April in the US can only mean one thing… It’s tax time and finances are top of mind for many people. In additional to cultural adaptation, foreign nationals living or working in the US face many unique financial challenges. There’s a lot to learn, and even American friends, accountants, financial advisors, HR departments, or bankers may not be fully aware of it all! So, we sat down with Simon Brady of Anglia Advisors to gain insight into these challenges and how to successfully navigate the financial waters…
1. You need to tell the IRS about ALL your worldwide income.
The US is one of just three countries in the world (along with the Philippines and Eritrea), which imposes a requirement on its taxpayers to declare worldwide income to its government every year. That means that your annual 1040 tax return needs to include details of all income generated from outside the US. This includes income in any form and irrespective of your immigration status.
2. You need to tell the Treasury Department about your non-US accounts.
Is your name on any bank or investment account held anywhere outside the US? If so, you are likely to have to disclose the details of the account separately from your tax return. Depending on the amount involved and type of asset, this could mean filing one or two additional disclosures. Penalties for failing to do this are extremely severe.
3. You can save for retirement in the US even if you do not plan to retire in the US.
The US has excellent tax-advantaged retirement planning programs. For example, there are 401K, 403b, or IRA accounts that allow you to access the distributions from overseas when the time comes. Therefore, there’s no need to take a break from saving for retirement while you are here.