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Why Expats Should Keep Their Investments in the US
Manage episode 487329286 series 3014249
Content provided by Bill Holliday, CFP, Bill Holliday, and CFP. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Bill Holliday, CFP, Bill Holliday, and CFP or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.
Protect Your Wealth While Living Abroad
✅ Lower Costs | ✅ Better Investments | ✅ Easier Taxes
💡 Learn why keeping your U.S. accounts (and address!) is the smartest move for expats.
✅ Lower Costs | ✅ Better Investments | ✅ Easier Taxes
💡 Learn why keeping your U.S. accounts (and address!) is the smartest move for expats.
🌍 Why Americans Living in Mexico, Spain, France, or Italy Should Keep Their Investments in the US — and Keep a U.S. Address
Living abroad comes with incredible benefits — lifestyle, culture, food, and cost of living — but it also brings serious financial planning challenges. U.S. citizens living in places like Mexico, Spain, France, or Italy must carefully manage their investments, taxes, and residency to avoid losing access to the U.S. financial system or triggering unintended tax consequences abroad.
This guide covers everything you need to know to make smart, compliant decisions — and to keep your financial life secure, wherever you live.
✅ Why Keep Your Investment Accounts in the U.S.?
Keeping your brokerage, retirement, and investment accounts in the U.S. is usually the best choice for Americans abroad. Here’s why:
- Lower Costs
- U.S. ETFs and index funds have some of the lowest expense ratios in the world (as low as 0.03%)
- Foreign funds (especially in Europe and Mexico) often charge 1%–2% or more annually
- U.S. brokers rarely charge custody or annual maintenance fees
- Better Investment Choices
- Access to thousands of mutual funds, ETFs, and stocks
- U.S. platforms offer robust options in ESG, tech, emerging markets, fixed income, and more
- Foreign brokers often limit access or block U.S.-domiciled investments
- Simpler Tax Reporting
- U.S.-based investments are not subject to PFIC rules
- Investing in foreign funds (like UCITS ETFs in Europe) means:
- Filing IRS Form 8621
- Possible punitive tax treatment
- High reporting burdens for each fund annually
- Stronger Protection
- U.S. brokers are regulated by SEC and FINRA
- Investor funds are insured up to $500,000 by SIPC
- Transparent disclosures and support in English
- Better Retirement Integration
- U.S. accounts are the only place to hold:
- Traditional IRAs
- Roth IRAs
- 401(k)s, SEP IRAs, and inherited IRAs
🏠 Why You Need a U.S. Address
To keep a U.S. brokerage or retirement account open and fully functional, you typically must have a U.S. residential address on file.
| Why It Matters | What Happens Without a U.S. Address |
| Regulatory compliance | Brokers may freeze or restrict trading |
| U.S. mutual funds & ETFs | Blocked if you’re flagged as an EU resident (PRIIPs regulation) |
| Retirement accounts | May not allow new contributions or rollovers |
| Account updates or re-verification | May fail without a valid U.S. residential address |
📬 How to Maintain a U.S. Address (Even While Living Abroad)
✅ Best Options:
- Use a trusted friend or family member’s residential address
- Must be a real home (not a PO box or commercial mail center)
- Most reliable and widely accepted
- Rent or own property in the U.S.
- Can be small or shared; gives you legal “domicile”
- Lets you keep a U.S. driver’s license and voter registration
⚠️ Risky Options:
- Virtual mailboxes (e.g., iPostal1, Traveling Mailbox)
- These provide real street addresses, but most brokers flag them as CMRA (Commercial Mail Receiving Agency) and may reject them.
- PO Boxes and UPS Store mailboxes
- Explicitly rejected by financial institutions
🧾 Do You Still Have to File Taxes in the U.S. and Abroad?
