FATCA, NISA....losing touch with reality

[Nice house, F4 -- decent bungalows are not all that easy to find hereabouts]

 In fact, I have a dermatologist checkup scheduled for February (not standard with NHS even with a history of skin cancer)

That house for 225K would cost twice that in Harrogate.....which is why we are probably heading to the Slaithwaite/Meltham area. Plenty of great walking. I'll probably play golf since I think my running days are numbered. That house is bigger than we want.....a 2 bedroom with a large kitchen/diner/living room+ integrated garage would be perfect for us.

I also go at least yearly to the Dermatologist. I have had numerous decent sized chunks cut out of me by the time I hit 50. Just had two small things cut out a month ago.....might as well just dip my whole body in liquid N.

A bit late logging in today, so a late thank you to OAP and nun in particular for some excellent posts.

Most of our income will be based in the US after we set up residence in the UK.  2 US private company pensions plus we both have IRA's and ROTH's, and also lots of money invested in Vanguard ETF's, and both will get SS.  This past 3 years I've been aggressively converting IRA money to ROTH's, paying 25% tax now to avoid paying 40% in the UK at age 70 when IRA withdrawals are mandatory and I'll start drawing my SS.  (ROTH withdrawal is tax free in both countries).

Head spinning stuff, but just as good as doing crosswords and Sudoku's to keep the brain exercised.

durhamlad.....same with us I am thinking. I will always have the SS and pension and TSP coming in from the US side of things....and hopefully still the small SS spousal for my wife. Thinking that my wife getting rid of her green card as soon as possible on moving is wise.....yes, cuts the possibility of coming back this way...but that's extremely unlikely. Even at 67 my wife's total pensions will be less than 10kPounds, so it looks like she probably has the better options of hiding/investing cash in the UK over the next 10+ years. Wished I had known about the ROTH conversions years ago....too late for me now.

durhamlad.....same with us I am thinking. I will always have the SS and pension and TSP coming in from the US side of things....and hopefully still the small SS spousal for my wife. Thinking that my wife getting rid of her green card as soon as possible on moving is wise.....yes, cuts the possibility of coming back this way...but that's extremely unlikely. Even at 67 my wife's total pensions will be less than 10kPounds, so it looks like she probably has the better options of hiding/investing cash in the UK over the next 10+ years. Wished I had known about the ROTH conversions years ago....too late for me now.

I would think that your wife giving up her green card would be a sensible thing to do.  She would likely lose it anyway if she stays away so she may as well relinquish it formally as described in posts above.

I wish I had done my research earlier on moving back to the UK because initially when doing ROTH conversions I concentrated on my wife's IRA which had a higher basis and cost less in taxes during conversions.  I hadn't realized that we would be taxed as individuals in the UK so it was much more important to convert my IRA money as she would never approach the 40% tax bracket in the UK (unless/until I die before her)

http://www.uscis.gov/green-card/after-green-card-granted/maintaining-permanent-residence

You may be found to have abandoned your permanent resident status if you:

Move to another country intending to live there permanently
Remain outside of the United States for more than 1 year without obtaining a reentry permit or returning resident visa. However, in determining whether your status has been abandoned, any length of absence from the United States may be considered, even if less than 1 year
Remain outside of the United States for more than 2 years after issuance of a reentry permit without obtaining a returning resident visa. However, in determining whether your status has been abandoned any length of absence from the United States may be considered, even if less than 1 year
Fail to file income tax returns while living outside of the United States for any period
Declare yourself a “nonimmigrant” on your tax returns

And then I start wondering....(actually....just being paranoid)....would there be an issue with my wife getting her SS spousal without the greencard. That I am aware, it wouldn't matter.

durhamlad.....same with us I am thinking. I will always have the SS and pension and TSP coming in from the US side of things....and hopefully still the small SS spousal for my wife. Thinking that my wife getting rid of her green card as soon as possible on moving is wise.....yes, cuts the possibility of coming back this way...but that's extremely unlikely. Even at 67 my wife's total pensions will be less than 10kPounds, so it looks like she probably has the better options of hiding/investing cash in the UK over the next 10+ years. Wished I had known about the ROTH conversions years ago....too late for me now.

