3 Tax Tips to Help You Retire Overseas the Right Way

After chasing and living the American dream, more and more Baby Boomers are considering retiring overseas. According to Travel Market Report, 3.3 million of America’s 78 million Baby Boomers say they are interested in retiring abroad. It’s a growing trend that is motivated by either the desire to develop a second home and financial situation or the need for a lower cost of living to be able to retire early or retire without working.  In fact, approximately 7 million Americans file an expat tax return and millions more are no longer required to file a U.S. tax return due to their reduced income.

If you find yourself in one of these two boats, the good news is that retiring overseas is certainly possible and with good planning, can be very rewarding.  Sitting down with a tax and financial professional with experience in international tax is the best first step.  Making sure that your financial house is in order ensures that you will experience the retirement of your dreams. Typically, at Money Concepts, we start working with clients about 18-24 months before they move abroad to make sure that they have their tax and financial worlds in order.  The IRS especially targets U.S. expats with additional reporting requirements and draconian penalties so we help our clients make sure that they do not have to worry about any IRS surprises when they are abroad.

Money Concepts advisor, Nick Hodges, CPA/PFS, MBA, CFP, CGMA, shares the three tax tips he always talks through with prospective expats:

• Leave from the “right” state: You could save a bundle on state income tax and avoid future harassment from state authorities by making your overseas move from a “no income tax” state. But you have to establish residency there before you leave the U.S. There are nine “no income tax” states you can consider: Florida, Alaska, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Move to one of these before you head overseas and you can save significantly. 
• What you need to disclose: There are as many as six additional federal tax disclosure forms when you move abroad. While these forms usually don’t change your U.S. income tax amount, each form carries a minimum $10,000 per year penalty if not correctly filed. 
• Keep important documents safe and accessible: Most of us keep our important documents in a safe deposit
box or filing cabinet. But when you need them abroad, consider scanning
and saving your files to a USB-
or thumb-drive. Alternatively, you can employ a secure, online storage for your important documents and data, which you can then access from anywhere in the world.

If you are considering retiring overseas, make sure you have a firm grasp on your tax and financial situation, a strong sense of adventure and adaptability, and the willingness to exchange some U.S. comforts for the exotic offerings of foreign locations. 

For more information, we encourage you to contact one of our financial advisors and take a look at the following resources:

•  www.Expatcfo.com
•  56 Questions You Need to Ask Before You MoveAbroad
• How U.S. Expats Can Avoid the 13 Most Common Expat Tax Traps
• ExpatTax Lesson Learned from the Gorillas of Rwanda

Sources:
Nick Hodges, CPA/PFS, MBA, CFP, CGMA

How Charitable Giving Pays Off

“We make a living by what we get. We make a life by what we give.” – Wintston Churchill

At Money Concepts, we offer our clients and customers holistic financial planning and wealth management solutions that empower them to live more enriched lives. In doing so, we encourage them to pay it forward and enrich the lives of others through charitable giving.

Imagine if you transformed your thought process from earning money just to get by to earning money to be a part of a bigger whole! This is the concept of “earning to give.”

One of the key phrases Founder Jack Walsh stated in Money Concept’s formation was that "our education teaches us how to earn a living, not what to do with it". We all have our own respective situations and the ability to give or spend as we see fit. Making charitable giving a regular part of a budget can be an empowering teaching tool and justification of what we were meant to do in life. By simply showing the reduction of arbitrary or wasteful spending that has no real value, and turning it into a giving stream that saves lives, or helps deliver a life experience can not only change the receiver, but also the giver. It helps bring a perspective into your life that is often times lacking. 

If you want to incorporate charitable giving into your financial plan, the first step is to take the first step. Make the decision to prioritize it within your budget. Review what your current spending habits are and where your money goes. Usually, you will find multiple ways to create money to reallocate in your monthly budgeting. If you’re having trouble with this process, speak with your financial planner. “[We] are in the business to truly help others, not only from a financial planning perspective, but also to help discover how we can all have a better life, which includes charitable efforts,” noted Money Concepts financial advisor John Hathaway.

The next step is to do a self-evaluation on what is important to you and align yourself with a charity or organization that you will be proud supporting. You can’t give to every charity, but find one or two that ideologically and philosophically align with yours. Probably the best advice when it comes to giving is not to get involved with charities for the sole purpose of exposure or to be a part of anything that acts in an unauthentic way. You will do yourself a disservice and you will not gain the full life experience that awaits you unless your intention is pure.

Money Concepts strives to be a prime example of “earning to give” through its yearly tradition Spring of Love. During May and June Money Concepts allocates 1% of its gross income to various charities like Folds of Honor, St. Jude’s Hospital and Make A Wish Foundation. It is our mission to help foster and assist charities in the communities where our advisors are. Money Concepts financial advisor Craig Sutherland has supported St. Jude Children's Research Hospital for almost 20 years and has even founded the "Money Concepts Classic,” a local charity golf event. John Hathaway helps contribute to Early Childhood Education and Wellness and Cherish the Children, a statewide effort to help children and families in need of financial assistance.

Sutherland adds, “At some point, everyone will face a situation or make a decision on what is most important or meaningful in their life. In that moment, there is a clear realization that you have the ability to change the world. No matter, great or small, you can be a part of something great.”

Are you ready to start earning to give?


Major Contributions by:
Craig Sutherland
John Hathaway

Real Wealth: What is it?

Contrary to popular belief, financial wealth is not just about earning a large income, wearing expensive clothes, driving fancy cars, or owning a large home. Financial experts describe wealth as based on one’s ability to have enough assets to maintain their current standard of living after retirement. In addition, wealth is linked to their ability to regularly make charitable donations and eventually, build a legacy to improve the lives of their children and grandchildren.

Despite the U.S. being quantifiably one of the richest countries in the world, many Americans have little knowledge of how to effectively manage their assets prior to retirement. Consider this, at age 65, statistics show only 19 out of 100 people are financially independent, while 46 out of every 100 are dependent on their children or other resources to maintain their standard of living. Even more alarming is 15 of the 100 will be living below the poverty level established by the government. And while most of us were taught how to make a living, very few people have learned how to save their money, let alone how to increase their savings thru various investment opportunities.

So how do you overcome the potential roadblocks to financial success and create wealth? The first step is find a trustworthy and well educated financial advisor to serve as your guide.  Together you can create a roadmap to success that will account for typical hurdles like the ever rising cost of living and taxes, which can be one of the largest contributors to the erosion of your wealth if not managed appropriately.  Top advisors not only make recommendations on investment opportunities, they also help you plan for major life occurrences like buying a home, having children, college funds, retirement, etc.

Today’s investor has access to more information than ever. They also must find a way to cut through the “noise”. Compare how the investor faired against the S&P 500. According to Dalbar, from 1993-2013 the investor averaged a 4.25% return while the S&P 500 enjoyed 9.14%. Let’s face it, investing is hard and even harder when you go it alone.  “The investor’s chief problem–and even his worst enemy–is likely to be himself,” said Benjamin Graham, a legendary American investor, scholar, teacher and author. In order to make the most of your investments and your future, ongoing financial coaching and guidance is an absolute must.

Don’t become your own biggest roadblock to wealth. Seek guidance from a financial advisor today and begin creating your own roadmap to financial success and true wealth.

Written by:

Denis Walsh

CEO

Money Concepts International