Yes. As a U.S. citizen:
- You must file a U.S. tax return every year, no matter where you live
- You must also report worldwide income, including:
- Investment dividends and capital gains
- Roth IRA withdrawals
- Foreign-earned income (even if it’s excluded under FEIE)
If you’re also a tax resident abroad, you will likely have to file two tax returns: one in the U.S., and one in your country of residence.
| Country | When You’re Considered a Tax Resident |
| 🇲🇽 Mexico | 183+ days or “center of vital interests” |
| 🇫🇷 France | 183+ days or habitual residence |
| 🇪🇸 Spain | 183+ days or economic interest |
| 🇮🇹 Italy | 183+ days or habitual residence or registered address |
⚖️ What About Enforcement? Will They Know?
🇲🇽 Mexico
- Enforcement is still relatively light for personal investment income
- Many expats do not file Mexican returns, especially if income is low or passive
- That said, Mexico participates in FATCA, and enforcement is gradually increasing
🇪🇸🇫🇷🇮🇹 Europe
- Enforcement is much stricter
- These countries participate in:
- FATCA (U.S. reporting)
- CRS (Common Reporting Standard for global tax transparency)
- Foreign financial institutions and tax authorities receive U.S. account data
- Non-disclosure of Roth IRA withdrawals or large foreign balances can trigger penalties or audits
💸 Are Roth IRA Withdrawals Tax-Free Abroad?
In the U.S., qualified Roth IRA withdrawals are tax-free. But that’s not how other countries see it.
🌍 Abroad:
- Mexico, Spain, France, and Italy do NOT recognize Roth IRAs as tax-exempt
- Roth distributions are often treated as ordinary income
- You are legally required to report Roth withdrawals in your country of residence
| Country | Roth IRA Withdrawal Taxed? |
| 🇺🇸 U.S. | ❌ No (if qualified) |
| 🇲🇽 Mexico | ✅ Yes |
| 🇪🇸 Spain | ✅ Yes |
| 🇫🇷 France | ✅ Yes |
| 🇮🇹 Italy | ✅ Yes |
Even if enforcement is low, you’re legally responsible for reporting Roth income abroad.
💰 Do You Have to Worry About Wealth Taxes?
Yes — in certain countries, your worldwide assets (including U.S. accounts) may be subject to annual wealth tax.
| Country | Wealth Tax Notes |
| 🇲🇽 Mexico | ❌ No wealth tax |
| 🇪🇸 Spain | ✅ Yes, varies by region. Madrid has 100% exemption. Catalonia and Valencia impose higher rates |
| 🇫🇷 France | ✅ Yes, but only on real estate over €1.3 million |
| 🇨🇭 Switzerland | ✅ Yes, varies by canton |
| 🇮🇹 Italy | ✅ Yes, for foreign financial assets (IVAFE tax) |
📌 If you’re in a country with a wealth tax, you’ll likely need to declare your U.S. brokerage balances, including IRAs.
🪪 Which U.S. State Should You “Live In” for Financial Purposes?
Choosing a tax-friendly state for your legal address can reduce complexity and risk.
✅ Best States with No State Income Tax:
- Texas
- Florida
- Nevada
- Wyoming
- Washington
- South Dakota
- Alaska
- Tennessee (taxes interest/dividends only)
- New Hampshire (taxes interest/dividends only)
📌 Texas and Florida are especially popular among expats due to:
- No state income tax
- Friendly DMV rules
- Reciprocity for driver’s license exchange in France
🚗 Driver’s License Reciprocity in Europe
Maintaining a U.S. driver’s license from the right state can save you a lot of time and money.
🇫🇷 France
- Allows license exchange without testing from these states:
- Texas
- Florida
- Pennsylvania
- New Hampshire
- And others
🇲🇽 Mexico
- Most states accept U.S. licenses to obtain a local one; no formal reciprocity needed
🇪🇸 Spain, 🇮🇹 Italy
- No reciprocity: you’ll have to retake both written and driving exams
💳 What About U.S. Credit Cards?
Keeping U.S. credit cards is another strong reason to maintain a U.S. address.
