. You can do the trades in IB in a couple of minutes. Try their paper trading to ease your way in. IWDA also exists as SWDA if you prefer purchasing it in Euros or GBP. Performance will be identical in all currencies since what matters are the currencies that exist in the underlying stocks, not the enveloping ETF. That self adjusts all the time. Since IB also allows you to handle numerous currencies in your portfolio (with very good exchange rates when you need to) just send your earnings there. Not sure whether they handle RMB but just sign in and check. Of course you can also hold cash in IB, and buy bond ETFs. I spent a lot of time researching what stock ETFs to buy (both Vanguard and iShares) before settling on those two, but I have nil interest in bonds, so cannot recommend any.

hermano
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Re: Global nomad advice/newbie alert

Post by hermano » Tue Dec 05, 2017 5:30 am

msk wrote:
Tue Dec 05, 2017 2:48 am
Stocks: you need to invest in an ETF or a Mutual Fund that is NOT run from the USA (to avoid dividend withholding tax and estate tax). UK or Ireland are fine. Simplest would be a worldwide ETF by free market weight, my choice after decades of investing. For myself I chose 90% in iShares IWDA + 10% in iShares EIMI. IWDA covers markets in the developed world while EIMI covers emerging markets. Both are accumulative so you never have to worry about re-investing dividends, done automatically. Both run from Ireland so no fears about US estate taxes for a Brit. You can do the trades in IB in a couple of minutes. Try their paper trading to ease your way in. IWDA also exists as SWDA if you prefer purchasing it in Euros or GBP. Performance will be identical in all currencies since what matters are the currencies that exist in the underlying stocks, not the enveloping ETF. That self adjusts all the time. Since IB also allows you to handle numerous currencies in your portfolio (with very good exchange rates when you need to) just send your earnings there. Not sure whether they handle RMB but just sign in and check. Of course you can also hold cash in IB, and buy bond ETFs. I spent a lot of time researching what stock ETFs to buy (both Vanguard and iShares) before settling on those two, but I have nil interest in bonds, so cannot recommend any.
Thanks for your valuable advice msk. I will do more research on the funds you have mentioned.
Vanguard, Blackrock's iShares, and Investec's Powershares products that are non-USA domiciled are what I'm looking at...

halfnine
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Re: Global nomad advice/newbie alert

Post by halfnine » Tue Dec 05, 2017 5:31 pm

hermano wrote:
Tue Dec 05, 2017 1:33 am
Thanks for the perspective TedSwippet. Everyone is making a big fuss about it. Again I agree she should file, but the IRS won't ever pursue anyone who earns so little, and has no assets......
Unless, they don't let her renew her passport. Then she has a big problem unless she is a dual national. And she is not qualifying for UK citizenship from outside the UK AFAIK.

halfnine
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Re: Global nomad advice/newbie alert

Post by halfnine » Tue Dec 05, 2017 5:38 pm

I won't rehash any of the previous points made. I will add one thing, though. If your spouse has some work history in the US it might be a good financial move for her to ensure 10 years of qualifying credit for Social Security benefits. US Social Security is one of the best deals going not only for the benefit amount itself but also for survivorship benefits for the entire family. Furthermore, in addition to the individual benefit, the non-US spouse may be eligible to receive a 50% benefit themselves concurrently. This 50% benefit increase to 100% if the US spouse predeceases the non-US spouse. While the previous two statements aren't true for all non-US spouses it is true for a UK citizen spouse.

TedSwippet
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Re: Global nomad advice/newbie alert

Post by TedSwippet » Tue Dec 05, 2017 6:23 pm

halfnine wrote:
Tue Dec 05, 2017 5:31 pm
Unless, they don't let her renew her passport. Then she has a big problem unless she is a dual national.
The IRS says this about revocation or denial of US passports:
If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that debt to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS.
...
Seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt totaling more than $50,000* (including interest and penalties) for which a:
* Notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted or
* Levy has been issued
Of course, that is not to say that this type of issue will not worsen over time for US expats. It will. That has been the clear direction of US expat tax law travel over the past two or more decades, and there are no reasons to expect a sudden reversal.

But while we may well reach a point in future where the US denies passports for simple non-filing of tax forms, we are not there just yet.

halfnine
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Re: Global nomad advice/newbie alert

Post by halfnine » Fri Dec 15, 2017 10:57 am

TedSwippet wrote:
Tue Dec 05, 2017 6:23 pm
halfnine wrote:
Tue Dec 05, 2017 5:31 pm
Unless, they don't let her renew her passport. Then she has a big problem unless she is a dual national.
The IRS says this about revocation or denial of US passports:
If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that debt to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS.
...
Seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt totaling more than $50,000* (including interest and penalties) for which a:
* Notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted or
* Levy has been issued
Of course, that is not to say that this type of issue will not worsen over time for US expats. It will. That has been the clear direction of US expat tax law travel over the past two or more decades, and there are no reasons to expect a sudden reversal.

