Just posting to say that I’ve just ordered The Richest Man in Babylon and Rich Dad Poor Dad. I’ll start reading this evening. Thanks, Guy, for the reading tips. I’ll see what I can learn.
Good. I’m a bit flat out at the moment (Wednesdays are always intense and there’s been a rescheduling today, so I have seven lessons today), so I haven’t really had a chance to look though any blogs or other stuff for people.
Cool, thanks for the info. My husband is British and we were trying to decide whose name it would be better to invest under, as I am American.[/quote]
What’s wrong with investing under your name? Long term capital gains (owned for one year) on stocks is taxed at 15% unless that recently changed under Obama. I don’t see how it would be cheaper for a foreigner. Plus the US has several favorable retirement accounts that you can setup. I’m not an expert on these though.
Does foreign earned income count towards opening a Roth IRA? These are a great deal since you don’t get taxed at all when you take money out. Provided of course you wait until retirement age although you can take out your initial investment penalty free IIRC. But the gains have to stay in the account.
Cool, thanks for the info. My husband is British and we were trying to decide whose name it would be better to invest under, as I am American.[/quote]
What’s wrong with investing under your name? Long term capital gains (owned for one year) on stocks is taxed at 15% unless that recently changed under Obama. I don’t see how it would be cheaper for a foreigner. Plus the US has several favorable retirement accounts that you can setup. I’m not an expert on these though.
Does foreign earned income count towards opening a Roth IRA? These are a great deal since you don’t get taxed at all when you take money out. Provided of course you wait until retirement age although you can take out your initial investment penalty free IIRC. But the gains have to stay in the account.[/quote]
My primary concern is having to pay tax on income. Between my salary and returns on investments, I would most likely have to pay income tax and would like to avoid that. Having my husband put investments under his name may be a better option for us because of that.
We went to HSBC yesterday to discuss a few things including investments, and they actually told us that they are telling their customers to stay away from the markets at the moment because they are too volatile. I was surprised that they actually would turn potential custom away despite the situation!
Anyway, we are thinking about property again, namely in London. We have a couple of friends who have purchased flats there and are renting them out. In addition to property appreciation, they are making an annual profit of about 10%. Half of that goes to a company who manages their properties in their absence, but even a 5% profit with property appreciation is appealing as you can, in turn, invest your profits however you wish.
What income are you talking about? If you not buying/selling then you only pay 15% long term cap gains unless you are looking at high dividend stocks. Or you might qualify for a Roth IRA where you pay no tax. Or a different kind of retirement account would be better.
Property looks to be a good investment right now though.
Indiana: Volatility should really only matter if you’re looking to take your money out again in the short term. The trick is not to look at your account and see that it’s down 10%, 20% or 30% in two months and freak out if you’re looking at a 10+ year investment period. If HSBC had advised me to stay out of the market right now, I would have left their offices without investing them for sure, but not for their reasons. Knuckleheads. Did they even ask you what your investment time frame was? What the hell does volatility even mean anyway? On Monday, a fictional company, X was making Y profit and had Z in assets - liabilities. On Tuesday, the same company was also making Y profit and had Z + Y in assets - liabilities. On Wednesday, it was making Y profit and had Z + 2Y in assets - liabilities. Yet because the share price was $1 on Monday, $0.70 on Tuesday and $1.15 on Wednesday, everyone freaks out. Oh my God! Oh my God! There’s volatility. Yet the company is still the same old company doing the same old thing.
Actually I was looking at term deposits, and the lady dealing with us was just chatty and started saying how they are telling their customers to avoid the markets at the moment. We were actually not interested in dealing with them in that way. The banks here act as third parties for investments and I wouldn’t trust any financial advisors / salespeople here as far as I could throw them!
Indiana: Good for you! Those charlatans’ interests don’t align with yours, though it’s odd that they would turn you away. Banks with a conscience?! Who’d have thought it! We do live in interesting times! If her superior had heard her turn you away, she’d probably have lost her job.
[quote=“Abacus”][quote=“Indiana”]
My primary concern is having to pay tax on income. Between my salary and returns on investments, I would most likely have to pay income tax and would like to avoid that. Having my husband put investments under his name may be a better option for us because of that.
[/quote]
What income are you talking about? If you not buying/selling then you only pay 15% long term cap gains unless you are looking at high dividend stocks. Or you might qualify for a Roth IRA where you pay no tax. Or a different kind of retirement account would be better.
Property looks to be a good investment right now though.[/quote]
What I mean is that when I file taxes each year from abroad, I need to list my salary as well as any profits made on investments. This amount, if I were to invest my savings right now, may eventually push me over the amount that an expat is allowed to make overseas tax-free. Or am I missing something? Do you mean that tax is already accounted for (the 15% you mentioned) and that this wouldn’t be a factor? I must apologize, I am an investment dummy and am going on what very little I have picked up over the years about tax law for expats. 
We had gone in to inquire about opening an account in the UK through our branch in the UAE and to ask about upgrading our account here and the differences in interest rates on term deposits, etc. She was going on about how interest rates have gone down and then started saying how the bank as a whole is telling people to hold out on market investments at the moment. I was thinking the same thing, though…if she had been recorded, she may have lost her job over that! They still have an investment team who will surely be suffering at the moment because people are so hesitant to enter the markets right now (and because bank employees are scaring people off!). 
[quote=“Indiana”]
What I mean is that when I file taxes each year from abroad, I need to list my salary as well as any profits made on investments. This amount, if I were to invest my savings right now, may eventually push me over the amount that an expat is allowed to make overseas tax-free. Or am I missing something? Do you mean that tax is already accounted for (the 15% you mentioned) and that this wouldn’t be a factor? I must apologize, I am an investment dummy and am going on what very little I have picked up over the years about tax law for expats. [/quote]
In most retirement accounts you don’t pay taxes until you withdraw the funds so it will have very no impact on your current taxes. But a lot of retirement accounts give you current tax breaks but since you are not living in the US I don’t think you can use these.