Benefits:
- No foreign transaction fees (with the right card)
- Better rewards: cashback, travel miles, hotel perks
- Purchase protection and fraud support
- Access to services like TSA PreCheck, Global Entry, and U.S. travel insurance
🧾 Most credit cards require a U.S. billing address, and many issuers check that it’s a residential address — not a commercial one.
🧠 Final Takeaways
| Topic | Recommendation |
| Investment accounts | ✅ Keep them in the U.S. |
| Address requirement | ✅ Use a real U.S. residential address |
| Roth IRA distributions | ✅ Report abroad; taxable outside U.S. |
| Filing taxes | ✅ Yes, both in the U.S. and locally |
| Tax enforcement | ⚠️ Light in Mexico, strict in Europe |
| Wealth tax | ⚠️ Depends on country/region |
| Best states | ✅ TX or FL (no tax, license reciprocity) |
| Credit cards | ✅ Maintain U.S. address for access |
| Driver’s license | ✅ Consider states with reciprocity (TX, FL) |
📍 About AIO Financial
AIO Financial is a fee-only fiduciary firm that specializes in working with U.S. expats in Mexico and Europe. We don’t sell products or earn commissions — just experienced, independent guidance tailored to your cross-border life.
We help you:
- Keep U.S. accounts open legally
- Avoid PFICs and reporting traps
- Coordinate Roth IRA distributions abroad
- Plan for wealth taxes and foreign filing
- Anchor your financial life in the best U.S. state
📅 Book your free consultation now
Let’s make your financial life abroad simpler, safer, and more strategic.
Transcript of podcast/video:
Americans abroad
should keep their investments in the US
so expats
I’m gonna talk about cross border financial planning
expats in Mexico France
Spain Italy
Europe should keep their investments in the US
we’re gonna talk about why
the benefits of keeping investments in the US
lower investment fees exchange traded funds
have expense ratios as low as point o 3%
sometimes even lower
there’s thousands of investment options
thousands of exchange traded funds
mutual funds stocks
the expense ratios
in some of these European funds are 1 to 2%
you’re just losing a lot of investment power
the investment options are a lot more limited
they’re trying to protect the investors
but they’re limiting you quite a bit
you get to avoid this PFIC
European taxation
you have some regulatory Protection
a lot of transparency Protection like the SEC
FINRA CIPIC and you have access to IRAs
Roth
401ks in the US you don’t have that access overseas
why do you need a US address
you need an address
if you want to keep a US brokerage account
an account that holds these mutual funds
stocks exchange traded funds
and have full access
to all those different investment options
so if you want to trade everything you
you want to be able to trade
you need a US address it’s required for IRA
401k contributions rollovers
and to avoid being restricted by the EU
PRIIP regulations
how do you keep a US address if you’re living abroad
well you can use family member
trusted friends residential address
you can rent or maintain property in the US
these Po boxes
commercial mail mailboxes are not allowed
virtual mailboxes sometimes work
we have clients that use these virtual mailboxes
and we’ve seen them work they don’t always work
sometimes Schwab or Vanguard will flag them
and they’ll say hey
this person is not here we need a physical address
and they’ll flag it
and they have to come up with a physical address
you could try it it may not work
so the best option is get a physical address
somewhere where you have a friend
family member
somewhere where there’s a physical mailbox
tax filing and enforcement
so US citizens must file annually with the IRS
US taxes on worldwide income
if you have interest dividends
Social Security income
pensions all that is gonna get taxed
you’re gonna file a US tax return
now you may be in a country
where you’re not getting double taxed
but you’re filing a US US return
and if you’re paying taxes in Mexico
you don’t get double tax you don’t have to pay it twice
but you’re filing a return
most times
you’re also filing in your country of residence
so if you’re living in Mexico
if you’re living in Spain
you’re gonna file a Spanish return
or an Italian return or a French return as well Mexico
their enforcement is like many ex pats
many Americans living in Mexico do not file
Mexican returns but enforcement is growing
so in five years that may change
currently there’s not a ton of enforcement but again
