How best to handle USA-based investment accounts

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How best to handle USA-based investment accounts


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Old 10th July 2019, 09:55 PM
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Post How best to handle USA-based investment accounts

Kia ora koutou,

My partner is a US national still in the transitional tax resident stage. She has some USA-based equity investments with some hefty unrealised long term capital gains. She is also earning well under the US$103,900 exclusion amount so isn't paying USA taxes on her NZ income.

I'm just wondering what the best way to structure our finances is and whether we should realise some capital gains now.

My understanding is that the long capital gains tax rate is 0% up until US$39,375. Exactly what income counts towards this number for an expat? NZ earned income? Retirement/kiwisaver employer contributions? Kiwisaver tax credit? PIE capital gains? PIE dividends? USA-based realised capital gains? She has income from all of these sources... I believe if we count all of them towards the US$39,375 she would go into the next bracket.

Thanks heaps for any help!

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Old 11th July 2019, 06:13 AM
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You may want to post this over in the Expat Tax section of the forum https://www.expatforum.com/expats/expat-tax/
It's a common concern for US expats the world over. However, the US does practice "citizenship based taxation" - which means that essentially a US citizen living abroad is subject to all the same tax rules and regulations as if he or she were resident in the US. This is mitigated by the Foreign Earned Income Exclusion (FEIE) which applies only to "earned income" (i.e. salary), and the Foreign Tax Credit for taxes paid to a non-US taxing authority (though the forms to claim this credit can be kind of complicated).

She may want to look up the US-NZ tax treaty to see what other provisions there are for the types of investments she holds. But there should be some folks in the Expat Tax section who can point you in the right direction.
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