We can help
Navigate and establish
the right solution
If you are from the US and living overseas you have probably struggled to find an advisory firm that can help with your unique needs. At Chase Buchanan we have a great deal of experience working with those needs and providing suitable solutions specifically for US expats.
Financial Planning Support for US Connected Persons
Benefits of Professional Financial Advice for US Expatriates
Expats from around the world living in new home countries have a unique set of challenges when it comes to making sound decisions about their financial futures.
Professional advice is even more important for US expats, given that a substantial proportion of banks and financial institutions based in America will not serve clients living abroad.
As a US national living overseas, other obstacles to overcome include:
- The inability to invest in US mutual funds from abroad.
- Common Reporting Standard rules relating to disclosures of offshore assets (via the US Foreign Account Tax Compliance Act (FATCA).
- Difficulties associated with holding cross border investment products as a US connected person.
- Limited options to manage your 401K pension funds from a different jurisdiction.
The best way to ensure your portfolio, finances and investment decisions support your aspirations is to seek expert advice from Chase Buchanan, the global expat wealth management consultants.
Individuals are considered US connected if any of these criteria apply:
- Having a Green Card or another visa and living in the states.
- Being an American tax resident.
- Holding a US passport, or being a citizen due to one parent holding a US passport, even if you were born overseas.
Many expats are unaware of the complication of US connected person status until it comes to making financial decisions. You can be treated as a connected person without necessarily travelling under an American passport.
The primary factor is that if you are a US citizen or connected person, then you must comply with the tax reporting obligations, regardless of where you live in the world.
While these regulations have always existed, they are now far more enforceable due to FATCA. Therefore, while US connected persons do not have any increased tax liabilities, they must ensure they maintain full compliance.
FATCA Compliance for US Connected Persons
Every investment must be compliant. If not, a US connected person may be taxed on investments as income, up to 37%.
However, a compliant investment may be treated as a capital gain. This income attracts a considerably lower rate of between zero and 20%, depending on the nature of the product.
Taking control of your investment decisions can substantially affect your investment returns and associated tax charges.
Some of the other elements to incorporate into your financial planning are:
- Liquidity: many compliant investments for US connected persons living overseas are based around pension funds – and cannot be accessed before a minimum age of between 50 and 59.5 years without attracting penalties. Suitable investments must be planned to provide income in line with your expectations.
- Regulation: any financial products selected should be in an established jurisdiction with compliant laws and be appropriately managed by a skilled asset manager.
- Costs: the fees associated with any financial decision should be transparent and provide a cost-efficient return, including clarity around fund management charges for an investment portfolio.
- Reporting: tax declarations are mandatory, and a professional financial adviser is crucial to ensure your documents identify the correct tax status of any investment or savings product.
These factors are vital to ensure a US connected person selects suitable investments with full compliance and provides comprehensive declarations in line with FATCA.
Essential Advice for International US Connected Persons
Along with the list of criteria above, some specific areas of financial advice are of meaningful benefit to US connected persons.
Many American citizens or expats hold a 401K-retirement plan. As with any cross border pension transfer, multiple factors require diligent financial oversight before making any long-term decisions.
Rolling over a 401K, for example, into an Individual Retirement Account (IRA) may be advisable, with a raft of advantages:
- More flexibility to choose investment options.
- Lower costs and more opportunities to withdraw pension funds.
- Inheritance planning benefits.
However, an IRA may not always be the most practical solution, depending on your circumstances, plans, family dependents and retirement ambitions.
Professional advice from an expat specialist wealth manager is therefore strongly advised to ensure you make confident, informed choices to benefit your financial security.
Chase Buchanan is a global leader in the financial advisory space, supporting worldwide expats with tailored, straightforward advice.
Our US connected persons’ consultants provide comprehensive assistance through our teams of financial advisers located in the US, Canada, Europe, and our UK Administration Centre.
For more information about the importance of financial planning for US connected persons or to schedule a convenient time to connect with one of our advisers, please get in touch.
Ask a Question
Advice can make a difference, especially with global tax and investments. US connected individuals, living and working abroad can benefit from our support.
Feel free to ask a question below or download your free guide here.