that could be a different situation however
in Spain France
Italy in Europe
you are gonna be filing there Roth IRA distributions
this is something to be aware of and plan accordingly
it is tax free to distribute from your Roth IRA if
if it’s qualified
if you have your five years
if you’re of age fifty nine and a/2
but it in the US
you can take these distributions and if it qualifies
it’s tax free
abroad usually it’s a taxable distribution
it’ll get taxed just like an IRA
even though you already paid taxes on the money
you put into it
you pay taxes again when you pull it out
so most countries are not recognizing it
that it’s a Roth
they’re just seeing it as an IRA and taxing on
on it when comes out so plan accordingly
pull out what you can before you go abroad
if you’re permanently going going abroad
you have to report those withdrawals
if you are a resident of that new country
wealth taxes be aware of wealth taxes
Spain has wealth taxes
Italy has wealth taxes they’re not the same everywhere
there’s exemptions for real estate
Spain has wealth taxes that’s that are different higher
Madrid has an exemption under Lucia
it’s very small um I I almost zero um
they’re they’re not but just be aware of them
and maybe your wealth is under it
and you don’t pay anything
um but just where that could be an issue uh
franchise real estate tax so just on real estate
when you’re picking a state
so if you’re getting your US location
if you have an option
pick a state with no income tax if you have an option
now if your family or friends are in Arizona great
that’s what you’re stuck with um
but if if you have a choice between Texas
Florida or New York and California
well pick one with the lower state tax um
some states offer license reciprocal agreements
so if you have a driver’s license in Texas
and you’re moving to France
well they’ll respect that
and it’ll make it
so much easier to get a driver’s license
in France they’ll respect your Texas driver’s license
but they won’t
won’t respect your driver’s license so it
it’s worth doing a little research on what states
have a reciprocal agreement with the country
you’re moving to if
if there is a
in Mexico there aren’t any reciprocal agreements
but
it’s not that hard to get a driver’s license in Mexico
um but be aware of taxes yeah
if you have a choice
then you’re just gonna be in the state that you’re in
other reasons to keep a US address
so if you want credit cards uh
less fees rewards
there could be that you want a US credit card
you want those airport lounges great
you will need a US address to have those
US credit cards if you want US bank
then you’re gonna need that receiving Social Security
Medicare notices
they’re gonna want a US address US phone number
I mean sometimes you could around that mail access
those could be reasons voter registration for sure
Global Entry travel documents
all those are nice reasons
or perks or pluses to having a US address
so in summary
it is nice to have US investment accounts
it’ll save you expenses
it’ll save you taxes to have those to have full access
there are workarounds
you know you can swab International
it’s more limited uh but it’s best
you have most access if you have a US address
uh be careful with that’s an issue
if you are living abroad
be if you choice be careful or not be careful
but be selective on the state you pick be strategic um
if you’re moving to Europe
you know avoid some foreign mutual funds
use US funds stay compliant with US and tax laws
you don’t want things
you don’t want these issues to bite you later
that’s it we have a blog that has more information
spells us out in more detail
I’m Bill Holiday AIO Financial
let me know if you have any questions more detail
this is really a brief overview
we are we only financial planning advisors
we deal with sustainable
responsible impact invest investing
we also with cross border financial
planning
mostly with Americans living in Mexico and Europe
primarily in Spain France
Italy um let me know do you have any questions
be glad to help we offer a free consultation
lots of information on our website a I 0 financial.com
we have some free tools we have free um apps
a budget app
retirement planning app we have some ebooks
little courses and videos
follow us leave a comment
and let me know if you have any questions
I really appreciate it thanks a lot bye
The post Why Expats Should Keep Their Investments in the US appeared first on AIO Financial - Fee Only Financial Advisors.
