Things to do when leaving the US permanently (not a US citizen)

[shawnab]

I studied in the US on F1 visa and worked for some years on OPT. I do not have US citizenship or a greencard.

I am planning to leave the US permanently and live as a digital nomad for the next few years. I'm currently looking at countries like Costa Rica or Panama that offer remote worker visas, and EU countries, where I can live and work with my (Swiss) passport.

My (US) employer is fine with this. My role is fully remote and I would just switch from a W2 employee to a contractor. (It is also easier for them than the whole visa sponsorship headache.)

What preparations do I have to do to make this happen? Here are some questions:

1. How do I officially end my US tax residency? I don't want the IRS and my state to think I owe them anything after I left the country.
2. What do I do with my US bank and brokerage accounts? I have a 401k, HSA, Roth IRA and a few other bank accounts. Is there a way to keep these open and still use them even if I no longer live in the US? I'd need at least one account to receive my USD paychecks. I'd also like to keep some US credit cards.
3. Would it be worth keeping a US mail address for this purpose? I hear there are mail forwarding services that give you a physical address.
4. I also have a google voice number that I am using for 2FA (works with most of my banks from outside the US). Can I keep this number if I no longer live in the US?
5. What else do I absolutely have to do BEFORE I physically leave the US? I feel I can't just hop on a one-way flight and figure things out later.
6. Do you have any good sources on this? All the articles I could find are about leaving the US with the intention to return. I do not want to return but leave permanently.
7. Can you recommend a tax asvisor or accountant who is familiar with such situations? I would like to do this by the book if at all possible.

Thanks!

 

[beardedchristian]

@shawnab It’s kind of essential you find the right financial advisor because as a non-resident with bank accounts in US, you’ll be able to use US status as the shady tax haven that it is: https://www.icij.org/investigations...st-enabler-of-financial-secrecy-in-new-index/.

For that reason alone, I would not keep the address in US. Banks in places like South Dakota are more than happy to service foreign clients but I’m not sure if that includes clients receiving checks from US based companies.

 

[shawnab]

@beardedchristian Interesting article, thanks for sharing. I'm not an oligarch tho and not trying to hide anything so I don't think this applies to me lol.

Any idea where I might find a financial advisor with this experience?

 

[beardedchristian]

@shawnab Your case is somewhat different than a typical US expat but maybe take a look at:

https://www.greenbacktaxservices.com/

https://www.ey.com/en_gl/tax-guides

https://nomadgate.com/us-tax-guide/

Taxes is where I would start because not being tied to US gives you lots of options for residency. A place like Panama does not tax income from outside the country so conceivably you could pay zero income taxes if you move there. I bet there are others and the last two links I provided would be the best to find out.

For banking maybe check this thread but again - you not being a US citizen will likely make this easier:

https://www.reddit.com/r/expats/comments/iruk6x

For brokerages talk to Schwab and Interactive Brokers - both serve expats so they may help you as well.

There are also libertarian sites adhering to “go, where you’re treated best” rule. That may be your best bet to find the most relevant info:

https://nomadcapitalist.com/

https://expatmoney.com/

 

[shawnab]

@beardedchristian Nice resources. Thanks for putting this together.

You are right tho that my case is somewhat different.

Nomad capitalist offers their services to 7 and 8 figure enterpreneurs and investors. I am nowhere close to that lol. Do you know if there is a consultancy for the average joe?

 

[beardedchristian]

@shawnab Average Joes consult reddit...

 

[shawnab]

@beardedchristian

 

[alexstore06]

@shawnab

My (US) employer is fine with this. My role is fully remote and I would just switch from a W2 employee to a contractor.

I am unsure how this would work. Since you won't have the right to work in the USA, how can they hire you as a contractor in the US? Or your US employer has Swiss office and will hire you in Switzerland?

How do I officially end my US tax residency?

You do not. It ends automatically once you no longer pass the IRS "substantial presence test" - i.e. being in USA 31+ days in the current year and 183+ days during the last three years. So if you leave the USA before Feb 2, you won't be US tax resident in 2024.

