What are the issues?
The US is almost unique in that US citizens or permanent residents (green card holders) remain US taxpayers irrespective of whether they reside in the US or not. So even if you are living in NZ, you remain a US taxpayer as long as you retain your US citizenship/residency status.
Prior to rollout of the Foreign Account Tax Compliance Act (FATCA), US taxpayers faced very little risk of Inland Revenue Service (IRS) sanction if they failed to fully comply with their US tax obligations. Now, with the global rollout of FATCA, there is nowhere to hide, and US taxpayers must assume the IRS has complete visibility of their global assets and income. The penalties for non-compliance are substantial.
The US tax code is also the most complex in the world and this complexity is amplified when both the US and NZ tax codes must be adhered to at the same time. One basic issue is the US December tax year and the NZ March tax year which requires financial records to be maintained and reported for both fiscal periods. Another is the US-NZ Double Taxation Agreement (DTA) and its interaction with the tax codes of both countries which often leads to quite unexpected outcomes.
In this cross jurisdictional world, the conventional US or NZ approaches and advice in relation to all aspects of a US citizen’s financial life do not translate well and often prove futile or have unintended consequences. These complexities become a permanent feature that must be understood and factored into a wide range of financial and investment decisions that arise over the course of a family’s life.
How we can help
We are specialists in managing the cross jurisdictional complexities that US citizens must adapt to when living in NZ. These include:
- Globally diversified and best practice investment strategies based on the science of investing that avoid the punitive US PFICS tax regime which applies to almost all NZ conventional investment strategies (including most NZ Kiwisaver schemes)
- Currency management when moving assets to and from NZ
- US capital gains tax minimisation through loss harvesting and trading minimisation of investment portfolios
- Optimal US retirement account (IRA/401k etc) distribution strategies that take account of the preferential NZ tax rates applicable during your first 30 years of residency in NZ. US inherited IRA’s and US annuities have particularly complex tax aspects that require a very proactive approach to avoid the full double taxation of these with no foreign tax credit relief
- Optimal drawdown strategies for US pension schemes
- Optimal drawdown strategies for US Social Security whilst also ensuring your entitlements to NZ Super are fully exploited
- Cross border asset protection and estate planning
We have strategic alliances with US-NZ accountants and US-NZ legal advisers to provide the wide ranging and holistic advice US citizens need to simplify and bring peace of mind to their complex financial lives, so you can relax and enjoy all the great things that attracted you to NZ in the first place.
Please contact Steve Mander at email@example.com or James Howard at firstname.lastname@example.org, or phone 0800 864 164 for an initial, no-obligation review of your situation. Disclosure Statement available on request, free of charge.