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Why Expats Should Keep Their Investments in the US
Podcast Archives - AIO Financial - Fee Only Financial Advisors
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Manage episode 487329286 series 3014249
Content provided by Bill Holliday, CFP, Bill Holliday, and CFP. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Bill Holliday, CFP, Bill Holliday, and CFP or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.
Protect Your Wealth While Living Abroad
✅ Lower Costs | ✅ Better Investments | ✅ Easier Taxes
💡 Learn why keeping your U.S. accounts (and address!) is the smartest move for expats.
✅ Lower Costs | ✅ Better Investments | ✅ Easier Taxes
💡 Learn why keeping your U.S. accounts (and address!) is the smartest move for expats.
🌍 Why Americans Living in Mexico, Spain, France, or Italy Should Keep Their Investments in the US — and Keep a U.S. Address
Living abroad comes with incredible benefits — lifestyle, culture, food, and cost of living — but it also brings serious financial planning challenges. U.S. citizens living in places like Mexico, Spain, France, or Italy must carefully manage their investments, taxes, and residency to avoid losing access to the U.S. financial system or triggering unintended tax consequences abroad.
This guide covers everything you need to know to make smart, compliant decisions — and to keep your financial life secure, wherever you live.
✅ Why Keep Your Investment Accounts in the U.S.?
Keeping your brokerage, retirement, and investment accounts in the U.S. is usually the best choice for Americans abroad. Here’s why:
- Lower Costs
- U.S. ETFs and index funds have some of the lowest expense ratios in the world (as low as 0.03%)
- Foreign funds (especially in Europe and Mexico) often charge 1%–2% or more annually
- U.S. brokers rarely charge custody or annual maintenance fees
- Better Investment Choices
- Access to thousands of mutual funds, ETFs, and stocks
- U.S. platforms offer robust options in ESG, tech, emerging markets, fixed income, and more
- Foreign brokers often limit access or block U.S.-domiciled investments
- Simpler Tax Reporting
- U.S.-based investments are not subject to PFIC rules
- Investing in foreign funds (like UCITS ETFs in Europe) means:
- Filing IRS Form 8621
- Possible punitive tax treatment
- High reporting burdens for each fund annually
- Stronger Protection
- U.S. brokers are regulated by SEC and FINRA
- Investor funds are insured up to $500,000 by SIPC
- Transparent disclosures and support in English
- Better Retirement Integration
- U.S. accounts are the only place to hold:
- Traditional IRAs
- Roth IRAs
- 401(k)s, SEP IRAs, and inherited IRAs
🏠 Why You Need a U.S. Address
To keep a U.S. brokerage or retirement account open and fully functional, you typically must have a U.S. residential address on file.
| Why It Matters | What Happens Without a U.S. Address |
| Regulatory compliance | Brokers may freeze or restrict trading |
| U.S. mutual funds & ETFs | Blocked if you’re flagged as an EU resident (PRIIPs regulation) |
| Retirement accounts | May not allow new contributions or rollovers |
| Account updates or re-verification | May fail without a valid U.S. residential address |
📬 How to Maintain a U.S. Address (Even While Living Abroad)
✅ Best Options:
- Use a trusted friend or family member’s residential address
- Must be a real home (not a PO box or commercial mail center)
- Most reliable and widely accepted
- Rent or own property in the U.S.
- Can be small or shared; gives you legal “domicile”
- Lets you keep a U.S. driver’s license and voter registration
⚠️ Risky Options:
- Virtual mailboxes (e.g., iPostal1, Traveling Mailbox)
- These provide real street addresses, but most brokers flag them as CMRA (Commercial Mail Receiving Agency) and may reject them.
- PO Boxes and UPS Store mailboxes
- Explicitly rejected by financial institutions
🧾 Do You Still Have to File Taxes in the U.S. and Abroad?
