Can a US citizen who leaves US keep his/her accounts?

[fluffy]

I searched and could not find a clear answer... If I am a US citizen and I immigrate to another country (say, Canada) while keeping my US citizenship (but not US residency) can I keep my existing US savings/checking accounts, non-sheltered investment accounts, IRA and Roth IRA accounts, etc as before and continue using/trading in those accounts as before? My broker says "no" -- is this a law or does it simply depend on the bank/brokerage firm? If it's a law then how do the people who left US to FIRE maintain their accounts? Can anyone point me in the right direction as far as all such issues? Thank you.

(My apologies if this is common sense/knowledge -- there are no dumb questions, only dumb people who ask questions )

 

[farmerEd]

I searched and could not find a clear answer... If I am a US citizen and I immigrate to another country (say, Canada) while keeping my US citizenship (but not US residency) can I keep my existing US savings/checking accounts, non-sheltered investment accounts, IRA and Roth IRA accounts, etc as before and continue using/trading in those accounts as before? My broker says "no" -- is this a law or does it simply depend on the bank/brokerage firm? If it's a law then how do the people who left US to FIRE maintain their accounts? Can anyone point me in the right direction as far as all such issues? Thank you.

(My apologies if this is common sense/knowledge -- there are no dumb questions, only dumb people who ask questions )

Geez, how would anybody know, and why would they care? Your taxes are going to be due to the US no matter where you live, I'd think having your accounts stay here would make it even easier for the IRS to keep tabs on you...so don't know why they would object.

If the broker/bank whomever, puts up a stink, just use a PO box with a forwarding service, and select eletronica delivery options for all your statements, bills, confirms etc....

 

[dex]

Anyone in the world can have accounts in the USA - assuming you comply with all the laws of your country and the USA.

 

[VaCollector]

...yep....no problem....I have a tax client who married and moved to England....she sends me her US "stuff" every year...and she files on her own here in the good ole US of A.

 

[Alan]

I think you need to check with a tax advisor. There should be no issues in managing your accounts from another country like Canada that has a foreign tax credit arrangement with the USA.

While I was a British Citiizen living in the USA having investments in the UK I had to prove residency in the USA to avoid paying taxes in the UK on my UK investments.

I am now a US citizen living in the USA with investments in the UK and an annuity (private pension) being paid in the UK. I still have to fill in forms to demonstrate I am not resident in the UK including a form I get from the US IRS (at a cost of $35 - form 8082) that validates that I pay taxes in the USA including my foreign investments and pensions - otherwise the UK taxes pensions and dividends and interest payments are taxed at source.

Even as a US citizen there are residency laws in the UK so we are planning to be sure and spend no more than 6 months in any one year over there. It is to stop people living in the UK and paying lower taxes in another country like the USA.

Even if you have no income from Canadian sources I would check out the rules with a tax advisor as you will be not be a resident of the USA

 

[DangerMouse]

When we were living in Australia in 2005 we were able to keep our brokerage account with Wells Fargo, but were only allowed to sell existing positions, we were not able to purchase anything. At the time I rather peeved, so I called around to a few different brokerage places to see if it was just a WF ruling, but it turns out to be a US government decision, I believe it came into being after 9/11.

 

[nun]

I searched and could not find a clear answer... If I am a US citizen and I immigrate to another country (say, Canada) while keeping my US citizenship (but not US residency) can I keep my existing US savings/checking accounts, non-sheltered investment accounts, IRA and Roth IRA accounts, etc as before and continue using/trading in those accounts as before? My broker says "no" -- is this a law or does it simply depend on the bank/brokerage firm? If it's a law then how do the people who left US to FIRE maintain their accounts? Can anyone point me in the right direction as far as all such issues? Thank you.

(My apologies if this is common sense/knowledge -- there are no dumb questions, only dumb people who ask questions )

Yes you can keep your accounts. As a US citizewn abroad you will have to pay US tax and as a resident of a foreign country you will be liable to tax there too, so you need to understand the tax treaty between the US and your county of residence. ie if you have a ROTH it might be tax free in the US but your country of residence might tax it as income......FYI the UK and US recognise the tax free status of eachothers retirement accounts you should check if your retirement county does the same.