However if you're employed by a US company and receive US-based income, you'd be taxed on your US income regardless on your tax resident status.

 

[shawnab]

@alexstore06

Since you won't have the right to work in the USA, how can they hire you as a contractor in the US?

I will not be working from the US, so won't need US work authorization. Company has many contractors who live outside the US.

if you're employed by a US company and receive US-based income, you'd be taxed on your US income regardless on your tax resident status

First time I'm hearing this. Do you have a source?

 

[patriotpaladin]

@alexstore06

However if you're employed by a US company and receive US-based income, you'd be taxed on your US income regardless on your tax resident status.

this is not true, though it's a common misunderstanding – likely due to the fact that "source" (as in "US source income") has a specific meaning in tax law/treaties that is not intuitive.

but in any case, OP is not going to be employed by the company moving forward

 

[patriotpaladin]

@shawnab

1. At some point you’ll file a nonresident tax return with the irs and a part-year or nonresident return with the state. When depends on when exactly you move. (If you’re getting dividends and interest from any of the us accounts you may need to keep filing nonresident federal tax returns anyway).
2. Depends on the institution. At some point some of them might ask for updated residency/visa documentation. Trying to change to a foreign address will probably trigger account closure for a lot of banks. (There is a conflict here with wanting to do everything above board, as there are e.g. withholding rules for nonresidents that don’t apply to residents, but those will only get applied properly if you notify the bank …)

(Related: You may want to consider holding off on selling the contents of the brokerage accounts if you can since capital gains are not taxed for nonresidents unless they’re connected to a US trade or business.)

As an EU citizen I think you can use Wise to get account details for USD direct deposits, for what that’s worth.

• Related to 2 - a virtual mailbox is probably wise if you want to keep accounts open, ideally in a state with no state income tax to avoid nasty letters from the state tax agency. I use virtualpostmail. (Alternately some folks just use a trusted family member or friend to receive the occasional piece of mail for them).
• Google voice number shouldn’t be an issue.

 

[shawnab]

@patriotpaladin Thanks for the pointers! Very helpful

 

[mfinnergab]

@shawnab Based on my personal experience, I highly recommend you open (or keep open) a checking account in the USA in a bank that has some significant foreign presence. In my case, I have a current account with HSBC USA, and (with a Premier account) I can transfer USD in and out of the country without any commission.

The other, more important thing I recommend is to open a Fidelity brokerage account. I've found Fidelity willing to continue servicing my Roth IRA, even though they have made a point to tell me their products are not designed for non-US persons (they have tolerated me establishing a UK address, phone number, my expatriation and finally the removal of my "permanent" American mailing address.

Other brokerages may be able to offer you the same thing, but my positive experience that I can share is with Fidelity.

Something to note about brokerage accounts is that as a NRA you can hold shares and you can hold ETF shares, but you cannot hold shares in a mutual fund.

What the American brokerage account offers me is an easy way to remain directly invested in the USD and US securities market. When I bring any of the money to my home country, that money becomes taxable.

 

[shawnab]

@mfinnergab I had a HSBC account once, maybe I'll open one again for this. Good idea.

Most of my assets are with Schwab currently. Only broker who could assure me via phone that I can keep my account when leaving the US. Fidelity said they may close my account, so looks like I had a different experience.

When I bring any of the money to my home country, that money becomes taxable.

You mean when you sell your ETFs at Fidelity you will pay capital gains tax in your home country? Seems pretty standard. Or did you mean something else?

 

[mfinnergab]

@shawnab My home country is the UK. I meant to describe a standard situation, yes.

If I can manage to withdraw and spend the money outside the UK, then it won't be subject to any kind of UK tax. If I withdraw and bring the money to the UK, I have to account for it either as income, or as a tax-sheltered money observed by the tax treaty between the USA and the UK.

 

[rivga]

@shawnab Citi confirmed via phone that they have brokerage accounts for non-US persons. Best to open while still present in the US, then transfer to that account once status changes