Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by LadyGeek »

Yes, that's very good news. Consider updating the Canadian forum thread: Recommended US brokerage for IRAs for US citizen, permanent residents of Canada
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cbeck
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by cbeck »

JohnFiscal wrote: Wed Jul 14, 2021 6:04 pm
LadyGeek wrote: Wed Jul 14, 2021 4:05 pm Please see this article: Why US Brokerage Accounts of American Expats are Being Closed
Comments plz from anyone?

The well-written article also states:

"Finally, it should also be noted that in many cases the best solution for Americans abroad is simply to keep their address of record in the U.S. Any American living abroad, even for an extended period, is well within their rights to use a U.S. address for the sake of opening accounts and receiving mail. In this case, there will be no restrictions on the account."

So it is our 'right' to provide an address in the US that may not be our residence (for tax purposes)? I've read elsewhere (other cross-border financial/tax advisors) that doing so may not be a good ...or legitimate... thing to do.
Concealing your physical location for as long as possible is the best solution possible. As we see from the Fidelity example, even a custodian that acquiesces in maintaining accounts for an expat is free to change its mind at any time in the future leaving that expat high and dry. Available tools can assist expats in simulating a US presence, but not one that will stand up to any scrutiny. It is important to note that doing so does not violate any US law that I know of.

But even despite our best efforts the situation, including the technology, can defeat us at some point in the future.
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by sfnerd »

Another vote for concealing your location.

Here's what I did when I moved to Thailand 5+ years ago, with no problems so far:

- Kept existing accounts at Fidelity, used the address of a relative
- Opened a Schwab account before I left the US and funded it for new money
- I use a VPN to connect to a US server to access the Fidelity accounts, but I don't bother with Schwab
- I never tell either Fidelity or Schwab (or other brokers) where I actually reside
- I use Schwab for new money (that I've earned abroad)

Schwab is really great. They don't really care if you're abroad, and they've even sent me replacement debit cards to Thailand (express at their cost). They refund ATM fees internationally, and have done this in the dozens of countries I've traveled to over the past 5 years.

Most of these banks just don't want to know. If you inform them that you live abroad, there is a lot of stuff that you need to do. Schwab is better because they have an international arm, but best to keep it secret.
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by cbeck »

sfnerd wrote: Fri Jul 23, 2021 10:07 pm Another vote for concealing your location.

Here's what I did when I moved to Thailand 5+ years ago, with no problems so far:

- Kept existing accounts at Fidelity, used the address of a relative
- Opened a Schwab account before I left the US and funded it for new money
- I use a VPN to connect to a US server to access the Fidelity accounts, but I don't bother with Schwab
- I never tell either Fidelity or Schwab (or other brokers) where I actually reside
- I use Schwab for new money (that I've earned abroad)

Schwab is really great. They don't really care if you're abroad, and they've even sent me replacement debit cards to Thailand (express at their cost). They refund ATM fees internationally, and have done this in the dozens of countries I've traveled to over the past 5 years.

Most of these banks just don't want to know. If you inform them that you live abroad, there is a lot of stuff that you need to do. Schwab is better because they have an international arm, but best to keep it secret.
Is your relative's address in a state with an income tax? If so, then Fidelity is sending 1099s to the tax authority in that state who are going to be sending you a letter wondering why you haven't been filing state returns lately.
sfnerd
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by sfnerd »

cbeck wrote: Sat Jul 24, 2021 6:48 pm
sfnerd wrote: Fri Jul 23, 2021 10:07 pm Another vote for concealing your location.

Here's what I did when I moved to Thailand 5+ years ago, with no problems so far:

- Kept existing accounts at Fidelity, used the address of a relative
- Opened a Schwab account before I left the US and funded it for new money
- I use a VPN to connect to a US server to access the Fidelity accounts, but I don't bother with Schwab
- I never tell either Fidelity or Schwab (or other brokers) where I actually reside
- I use Schwab for new money (that I've earned abroad)

Schwab is really great. They don't really care if you're abroad, and they've even sent me replacement debit cards to Thailand (express at their cost). They refund ATM fees internationally, and have done this in the dozens of countries I've traveled to over the past 5 years.

Most of these banks just don't want to know. If you inform them that you live abroad, there is a lot of stuff that you need to do. Schwab is better because they have an international arm, but best to keep it secret.
Is your relative's address in a state with an income tax? If so, then Fidelity is sending 1099s to the tax authority in that state who are going to be sending you a letter wondering why you haven't been filing state returns lately.
Hasn't ever happened, but if it did I would just send them my US tax returns showing I'm a bonafide resident of another country, along with travel records if needed.

I'm pretty sure states don't trigger audits based on passive income sources though, because it's common to use a mailing address in a different state (think of all the people who move and don't update their brokerage accounts). The state would be spending a fortune chasing people where 98% of them are not liable for tax.
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JohnFiscal
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Location: US citizen now retired in Canada. Subject to income tax in both.

Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by JohnFiscal »

Using a US address for Vanguard, or elsewhere, while resident in Canada (or elsewhere) concerns to me because of possible repercussions with the tax authorities for that address. I would hate to be dunned for income tax for that location.

The only likely address I might use is that of a relative in Connecticut ("CT"). Lucky me, "Connecticut is among the least tax-friendly states in the U.S." But this morning I had some interesting reading from the CT state laws regarding abodes, domiciles, resident, nonresident, etc.