Also as a US citizen abroad you should avoid investing in foreign mutual funds as these are taxed by the IRS at draconian rates also if you have a foreign brokerage account and buy shares it is a real pain to get the info right for the IRS.

What you need to do is to make sure you understand your status, ie US citizen, know where you are domiciled and where you are resident. Then get to know the tax treaty between the US and your residence country. FYI if you are a US citizen retired in the UK the SS payments are only taxable in the UK, so look at the approprairte tax treaty to see if this is the case for you too

 

[nfs]

I searched and could not find a clear answer... If I am a US citizen and I immigrate to another country (say, Canada) while keeping my US citizenship (but not US residency) can I keep my existing US savings/checking accounts, non-sheltered investment accounts, IRA and Roth IRA accounts, etc as before and continue using/trading in those accounts as before? My broker says "no" -- is this a law or does it simply depend on the bank/brokerage firm? If it's a law then how do the people who left US to FIRE maintain their accounts? Can anyone point me in the right direction as far as all such issues? Thank you.

(My apologies if this is common sense/knowledge -- there are no dumb questions, only dumb people who ask questions )

You may find Financial Webring Forum :: View topic - If You're a Snowback Returning from the U.S. worth reading if Canada is really your intended destination.

 

[nfs]

Anyone in the world can have accounts in the USA - assuming you comply with all the laws of your country and the USA.

Actually, post-911, this is no longer true. Regulation since has been tightened up so much that it's almost impossible for foreigners to open accounts in the US.

I'm not sure I could open a new bank account in the US. No US broker or mutual fund will touch a taxable account. They are extremely reluctant about tax deferred accounts. Paypal will not link to my US bank account or US credit card. I can't even get a new US credit card, even though I still have a stellar US credit rating. My Canadian address disqualifies me.

The original poster in this thread might not face the same difficulties because s/he is a US citizen, but I wouldn't count on it. An address without a zip code in any financial context is now cause for suspicion.

 

[ladelfina]

Yes, 9/11 changed everything! [I would actually be interested in figuring out who actually benefits from the new draconian rules. If the terrorists are so incredibly crafty and need USD in the US.. why they couldn't just sneak some of that $9 billion in hundreds in cash from Iraq. Or maybe some of those Korean counterfeits.. I mean, how do drugs get in? How do illegals get in?]

You CAN open some international accounts but it just may not be as advantageous and will definitely be subject to more scrutiny. It's still worth looking into.

Required Document Check List to Open a Schwab One International Account

IIRC the drawbacks used to be 1.) high account fees and 2.) automatic witholding of US taxes at the max. rate, which was then 35% or thereabouts. No idea if there were any restrictions on buying and selling. Now it seems Schwab has eliminated those fees (w/a min. balance) and tax witholding is less of an issue since rates on dividends/CG are now low.

I think in a post addressed to MyDream I linked to the Canadian E*Trade site, so you might investigate there as well.

We maintain a US mailing address even though logistically sometimes that is a pain, too.

 

[nun]

Yes, 9/11 changed everything! [I would actually be interested in figuring out who actually benefits from the new draconian rules. If the terrorists are so incredibly crafty and need USD in the US.. why they couldn't just sneak some of that $9 billion in hundreds in cash from Iraq. Or maybe some of those Korean counterfeits.. I mean, how do drugs get in? How do illegals get in?]

You CAN open some international accounts but it just may not be as advantageous and will definitely be subject to more scrutiny. It's still worth looking into.

Required Document Check List to Open a Schwab One International Account

IIRC the drawbacks used to be 1.) high account fees and 2.) automatic witholding of US taxes at the max. rate, which was then 35% or thereabouts. No idea if there were any restrictions on buying and selling. Now it seems Schwab has eliminated those fees (w/a min. balance) and tax witholding is less of an issue since rates on dividends/CG are now low.

I think in a post addressed to MyDream I linked to the Canadian E*Trade site, so you might investigate there as well.

We maintain a US mailing address even though logistically sometimes that is a pain, too.

There's also a nasty treasury form TDF90-22.1 you have to file each year if you have over $10k in foreign accounts.