The TSP and the US SS are pretty easy to deal with because foreign tax credits aren't needed if you're a US citizen living in the UK. The TSP is only taxable in the US and the SS is only taxable in the UK. Things get a bit more mirky with IRA money. If the money is a rollover from say a 403b your paid into while working for a government organization I suppose payments would be treated as a government pension....but you might also have private employment 401k money in that same IRA so maybe you'd pro-rate how the income is taxed.......I suppose if you had a 401k from a Government contractor that would be classed as a private pension.

For me....it's just the TSP (which I plan to keep, if for no other reason than the G fund), I have no other IRA. That's one of the reasons I would think my taxes should be about as easy as they could be in my situation (but still confusing as heck). My pension isn't very big ($15,348yr and it's US Govt so UK doesn't care?). My SS won't be very big ($16,000 and US doesn't care). My Vanguard outside of the ROTH will only have about $100K once I sell off one more biggish chunk after the start of the year. Then the total cash when we move it over to the UK will be about 300KPounds. That will pretty well disappear after the first year or so. I will still need to keep on account (probably in the UK) big enough (33K+Pounds) to cover the next VISA...my pension money etc knocks the VISA cash requirement down to about 33KPounds. If the US taxes don't care diddle about my SS.....then when I hit 62 I can keep selling around $10K out of my TSP every year to stay in the filing separate 15% bracket. Sooner or later I won't be able to avoid going over into the 25% bracket.....but as OAP has repeatedly said..... "suck it up". I wish I had enough money as durhamlad and had to worry about the higher tax brackets.......but I don't, and what we have seems to me to be more than enough for us to live comfortably. We spent the equivalent of less than 20KPounds last year.

Many many thanks to the people that have kept this discussion going....OAP, nun, durhamlad.....and in another month or so I am likely to start cranking out posts on the VISA side of the forum. At this point I at least feel like I have half a plan in place on the money side of things. And as I pointed out earlier today to my wife.... "When we win the lotto back in the UK.....it's got to be in your name!!!" I don't need any "Boris" issues to deal with.

SO I think I've been guilty of looking at the internet and believing what I saw when it comes to FTC baskets and pensions.

So OAP would you agree with this.

Dividends, interest, rent, capital gains.....passive basket
Pensions, earned income..........general basket

The "certain income resource by treaty" red herring is addressed in this exchange by people way more knowledgable that me.

http://talk.uk-yankee.com/index.php?topic=60995.0

For me....it's just the TSP (which I plan to keep, if for no other reason than the G fund), I have no other IRA. That's one of the reasons I would think my taxes should be about as easy as they could be in my situation (but still confusing as heck). My pension isn't very big ($15,348yr and it's US Govt so UK doesn't care?). My SS won't be very big ($16,000 and US doesn't care).

yes, exactly, so no need for FTCs here.

My Vanguard outside of the ROTH will only have about $100K once I sell off one more biggish chunk after the start of the year. Then the total cash when we move it over to the UK will be about 300KPounds. That will pretty well disappear after the first year or so. I will still need to keep on account (probably in the UK) big enough (33K+Pounds) to cover the next VISA...my pension money etc knocks the VISA cash requirement down to about 33KPounds.

So watch out for FBAR filing and FATCA and make sure you avoid attaching your name to anything that might be a PFIC. It's probably a good idea to keep a good amount of cash in the local currency for emergencies and general spending anyway with or without the visa requirements. You might want to sell your US Vanguard funds before you move to the UK so you only have to deal with US taxes on capital gains.

If the US taxes don't care diddle about my SS.....then when I hit 62 I can keep selling around $10K out of my TSP every year to stay in the filing separate 15% bracket. Sooner or later I won't be able to avoid going over into the 25% bracket.....but as OAP has repeatedly said..... "suck it up". I wish I had enough money as durhamlad and had to worry about the higher tax brackets.......but I don't, and what we have seems to me to be more than enough for us to live comfortably. We spent the equivalent of less than 20KPounds last year.

