Hi ladelfina,
ladelfina said:
bpp. I just asked because at some point you may have to make your money moves in the opposite direction, away from Japan..
True, and I have modified my asset allocation as my view of the future has changed, too. Once we bought a house, the probability that we stay here forever went up, and so I bumped up the target allocation to Japan to reflect that. If it starts looking like we may move somewhere else some day, I will modify our allocations (and asset locations) accordingly. Life is like jello, can't nail it down, yes?
Out of curiosity, do you think you will be staying in Italy permanently?
Hi nun,
nun said:
[...]
If you are going to be away for a long time, 5 years or more,
[...]
6) Invest in US based mutual funds that hold stock in companys where you are living. This will insulate your investments from currency fluctuations.
Good basic principles. I avoid 6) myself, preferring to buy individual stocks in the country where I live for the tax reasons I mentioned (and also to keep more money close to home, in case, for example, the US goes weird on me -- even if that may be a low-probability event), but 6) is certainly a lower-maintenance approach.
Hi Rosalita,
Rosalita said:
BPP - where did you learn so much about the expat taxation laws, do you work in that area? Are you aware of any specific authorities that I could approach/scan websites to pick up some basic information before seeking out an international tax expert?
I am not an expert, just a taxpayer who has had to study up on this stuff to fill out his own tax returns. I have mostly learned what little I know from slogging through the IRS documentation and tax laws, and occasionally asking the IRS questions directly. I frankly don't know who I would trust as an international tax expert -- I have seen glaring errors in the advice proffered by self-proclaimed experts, and even the IRS staff are not well-trained as far as I can tell. They seem to be still at the level of trying to get taxpayers abroad to realize that they have to file returns at all, and haven't really addressed a lot of the more practical issues of how to actually fill out the returns in their material or training yet.
It goes without saying not to trust what I say, either.
Since you know that you will be heading to Australia, I would suggest you look for a tax advisor who is specifically familiar with both US and Australian tax law. An American tax attorney who is living and practicing in Australia would probably be ideal. I think that would be much more useful than a generic international tax attorney, since there are a lot of situation-specific issues.
For general US tax questions,
www.fairmark.com is probably a good place to start.
I also had a question regarding holding mutual funds that invest only in US companies - why would that complicate matters further with respect to taxation? Isn't the tax liability based only upon the payout of the fund, and not what is happening with the individual holdings of the fund? Or does this revert back to the payouts that the fund makes?
Maybe what I said was confusing. US funds that invest in US companies are fine. My concern (for my case) is with US funds that invest in Japanese companies, when I live in Japan and have to pay tax on my worldwide income to Japan. Reason being, my US fund will pay tax to Japan (based on what's happening with the individual holdings in the fund), and then Japan will ask me for tax again on top of that (based on the payouts of the fund to me), and I don't think I can get credit for the taxes already paid by my US fund to Japan, so I would end up paying double taxes to Japan on the investment.
In your case, that would be US funds that hold Australian companies, if you would have to pay tax on worldwide income to Australia after you move there. In nun's case, it sounds like he may have ways to avoid worldwide-taxation status in the UK, so it may not be an issue for him.
My general principle is to invest in US companies through US accounts, and Japanese companies through Japanese accounts. I think this minimizes tax complications in my case. (As for other countries, I buy mutual funds in the US, and individual stocks and bonds in Japan, for cost and tax reasons.) You may or may not find that the same principle works for you, depending on the details of Australian tax law and your status once you move there.
All this thinking about taxes is giving me a headache... Time for coffee!