What I'd do in your situation is to seach for relevant forums, there's one for US citizens in the UK at UK Yankee - Expat Americans Living in the UK and Moving to the UK.

Read the relevant info on the IRS website and plough through the tax treaty between the US and where your going.

Then I'd find a qualified tax person to help you out.

 

[bosco]

bottom line--you can keep US accounts while in Canada. You need to check with the custodian of the account. Some are willing to, some not.

But be sure to have them opened an in place before losing US residency.

Fidelity and Wells Fargo (and probably many others) are willing to maintain existing accounts in the US, and mail statements etc., to Canada. But they won't open them if you are a non-resident.

The previously-posted Canadian webring link was good advice.

 

[bpp3]

Legally, you should be able to keep and trade in your accounts. In practice, a lot of companies don't like to deal it, so you'll have to check with them. In any case, make sure to open any accounts you might need now, because it will be almost impossible to open new ones once you are outside the country, even as a US citizen. (Unless you maintain a fake US address, which carries its own tax risks.)

 

[FinanceGeek]

IANAL, but here goes my understanding of the situation:

Most US financial institutions will only deal with an account that has a US mailing address. Legally this should be your "US permanent address". There are plenty of ways to accomplish this via a friend, relative, mail forwarding service, attorney, etc.

In today's world wide web virtually any financial account can be managed from anywhere in the world so your physical mailing address is of far less relevance than it would have been 20 years ago.

You DO have to file US income tax returns and pay US taxes per your income no matter where you live in the world, and no matter where the income was earned, if you are a US citizen. Worse yet, I think you are considered a resident of the last state you lived in before leaving the US so you may owe state taxes too, at least for some amount of time.

You DO have to report the existence of any non-US financial institutions on a form which is furnished by the US Treasury Dept if the total value of all such accounts exceeds US $10k at any time during a given year. This form is part of TurboTax and other popular tax preparation programs. It must be filed once per year.

 

[fluffy]

Thanks for all the responses so far! It doesn't look to me like there's a complete consensus on this, so I'll continue to do more searching regarding any laws about this and hopefully report back with my findings. And keep the responses coming, please!

One aside regarding the internet access of accounts from anywhere in the world... It is true that there's no technical reason preventing such access now. But if a bank/brokerage really wanted to, they could certainly block IP addresses originating from outside of US from accessing the site. In fact, it may not be such a bad policy for them since many if not most of financial scams originate from outside the US.

For example, one type of scam works by gaining access to a number of legitimate brokerage accounts (by stealing usernames/passwords via phishing or trojans or some other means) and then using the funds in those accounts to buy up some thinly traded/penny stock that the perpetrator of the scam is selling. The legitimate owners of the accounts will in most cases be completely unaware of what has happened until well after the scam ends. There're numerous varieties on this strategy, of course, and I believe that this has already hit ETrade and TD Ameritrade: Identity thieves hit customers at TD Ameritrade, E-Trade

The bottom line is that IF the bank/brokerage officially does not allow non-US resident to maintain an account, THEN it could make good business sense for them to block non-US IP addresses from accessing their website. Such blocking would not be trivial to implement, but certainly very doable. Obviously there're trade-offs to such blocking (US residents on vacation elsewhere would be blocked out), but if the company is routinely losing money to foreign scams they may choose to implement it. Just something to keep in mind...

 

[FinanceGeek]

Fluffy makes a good point but I personally doubt that most US financial institutions IT depts are savvy enough to put together such a filter without falsely excluding many legitimate customers.

I would humbly point out to you that the Chinese government (among others) have attempted similar approaches to keep their citizenry from surfing CNN and many other Western news and political sites, but thanks to a proliferation of proxy servers, various methods of IP spoofing, etc. are never very successful for very long.

Of course, if it really comes down to it, you can of course appoint someone with a US IP connection to manage your finances (with you on a nearly free VoIP connection such as Skype giving them trading instructions) via a simple "limited power of attorney".

A biologically based proxy server, I may just have file a patent disclosure on this one

 

[Texas Proud]

Anyone in the world can have accounts in the USA - assuming you comply with all the laws of your country and the USA.