Yes. As a U.S. citizen:
- You must file a U.S. tax return every year, no matter where you live
- You must also report worldwide income, including:
- Investment dividends and capital gains
- Roth IRA withdrawals
- Foreign-earned income (even if it’s excluded under FEIE)
If you’re also a tax resident abroad, you will likely have to file two tax returns: one in the U.S., and one in your country of residence.
| Country | When You’re Considered a Tax Resident |
| 🇲🇽 Mexico | 183+ days or “center of vital interests” |
| 🇫🇷 France | 183+ days or habitual residence |
| 🇪🇸 Spain | 183+ days or economic interest |
| 🇮🇹 Italy | 183+ days or habitual residence or registered address |
⚖️ What About Enforcement? Will They Know?
🇲🇽 Mexico
- Enforcement is still relatively light for personal investment income
- Many expats do not file Mexican returns, especially if income is low or passive
- That said, Mexico participates in FATCA, and enforcement is gradually increasing
🇪🇸🇫🇷🇮🇹 Europe
- Enforcement is much stricter
- These countries participate in:
- FATCA (U.S. reporting)
- CRS (Common Reporting Standard for global tax transparency)
- Foreign financial institutions and tax authorities receive U.S. account data
- Non-disclosure of Roth IRA withdrawals or large foreign balances can trigger penalties or audits
💸 Are Roth IRA Withdrawals Tax-Free Abroad?
In the U.S., qualified Roth IRA withdrawals are tax-free. But that’s not how other countries see it.
🌍 Abroad:
- Mexico, Spain, France, and Italy do NOT recognize Roth IRAs as tax-exempt
- Roth distributions are often treated as ordinary income
- You are legally required to report Roth withdrawals in your country of residence
| Country | Roth IRA Withdrawal Taxed? |
| 🇺🇸 U.S. | ❌ No (if qualified) |
| 🇲🇽 Mexico | ✅ Yes |
| 🇪🇸 Spain | ✅ Yes |
| 🇫🇷 France | ✅ Yes |
| 🇮🇹 Italy | ✅ Yes |
Even if enforcement is low, you’re legally responsible for reporting Roth income abroad.
💰 Do You Have to Worry About Wealth Taxes?
Yes — in certain countries, your worldwide assets (including U.S. accounts) may be subject to annual wealth tax.
| Country | Wealth Tax Notes |
| 🇲🇽 Mexico | ❌ No wealth tax |
| 🇪🇸 Spain | ✅ Yes, varies by region. Madrid has 100% exemption. Catalonia and Valencia impose higher rates |
| 🇫🇷 France | ✅ Yes, but only on real estate over €1.3 million |
| 🇨🇭 Switzerland | ✅ Yes, varies by canton |
| 🇮🇹 Italy | ✅ Yes, for foreign financial assets (IVAFE tax) |
📌 If you’re in a country with a wealth tax, you’ll likely need to declare your U.S. brokerage balances, including IRAs.
🪪 Which U.S. State Should You “Live In” for Financial Purposes?
Choosing a tax-friendly state for your legal address can reduce complexity and risk.
✅ Best States with No State Income Tax:
- Texas
- Florida
- Nevada
- Wyoming
- Washington
- South Dakota
- Alaska
- Tennessee (taxes interest/dividends only)
- New Hampshire (taxes interest/dividends only)
📌 Texas and Florida are especially popular among expats due to:
- No state income tax
- Friendly DMV rules
- Reciprocity for driver’s license exchange in France
🚗 Driver’s License Reciprocity in Europe
Maintaining a U.S. driver’s license from the right state can save you a lot of time and money.
🇫🇷 France
- Allows license exchange without testing from these states:
- Texas
- Florida
- Pennsylvania
- New Hampshire
- And others
🇲🇽 Mexico
- Most states accept U.S. licenses to obtain a local one; no formal reciprocity needed
🇪🇸 Spain, 🇮🇹 Italy
- No reciprocity: you’ll have to retake both written and driving exams
💳 What About U.S. Credit Cards?
