Top 10 Financial Considerations When Moving to the United States

 

Moving to a new country is exciting, but it can also feel overwhelming. Alongside finding a place to live or opening a bank account, there are often complex financial and legal matters to address. These are frequently postponed until “later,” but delaying them can be costly.

To help individuals prepare, Cross Border Financial Planning USA has outlined ten key financial considerations for anyone planning a move to the United States. While personal circumstances vary by country of origin, many of the principles below apply broadly to international relocations to the US.

1. Understanding US tax reporting and payment obligations

Many countries collect income tax through payroll withholding systems, and although the US system is similar, most people are still required to file a tax return each year and it is the individual’s responsibility to make sure they do, regardless of how tax is withheld.

Another difference can be the tax year. The US tax year follows the calendar year, running from January 1 to December 31, which may differ from the tax year in your home country. This can complicate the transition year and make advance planning especially important.

2. Reviewing investments before becoming a US taxpayer

Many investment products that are common and tax-efficient in other countries—such as mutual funds, exchange-traded funds (ETFs), or pooled investment vehicles—may be classified as Passive Foreign Investment Companies (PFICs) once you become a US taxpayer.

PFICs are subject to punitive US tax treatment and complex reporting requirements, which can significantly reduce after-tax returns. In addition, tax-advantaged accounts in your home country may not be recognized as tax-free by the US Internal Revenue Service (IRS).

Before moving, it is important to understand how existing investments will be treated under US tax rules and whether changes should be considered prior to becoming US tax resident.

3. Considering what happens if you later leave the US

Investment planning should not focus solely on your time in the US. If you expect to return to your home country or move elsewhere in the future, it is important to consider how US-based investments will be taxed once you are no longer US resident.

Some investments that are efficient while living in the US may be taxed unfavorably elsewhere. Reviewing investments through a long-term, cross-border lens can help avoid problems later. It can also help you to take advantage of tax opportunities by structing accounts and investments correctly for when you are no longer US resident.

4. Retaining property in your home country

For many people, a move to the US is not permanent. Visa restrictions or personal plans may mean returning home at a later date. As a result, it is common to retain property in your home country and rent it out.

Rental income may be taxed in the country where the property is located, but it must also be reported on your US tax return. Double taxation treaties may allow foreign tax credits to reduce or eliminate double taxation, but reporting obligations still apply.

If you sell property in your home country while living in the US, there may also be local filing deadlines and reporting requirements to be aware of.

5. Reporting foreign bank accounts and financial assets

Often individuals moving to the US maintain bank or investment accounts outside the US. While this can be practical, it comes with additional reporting obligations.

If the combined value of your non-US bank accounts exceeds $10,000 at any point during the year, you are required to file a Foreign Bank Account Report (FBAR). Failure to do so can result in significant penalties.

There is also a separate annual reporting requirement for foreign financial assets above certain thresholds, which vary depending on filing status.

6. Managing currency transfers efficiently

Moving money internationally can be expensive if not handled carefully. While transferring funds directly through traditional banks may be convenient, it is often not the most cost-effective option.

Using a reputable currency broker or online currency service could result in lower costs and greater transparency. Banks often advertise zero fees while incorporating costs into less favorable exchange rates.

7. Reviewing pensions and retirement accounts

Retirement accounts can be among the largest assets a person owns, yet they are easy to overlook during a move.

It is important to understand how retirement plans held in your home country will be taxed in the US, as well as what retirement options are available once you arrive. Planning should also take into account how these accounts will be treated if you later leave the US.

8. Rebuilding a US credit history

In most cases, credit history does not transfer internationally. Even individuals with strong credit profiles elsewhere may find themselves starting from scratch in the US.

This can affect everything from renting a home to obtaining a credit card or mortgage. Some international banks and financial institutions may consider overseas credit history, which can help bridge the gap during the early years.

9. Reviewing wills, powers of attorney, and trusts

Estate planning documents created in one country do not necessarily operate as intended in another. Before moving, it is important to review existing wills, powers of attorney, and trust structures to ensure they remain effective under US law.

In some cases, having estate planning documents in more than one jurisdiction may be appropriate. Trusts, in particular, can be treated very differently depending on where the settlor, trustees, and beneficiaries reside.

10. Understanding US estate and gift tax exposure

The US estate and gift tax system is complex and can be affected by citizenship, residency, and domicile. At the federal level, estate tax allowances are relatively high compared to many countries, but state-level rules can add further complexity.

For international families, understanding how estate tax exposure changes when moving to the US is an important part of long-term planning.

Seek advice if you are unsure

Relocating to the US involves more than adjusting to a new culture or finding a place to live. Cross-border tax, investment, and estate planning considerations can be complex, and mistakes can be costly.

While some questions can be researched independently, working with professionals experienced in international and cross-border financial planning can help clarify your obligations, reduce risk, and uncover planning opportunities. With effective preparation and ongoing planning, moving to the US can be a fantastic opportunity and financially rewarding.

Cross Border Financial Planning USA LLC is an investment adviser located and registered with the U.S. Securities and Exchange Commission (“SEC”). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. Cross Border Financial Planning USA LLC only transacts business in states in which it is properly notice filed or is excluded or exempted from registration. A copy of Cross Border Financial Planning USA LLC’s current written disclosure brochure which discusses among other things, Cross Border Financial Planning USA LLC’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Prior to making an investment decision, please consult with your financial advisor about your individual situation. Any mention of a particular security or type of security is not a recommendation to buy or sell that security. Investing involves risks including the possible loss of capital. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. Cross Border Financial Planning USA are not tax or legal advisors, and you should discuss any tax or legal matters with the appropriate tax or legal professional.