Have not read the whole thread.. but stopped here..

Wrong-O... I was in England and knew some people who tried to get a broker account in the US.... they could not... I don't know if the broker was the problem or not.... but I would think that THEY would not want you as a customer since they want to deal with US law if there is a problem... if you are living in England, then they might be breaking THEIR laws in advising you on your investments etc...

Can you get around it if you want... YES... but that means you are getting around the problem, not that it IS a problem...

 

[bpp3]

TBut if a bank/brokerage really wanted to, they could certainly block IP addresses originating from outside of US from accessing the site.

Last Fall, Vanguard locked out everybody connecting from Thailand for a while, which affected one of the posters here. So it can be and is done.

Worse yet, I think you are considered a resident of the last state you lived in before leaving the US

If my state of last residence tries to come after me for tax on income earned after I left, they are just going to have to bite me. But, in general, this issue is why I think maintaining a shadow address in the US might be a bad idea. Maybe at least do it in a state without an income tax.

if you are living in England, then they might be breaking THEIR laws in advising you on your investments etc...

That is also part of the problem, that US brokers might not want to run afoul of the equivalent of the SEC in your country of residence if they have any business there.

In Japan, I found that the Japanese branches of Citibank (brokerage arm), Fidelity, etc. would have nothing to do with me because I was a US citizen. Opening an account at a stateside brokerage was difficult but just barely possible pre-9/11. Now I think Schwab Global may be the only option there.

Opening an account at a Japanese brokerage was no problem, however. So, the net effect of all the US regulations is to force US citizens into foreign brokerages. Surely an unintended consequence.

 

[Gillette]

Our experience: We moved to the UK in 2005. I went to the local branch of WF before we moved and told them this is our new address (UK address). Great thanks they said. Told our broker at SmithBarney we were moving, please update our address. Great thanks he said. Called the US credit card company, we're moving, this is our new address. Great thanks they said.

Since then we decided the SB broker was rubbish and opened a WF investment account and closed our SB accounts. We used a US address for the new WF account (2007), only b/c we moved to Russia and Russian mail is not what one would call reliable. However, my banker at WF knows we live in Russia and doesn't have a problem with it. What I have been told is that existing accounts are fine, they will send your statements anywhere you want them to go. New accounts maybe a problem without a US address.

All of our accounts had exactly the same access and trading ability as they did before we moved overseas. Having a foregin address on our accounts didn't change what we could or couldn't do with the accounts.

A foregin address on our US credit card wasn't very practical so we changed it to a US address shortly after moving to the UK. Any time you call customer service you needed to enter your zip code. Very difficult to type in a zip code over the telephone when it starts with two letters. We got UK credit cards and bank accounts shortly after moving there and the US card became much less important - in the UK. In Russia it is nearly impossible to open bank accounts and get a credit card as a foreginer so back to the US card. Our statements are online and we pay online so the physical address isn't really that important.

You must file the report of foregin bank accounts if at any time during the year your foregin account exceeded the value of 10,000 USD. Due June 30, very stiff penalty for not filing. It's just a reporting form, no tax due.

Also, you'll have to file a US tax return, automatic 2 month extension for not being a US resident, any tax owed is still due April 15.

Our last US residence wasn't in an income tax state so we don't have those worries while overseas.

 

[teejayevans]

If my state of last residence tries to come after me for tax on income earned after I left, they are just going to have to bite me. But, in general, this issue is why I think maintaining a shadow address in the US might be a bad idea. Maybe at least do it in a state without an income tax.

Why not go to a state with no income tax and go to Mailbox Etc, and get a
po box, I believe they will also forward to your international address.
TJ

 

[lazygood4nothinbum]

Why not go to a state with no income tax and go to Mailbox Etc, and get a
po box, I believe they will also forward to your international address.
TJ

while studying liveaboard life, a forum member who was supposedly a lawyer posted that your last state of residency can claim you until you establish residency in another state, regardless of where you set up a post office box. or at least that was my understanding of what that person said.

so that i could leave florida and become a vagabond and claim florida as my state of residency as long as i don't establish residency in any other state during that time.

when i google "establishing residency" i get mostly college info dealing with in/out of state tuition and refers to items such as where you are registered to vote & from where your driver's license has been issued.

here's an case study i just found of someone moving to mexico and trying to show non-residency in his previous home state of california by skipping first through reno.