Keeping U.S. credit cards is another strong reason to maintain a U.S. address.
Benefits:
- No foreign transaction fees (with the right card)
- Better rewards: cashback, travel miles, hotel perks
- Purchase protection and fraud support
- Access to services like TSA PreCheck, Global Entry, and U.S. travel insurance
🧾 Most credit cards require a U.S. billing address, and many issuers check that it’s a residential address — not a commercial one.
🧠 Final Takeaways
| Topic | Recommendation |
| Investment accounts | ✅ Keep them in the U.S. |
| Address requirement | ✅ Use a real U.S. residential address |
| Roth IRA distributions | ✅ Report abroad; taxable outside U.S. |
| Filing taxes | ✅ Yes, both in the U.S. and locally |
| Tax enforcement | ⚠️ Light in Mexico, strict in Europe |
| Wealth tax | ⚠️ Depends on country/region |
| Best states | ✅ TX or FL (no tax, license reciprocity) |
| Credit cards | ✅ Maintain U.S. address for access |
| Driver’s license | ✅ Consider states with reciprocity (TX, FL) |
📍 About AIO Financial
AIO Financial is a fee-only fiduciary firm that specializes in working with U.S. expats in Mexico and Europe. We don’t sell products or earn commissions — just experienced, independent guidance tailored to your cross-border life.
We help you:
- Keep U.S. accounts open legally
- Avoid PFICs and reporting traps
- Coordinate Roth IRA distributions abroad
- Plan for wealth taxes and foreign filing
- Anchor your financial life in the best U.S. state
📅 Book your free consultation now
Let’s make your financial life abroad simpler, safer, and more strategic.
Transcript of podcast/video:
Americans abroad
should keep their investments in the US
so expats
I’m gonna talk about cross border financial planning
expats in Mexico France
Spain Italy
Europe should keep their investments in the US
we’re gonna talk about why
the benefits of keeping investments in the US
lower investment fees exchange traded funds
have expense ratios as low as point o 3%
sometimes even lower
there’s thousands of investment options
thousands of exchange traded funds
mutual funds stocks
the expense ratios
in some of these European funds are 1 to 2%
you’re just losing a lot of investment power
the investment options are a lot more limited
they’re trying to protect the investors
but they’re limiting you quite a bit
you get to avoid this PFIC
European taxation
you have some regulatory Protection
a lot of transparency Protection like the SEC
FINRA CIPIC and you have access to IRAs
Roth
401ks in the US you don’t have that access overseas
why do you need a US address
you need an address
if you want to keep a US brokerage account
an account that holds these mutual funds
stocks exchange traded funds
and have full access
to all those different investment options
so if you want to trade everything you
you want to be able to trade
you need a US address it’s required for IRA
401k contributions rollovers
and to avoid being restricted by the EU
PRIIP regulations
how do you keep a US address if you’re living abroad
well you can use family member
trusted friends residential address
you can rent or maintain property in the US
these Po boxes
commercial mail mailboxes are not allowed
virtual mailboxes sometimes work
we have clients that use these virtual mailboxes
and we’ve seen them work they don’t always work
sometimes Schwab or Vanguard will flag them
and they’ll say hey
this person is not here we need a physical address
and they’ll flag it
and they have to come up with a physical address
you could try it it may not work
so the best option is get a physical address
somewhere where you have a friend
family member
somewhere where there’s a physical mailbox
tax filing and enforcement
so US citizens must file annually with the IRS
US taxes on worldwide income
if you have interest dividends
Social Security income
pensions all that is gonna get taxed
you’re gonna file a US tax return
now you may be in a country
where you’re not getting double taxed
but you’re filing a US US return
and if you’re paying taxes in Mexico
you don’t get double tax you don’t have to pay it twice
but you’re filing a return
most times
you’re also filing in your country of residence
so if you’re living in Mexico
if you’re living in Spain
you’re gonna file a Spanish return
or an Italian return or a French return as well Mexico
their enforcement is like many ex pats
many Americans living in Mexico do not file
Mexican returns but enforcement is growing
so in five years that may change
currently there’s not a ton of enforcement but again