You sound a lot like me, fretting over staying within the 15% tax bracket. I retired last March and I'm spending that same as you, but it's just me and I did have to fly to the UK twice this summer.

 You might want to sell your US Vanguard funds before you move to the UK so you only have to deal with US taxes on capital gains.

OK, now you're bringing up something else I have no clue on. I already sold a big chunk a few months ago and am planning on another $80-90K or so after the first of the year. You think selling everything but the ROTH and paying 15% (instead of 0%) on the capital gains is wise....something I would trigger if I sell while living in the UK? Remember....I'm only picking up about half of what is being talked about.....

OK, now you're bringing up something else I have no clue on. I already sold a big chunk a few months ago and am planning on another $80-90K or so after the first of the year. You think selling everything but the ROTH and paying 15% (instead of 0%) on the capital gains is wise....something I would trigger if I sell while living in the UK? Remember....I'm only picking up about half of what is being talked about.....

I would think it depends on how the treaty works.  If cap gains are taxed first by the UK and then the US and you take a credit against the US tax using 1116 then it doesn't matter since you are going to be paying 15% anyway.

I think you misunderstood me. Definitely move all Vanguard mutual funds outside of retirement accounts to Vanguard ETFs before you move to the UK. I'd double check on the HMRC reporting funds list that the Vanguard ETFs you choose are included. I would also choose ETFs that don't (or rarely) issue capital gains distributions.

Whatever, Vanguard funds you are planning on liquidating should be sold before you move to the UK so you don't have to bother with CGT in two countries on those sales. Eventually you'll have to deal with that when you sell in the future, but why complicate things.

For the capital gains you pay full tax in the UK and then claim a passive FTC in the US. For dividends, by treaty, you pay the US 15% tax and claim a foreign tax credit in the UK.

OK, now you're bringing up something else I have no clue on. I already sold a big chunk a few months ago and am planning on another $80-90K or so after the first of the year. You think selling everything but the ROTH and paying 15% (instead of 0%) on the capital gains is wise....something I would trigger if I sell while living in the UK? Remember....I'm only picking up about half of what is being talked about.....

Thinking out loud.....

If your wife gives up the green card and is not being taxed in the US but still owns VG ETFs then she would only be liable to pay UK taxes on them so would get a good chunk of cap gains free of tax each year she sells some shares.

Thinking out loud.....

If your wife gives up the green card and is not being taxed in the US but still owns VG ETFs then she would only be liable to pay UK taxes on them so would get a good chunk of cap gains free of tax each year she sells some shares.

She'll pay 15% US tax on dividends. The capital gains allowances in the UK and the US are quite generous and if you control your income you can easily pay zero CGT in both the US and the UK on sale of investments under many residency, income source and citizenship combinations. If US funds issue capital gains distributions there is some questions as to whether they are taxed as income or capital gains in the UK. Luckily stock ETFs seldom....if ever...distribute capital gains so that you will only get them when you sell. Bond ETFs do sometimes distribute capital gains which is just another reason to keep them nice and cozy inside a retirement account wrapper.

She'll pay 15% US tax on dividends. The capital gains allowances in the UK and the US are quite generous and if you control your income you can easily pay zero CGT in both the US and the UK on sale of investments under many residency, income source and citizenship combinations. If US funds issue capital gains distributions there is some questions as to whether they are taxed as income or capital gains in the UK. Luckily stock ETFs seldom....if ever...distribute capital gains so that you will only get them when you sell. Bond ETFs do sometimes distribute capital gains which is just another reason to keep them nice and cozy inside a retirement account wrapper.

Right now my Vanguard outside the ROTH is in Dividend Growth and Total Stock. I was planning on selling the chunk in the new year from the Total Stock. The Dividend Growth throws off a lot of short term gains and I was thinking about just moving everything in that one and the regular Total Stock over to the ETF Total Stock. Then I could just use my TSP money (mostly in the G fund) as a steady fund. If the market keeps going up I would drain out of the Total Stock.....if the market goes kaput I would take money out of the TSP. I really don't have a clue what I'm doing......