But while we may well reach a point in future where the US denies passports for simple non-filing of tax forms, we are not there just yet.
I believe if the expat spouse files then her taxes/penalties and at this point will be minimum. However, if she doesn't file...well once you look at interest, penalties and possibly another 50 year life span it's not unreasonable to think that passport renewal in the future could be in jeopardy. And while I agree with the OP that it is probably not worth the IRS time to pursue her for a monetary judgment, the time and effort to blacklist her from passport renewal will likely be minimum. She has a long term risk here even under current law.

ATope
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Re: Global nomad advice/newbie alert

Post by ATope » Sat Jan 06, 2018 4:34 am

VWRD or the iShares equivalent seem fine if you wish to keep it simple. Which as a newbie myself I always follow KISS!

One further point: never say ‘never’.

I’m also a wandering expat (UK citizen, currently based in Switzerland but expat out of Japan!?!?!) and at various points in the past 2 years have been ‘100% sure I’m never retiring in x’ ....only for mindset to change as I realize it’s always best to keep my options as broad as possible. So, my only advice is to make sure you do things that allow you and your spouse to return easily to UK, US or wherever else. Start with a simple, global investment portfolio. Don’t weight it to any particular country. And take an interest in your spouse’s US situation. If it means back paying taxes, and you can afford it, then do it now. I’ve recently squared off my NI contributions in UK to qualify for full state pension when the time comes. Who knows if I’ll be in the UK, but I can still claim it 100%.

runner540
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Re: Global nomad advice/newbie alert

Post by runner540 » Sat Jan 06, 2018 8:20 am

ivk5 wrote:
Mon Dec 04, 2017 4:54 am
hermano wrote:
Mon Dec 04, 2017 4:29 am
As to our income, I'm pretty sure it's legitimate that all my wife's salary can go on our monthly spending (with any left over given as a gift to me) and all my salary into my IB investment account. Can anyone tell me otherwise?
This sounds fine. However:
hermano wrote:
Mon Dec 04, 2017 4:29 am
My wife has been living abroad for 9 years now, and she has never filed taxes or had any problems with getting a passport. I agree she should still file her taxes to avoid any potential future problems.
I would strongly urge her to get on top of these delinquent tax returns asap, both because it's the law and because the possible eventual consequences of non-compliance could be quite severe. Likewise if she has any non-US accounts/assets in her name or may at any time in the future, she needs to get familiar with the IRS and Treasury disclosure requirements (IRS Form 8938 and FinCEN FBAR / Form 114) and potentially the voluntary disclosure program for filers who want to remedy their past non-compliance.
+1
She needs to be filing taxes, every year, with the help of a professional. Americam Expat taxes are not a DIY opportunity, even for Bogleheads.
Everyone is different, but I am surprised your wife is comfortable having nothing in her name.

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in_reality
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Re: Global nomad advice/newbie alert

Post by in_reality » Sun Jan 07, 2018 4:04 am

hermano wrote:
Wed Nov 29, 2017 10:55 pm

Good points. You're right, as my wife is a US citizen, she is supposed to report her foreign income to the IRS, however the threshold for paying tax on this income is quite high (around $100,000) and as far as I am aware, if you owe nothing, they can't pursue it. I will tell her to start filing, but I'm not going to do it for her!!!
My understanding is that if you don't file, you can't claim the foreign-earned-income-exemption, so you will have a tax liability, so they can pursue it.

The IRS has a process she should use: https://www.irs.gov/individuals/interna ... procedures

This article below states that "non-willfully delinquent taxpayers can now come clean without incurring any penalties. Participants are required to file only the prior three years of tax returns and six years of FBARs.", though I don't know if that still holds true. I would look into it and that she state she misunderstood the need to file (so she is considered non-willful).

http://time.com/money/4298634/expat-exp ... -us-myths/

AddingUp
Posts: 67
Joined: Mon Aug 04, 2014 9:12 pm

Re: Global nomad advice/newbie alert

Post by AddingUp » Sun Jan 07, 2018 5:11 am

Diogenes wrote:
Thu Nov 30, 2017 2:35 am
There are also FBAR and FATCA requirements for foreign accounts that are easy to comply with and she should not ignore them. Since you're married to a U.S. citizen, it matters to you also. Since you have what I assume is a joint account in RMB valued at $15,000, your wife is required to electronically file FBAR. And there are consequences for not doing so.
+1.
The U.S. government already has her China bank account info as she had to show a passport to open the account. If they cross-check information, she could be penalized for not acknowledging the international account, even if she keeps the balance below $10,000 USD per year. Any bank account opened in a country outside the US has to be noted. Only if the account has the equivalent of $10,000 USD or more must she indicate the balance.

Form 2555-EZ should be filed by those expats who make below the 2017 threshold, which I believe is $102,000 USD.

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