Distributions from Non-Qualified Benefit Plans; Rules for determining Califonria residency for tax and* pension plan purposes

A taxpayer may have only one domicile at any one time and that domicile continues until it is shown to have changed. A taxpayer's domicile is the taxpayer's true, fixed, and permanent place of abode. The concept of domicile requires both physical presence and intention to make a place one's home.
Although numerous factors are evaluated in determining residency, the most important ones include physical presence in California, location of employment, business interests, bank accounts and other investments, ownership of real estate, location of family, and children attending California schools.
An individual is a resident of the state in which he has the closest connections during the tax year. A taxpayer is ordinarily found to be a resident of the state or country with which the taxpayer has the closest connections, determined by comparing contacts retained within and outside California. Thus, the more complete the severance of California ties, the more likely a finding of nonresidency.

 

[NinjaPigeon]

Of course, if it really comes down to it, you can of course appoint someone with a US IP connection to manage your finances (with you on a nearly free VoIP connection such as Skype giving them trading instructions) via a simple "limited power of attorney".

A biologically based proxy server, I may just have file a patent disclosure on this one

VPN or using terminal services to bounce is a bit more practical But hey, whatever works!

 

[bosco]

I think people are making this too complicated.

1) Fido mails my wife's statements for her US 403b directly to Canada, and has no problem with it.

2) Both Fido and Wells Fargo have indicated to me that there is no problem provided you open the account BEFORE assuming Canadian residency

3) the "nasty" US treasury form is really no big deal--unless you don't file it.

4) yes, your income taxes are more complicated.

all the other speculation about IP blocking, etc. etc. etc.--is precisely that--speculation.

Bottom line--it's a little more hassle and you need to get set up before you move. Find a broker that will cooperate. They are out there.

 

[nun]

while studying liveaboard life, a forum member who was supposedly a lawyer posted that your last state of residency can claim you until you establish residency in another state, regardless of where you set up a post office box. or at least that was my understanding of what that person said.

so that i could leave florida and become a vagabond and claim florida as my state of residency as long as i don't establish residency in any other state during that time.

when i google "establishing residency" i get mostly college info dealing with in/out of state tuition and refers to items such as where you are registered to vote & from where your driver's license has been issued.

here's an case study i just found of someone moving to mexico and trying to show non-residency in his previous home state of california by skipping first through reno.

Distributions from Non-Qualified Benefit Plans; Rules for determining Califonria residency for tax and* pension plan purposes

The only states where there might be an issue if you leave the US with them still wanting tax from you are the states who tax based on your domicile as well as residency.

I intend to move to the UK to retire and as a US/UK dual citizen I'm fair game for both countries wrt taxation. I plan to leave most of my investments
in the US becasue as a US citizen it's bad from a tax point to invest in overseas funds, and the tax deferred stuff is impossible to transfer without early withdrawal penalties and tax anyway. I'll probably keep my cash bucket in the UK in their equivalent of a
MM and CD. I'll also have a MM in the US to dump dividends and proceeds from fund sales into before transfering them to the UK. I can do almost all of my account maintainence online and the rest over the phone. My broker said there's no problem in having a foreign address on the account and
sending statements there as long as I'm a US citizen.

Tax time will be the most interesting as I'll have to take credit in the UK for the tax I pay in the US and vice versa. Hence my desire to get as much into my ROTH account as possible as withdrawals are also tax free in the UK

 

[FinanceGeek]

VPN or using terminal services to bounce is a bit more practical But hey, whatever works!

Indeed, it strikes me that all one needs is RealVNC and a PC back home at Mom and Dad's house, and presto, one has bypassed the so-called "Thailand filter". VPN would for more financial oriented types like myself fall into the 'extra credit' category since it probably would take at least 10 minutes to figure out all the *&^*&^&*^ options without a handy dandy IT help desk to assist.

As I said before my reading has led me to believe that entire governments have failed to do this type of filtering very well.