It is stated under some definitions (https://eregulations.ct.gov/eRegsPortal ... 1(a)(1)-1/)
"Certain individuals not deemed residents although domiciled in Connecticut. Any individual domiciled in Connecticut is a resident for income tax purposes for a specific taxable year, unless for that year he or she satisfies all three of the following requirements:
(1) the individual maintains no permanent place of abode inside Connecticut during such year;
(2) the individual maintains a permanent place of abode outside Connecticut during such entire year; and
(3) the individual spends in the aggregate not more than 30 days of the taxable year in Connecticut."
This would seem to apply to me. So I might use a street address and mailing address in CT (Vanguard asks for both) but not be considered a resident of CT for income tax purposes.

But I'm not out of the woods yet. I might still be taxed as a non-resident. But their tax code does not list any of my anticipated income as taxable (https://portal.ct.gov/DRS/Individuals/I ... Source-Inc).

The last concern is Social Security. CT does tax social security income and it's not yet clear to me if a non-resident would under law be subject to any tax on this; more reading required.

edit to add: I meant to add that they have a long list of issues considered when determining if an individual is 'domiciled' in CT. The only positive hit is "location of other transactions with financial institutions (...including rental of a safe deposit box)", so a CT address with Vanguard might be the camel's nose under the tent for taxing me. On the other hand, they say that any one of the listed items by itself does not determine domicile. So the negative hits on the list far outweigh that one possible positive.
Last edited by JohnFiscal on Sun Jul 25, 2021 7:59 am, edited 1 time in total.
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anon_investor
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by anon_investor »

JohnFiscal wrote: Sun Jul 25, 2021 7:49 am Using a US address for Vanguard, or elsewhere, while resident in Canada (or elsewhere) concerns to me because of possible repercussions with the tax authorities for that address. I would hate to be dunned for income tax for that location.

The only likely address I might use is that of a relative in Connecticut ("CT"). Lucky me, "Connecticut is among the least tax-friendly states in the U.S." But this morning I had some interesting reading from the CT state laws regarding abodes, domiciles, resident, nonresident, etc.

It is stated under some definitions (https://eregulations.ct.gov/eRegsPortal ... 1(a)(1)-1/)
"Certain individuals not deemed residents although domiciled in Connecticut. Any individual domiciled in Connecticut is a resident for income tax purposes for a specific taxable year, unless for that year he or she satisfies all three of the following requirements:
(1) the individual maintains no permanent place of abode inside Connecticut during such year;
(2) the individual maintains a permanent place of abode outside Connecticut during such entire year; and
(3) the individual spends in the aggregate not more than 30 days of the taxable year in Connecticut."
This would seem to apply to me. So I might use a street address and mailing address in CT (Vanguard asks for both) but not be considered a resident of CT for income tax purposes.

But I'm not out of the woods yet. I might still be taxed as a non-resident. But their tax code does not list any of my anticipated income as taxable (https://portal.ct.gov/DRS/Individuals/I ... Source-Inc).

The last concern is Social Security. CT does tax social security income and it's not yet clear to me if a non-resident would under law be subject to any tax on this; more reading required.
Do you have an address in a no income tax state to use?
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JohnFiscal
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Location: US citizen now retired in Canada. Subject to income tax in both.

Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by JohnFiscal »

anon_investor wrote: Sun Jul 25, 2021 7:56 am Do you have an address in a no income tax state to use?
Only if I rent one of those mail drop/mail forwarding places. There are a number of "UPS Store" type places around here (FL) that do those rentals. I saw a nice one targeted to expats near our old address in Texas. On the other hand, some posters have pointed out potential issues with these.
Marseille07
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by Marseille07 »

JohnFiscal wrote: Sun Jul 25, 2021 8:02 am
anon_investor wrote: Sun Jul 25, 2021 7:56 am Do you have an address in a no income tax state to use?
Only if I rent one of those mail drop/mail forwarding places. There are a number of "UPS Store" type places around here (FL) that do those rentals. I saw a nice one targeted to expats near our old address in Texas. On the other hand, some posters have pointed out potential issues with these.
Correct. PMB addresses can stop working at any moment: https://nomadlist.com/how-to-handle-pro ... ation/6188
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by tamudude »

JohnFiscal wrote: Sun Jul 25, 2021 8:02 am
anon_investor wrote: Sun Jul 25, 2021 7:56 am Do you have an address in a no income tax state to use?
Only if I rent one of those mail drop/mail forwarding places. There are a number of "UPS Store" type places around here (FL) that do those rentals. I saw a nice one targeted to expats near our old address in Texas. On the other hand, some posters have pointed out potential issues with these.
Texas you say? Get an address from www.travelingmailbox.com. Absolutely top notch service. They will scan mail to email, deposit checks, forward mail to address of your choice etc. based on your request). It does add up to $$ but you get the service.
Follow cbeck's advice on all other matters. it really is a "don't ask don't tell" type situation for expats.
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by LadyGeek »

New member shadowandsunlight has a question which I've moved into a new thread. See: Moving from US to Canada - Accessing my Vanguard account with a Canadian address
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by Yukon »

At 69 yo do you plan on making lots of purchases? I presume you will be spending down your portfolio? Is it THAT horrible Vanguard only lets you sell the portfolio you plan on selling? I'd think rebalancing could occur by selling the funds that have outperformed.
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Re: Likely expat, what to do with Vanguard? [update] [Moving from US to Canada]

Post by LadyGeek »

FYI - This is a 2021 thread bumped in 2022.
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