And if you didn’t even bother to setup a retirement account you only pay taxes on an investment (except dividends which are usually pretty small) when you sell a stock/fund. If you hold it for more than 1 yr then you only pay 15% to the US gov’t. And I don’t think you report it to the country that you live in.
And it’s complicated. I don’t know the half of it and I’m sure somebody will point out an error. Hopefully only a small one.
[quote=“Abacus”]In most retirement accounts you don’t pay taxes until you withdraw the funds so it will have very no impact on your current taxes. But a lot of retirement accounts give you current tax breaks but since you are not living in the US I don’t think you can use these.
And if you didn’t even bother to setup a retirement account you only pay taxes on an investment (except dividends which are usually pretty small) when you sell a stock/fund. If you hold it for more than 1 yr then you only pay 15% to the US gov’t. And I don’t think you report it to the country that you live in.
[/quote]
I didn’t know any of this! Thank you!!!
When I file there is always a section about investments, and I just assumed that I would have to report any gains…but I guess that wouldn’t really make sense since values rise and fall and it would be unfair to tax in that way.
Is the 15% you mentioned automatically deducted or is it a case of having to go through a procedure to pay it? Thanks again, Abacus.
[quote=“Indiana”]
What I mean is that when I file taxes each year from abroad, I need to list my salary as well as any profits made on investments. This amount, if I were to invest my savings right now, may eventually push me over the amount that an expat is allowed to make overseas tax-free. Or am I missing something? Do you mean that tax is already accounted for (the 15% you mentioned) and that this wouldn’t be a factor? I must apologize, I am an investment dummy and am going on what very little I have picked up over the years about tax law for expats. 
[/quote]
Are you using the 2555 Foreign Earned Income form? That allows you about 90K USD, and beyond that you need to pay taxes on your foreign earned income. Your investments, capital gains and dividends will be taxed regardless of where you are.
So, you seem to be saying you make a bundle. Congrats. :bravo:
No. Why would you?
[quote=“jdsmith”][quote=“Indiana”]
Are you using the 2555 Foreign Earned Income form? That allows you about 90K USD, and beyond that you need to pay taxes on your foreign earned income. Your investments, capital gains and dividends will be taxed regardless of where you are. [/quote][/quote]
Yes, I am using the 2555. I file using Turbo Tax and the investments page always comes up, that’s what I was unsure about.
I’m certainly making nowhere near 90,000, 
but I was thinking ahead to money made on investments in the future added to my salary. These investments would be from savings from both my husband and me, so I was thinking that I may be liable for tax if it were to hit this bracket, especially when I leave my current job as we accumulate a yearly bonus that we only receive once we resign. I will get nailed for taxes as it is when that happens. 
[quote=“Indiana”][quote=“jdsmith”][quote=“Indiana”]
Are you using the 2555 Foreign Earned Income form? That allows you about 90K USD, and beyond that you need to pay taxes on your foreign earned income. Your investments, capital gains and dividends will be taxed regardless of where you are. [/quote][/quote]
Yes, I am using the 2555. I file using Turbo Tax and the investments page always comes up, that’s what I was unsure about.
I’m certainly making nowhere near 90,000, but I was thinking ahead to money made on investments in the future added to my salary. These investments would be from savings from both my husband and me, so I was thinking that I may be liable for tax if it were to hit this bracket, especially when I leave my current job as we accumulate a yearly bonus that we only receive once we resign. I will get nailed for taxes as it is when that happens. 
[/quote]
Well, I don’t know your true foreign income, or your taxable unearned income, but if you do end up paying taxes, I can’t imagine it being that much, compared to what you made, unless you guys have a LOT of dividends coming in or have sold a LOT of stock at a profit last year. 
Yeah, it wouldn’t be that much probably…I just don’t want the hassle.
Yeah, it wouldn’t be that much probably…I just don’t want the hassle.[/quote]
You could always sell something for a loss if you think it’s going to be close. 
But you need to think ahead for that.
[quote=“Indiana”]
Is the 15% you mentioned automatically deducted or is it a case of having to go through a procedure to pay it? Thanks again, Abacus.[/quote]
It’s not deducted but it only occurs if you sell a stock that you owned for more than one year. If it’s held less than one year then it’s taxed at a much higher rate. But the tax only applies to the change in value. For example if you invest 10,000 in a mutual fund and 7 years later you sell it for 20,000 then you would pay 10,000 (gain) X 0.15 = 1,500 dollars. So you need to plan for this at tax time but you did sell $20,000 of stock so you should be able to afford it.
Unfortunately it looks like earned income isn’t eligible to fund retirement accounts. These have even better tax breaks but you aren’t paying US taxes so I guess it makes sense that these don’t apply.
tbh - the US might be the best place to invest (in western countries) because it’s one of the most capitalist countries with the lowest tax rates. Canadians get the bejeezus taxed out of them.
I always wondered about that. What if you started an IRA, and THEN moved overseas. Could you still feed the IRA? 
I always wondered about that. What if you started an IRA, and THEN moved overseas. Could you still feed the IRA? [/quote]
What would be the point? The reason you fund a traditional IRA vs just investing at a brokerage is to get the tax deduction. If you don’t pay US taxes then there is nothing to deduct. But I’m not a financial maven. I did a Google search though. 
I was hoping however that you could fund a Roth IRA since you’re paying a ridiculously low tax rate (at least the relatively poor teachers do) and you won’t get taxed when you withdraw the money (in retirement). But these recent threads have peaked my curiosity in online work. But I’m not sure if that is taxed in the country where you get paid or the country where you live.