that could be a different situation however
in Spain France
Italy in Europe
you are gonna be filing there Roth IRA distributions
this is something to be aware of and plan accordingly
it is tax free to distribute from your Roth IRA if
if it’s qualified
if you have your five years
if you’re of age fifty nine and a/2
but it in the US
you can take these distributions and if it qualifies
it’s tax free
abroad usually it’s a taxable distribution
it’ll get taxed just like an IRA
even though you already paid taxes on the money
you put into it
you pay taxes again when you pull it out
so most countries are not recognizing it
that it’s a Roth
they’re just seeing it as an IRA and taxing on
on it when comes out so plan accordingly
pull out what you can before you go abroad
if you’re permanently going going abroad
you have to report those withdrawals
if you are a resident of that new country
wealth taxes be aware of wealth taxes
Spain has wealth taxes
Italy has wealth taxes they’re not the same everywhere
there’s exemptions for real estate
Spain has wealth taxes that’s that are different higher
Madrid has an exemption under Lucia
it’s very small um I I almost zero um
they’re they’re not but just be aware of them
and maybe your wealth is under it
and you don’t pay anything
um but just where that could be an issue uh
franchise real estate tax so just on real estate
when you’re picking a state
so if you’re getting your US location
if you have an option
pick a state with no income tax if you have an option
now if your family or friends are in Arizona great
that’s what you’re stuck with um
but if if you have a choice between Texas
Florida or New York and California
well pick one with the lower state tax um
some states offer license reciprocal agreements
so if you have a driver’s license in Texas
and you’re moving to France
well they’ll respect that
and it’ll make it
so much easier to get a driver’s license
in France they’ll respect your Texas driver’s license
but they won’t
won’t respect your driver’s license so it
it’s worth doing a little research on what states
have a reciprocal agreement with the country
you’re moving to if
if there is a
in Mexico there aren’t any reciprocal agreements
but
it’s not that hard to get a driver’s license in Mexico
um but be aware of taxes yeah
if you have a choice
then you’re just gonna be in the state that you’re in
other reasons to keep a US address
so if you want credit cards uh
less fees rewards
there could be that you want a US credit card
you want those airport lounges great
you will need a US address to have those
US credit cards if you want US bank
then you’re gonna need that receiving Social Security
Medicare notices
they’re gonna want a US address US phone number
I mean sometimes you could around that mail access
those could be reasons voter registration for sure
Global Entry travel documents
all those are nice reasons
or perks or pluses to having a US address
so in summary
it is nice to have US investment accounts
it’ll save you expenses
it’ll save you taxes to have those to have full access
there are workarounds
you know you can swab International
it’s more limited uh but it’s best
you have most access if you have a US address
uh be careful with that’s an issue
if you are living abroad
be if you choice be careful or not be careful
but be selective on the state you pick be strategic um
if you’re moving to Europe
you know avoid some foreign mutual funds
use US funds stay compliant with US and tax laws
you don’t want things
you don’t want these issues to bite you later
that’s it we have a blog that has more information
spells us out in more detail
I’m Bill Holiday AIO Financial
let me know if you have any questions more detail
this is really a brief overview
we are we only financial planning advisors
we deal with sustainable
responsible impact invest investing
we also with cross border financial
planning
mostly with Americans living in Mexico and Europe
primarily in Spain France
Italy um let me know do you have any questions
be glad to help we offer a free consultation
lots of information on our website a I 0 financial.com
we have some free tools we have free um apps
a budget app
retirement planning app we have some ebooks
little courses and videos
follow us leave a comment
and let me know if you have any questions
I really appreciate it thanks a lot bye
The post Why Expats Should Keep Their Investments in the US appeared first on AIO Financial - Fee Only Financial Advisors.
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