Expat Financial Advice & Services In The United States
The Wealth Genesis provides specialist retirement advice to British Expats in the US.
The United States attracts an estimated 20,000 British expatriates every year. This vast and wildly diverse country offers something for everyone. With a strong economy and work culture, it can certainly be a land of opportunity for those looking to invest and grow their wealth, or a haven for expats looking for a complete change of pace.
It’s important to consider the financial aspects of moving to the United States. Getting the right visas, choosing healthcare options and even transferring your pension can all be complicated tasks.
Whether you’re moving for work, studying or retiring, our financial guide will help make sure that managing your money won’t get in the way of your pursuit of the American dream.
01 Moving to the USA: Visa Requirements
The USA can be a fantastic place to work, with opportunities to grow in your professional field and gain experience you might not get elsewhere.
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If you’re planning on working, you will need one of the following visas:
Employment immigration visa- this is usually granted to individuals with highly desirable skills.
Temporary employment visa – these are visas for short working stays.
Work permit – usually sponsored by an employer.
Green Card – this allows you to work and live in the US indefinitely.
If you have not already secured a job in the US, it’s advisable to contact an immigration specialist for advice on which of these options you could be eligible for.
02 Retiring in the USA
Retiring in the US can prove to be challenging if you haven’t already secured a Green Card or work visa sponsorship from an employer.
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There is, however, an option for expats to gain residency through investment:
EB-5 Investment Visa
British expats in the United States can be granted an investment visa, but it’s not as easy as simply laying down capital in exchange for a stay permit.
The criteria are as follows:
Investors must contribute typically $1 million towards a new business enterprise ($800,000 if the investment is in a rural area or area with high unemployment.)
The investment must be sustained for at least two years.
The enterprise must lead to the employment of at least ten US citizens.
The EB-5 Visa can grant expats with the opportunity to become a permanent resident or citizen of the US.
03 Can I Transfer My UK Pension To The USA?
As the UK and US have different pension schemes, unfortunately you cannot transfer your pension across the pond. This is because HMRC only permits British pensions to be transferred to schemes that share commonalities and does not recognise the US system. Sadly, although there are tax treaties between the two nations to avoid double taxation, this does not extend to retirement accounts.
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If you keep your existing pension in the UK once you become a resident of the US, you will likely lose out on some key benefits that US pensions offer, such as flexible draw-downs, multi-currency options, ability to invest in USD retirement plans and access to tax-free lump sums.
For this reason, we usually advise British Expats who intend to become US residents to transfer to a US SIPP, which has been specifically designed for these circumstances.
04 Paying Tax in the US
Us tax laws vary from state to state, so it’s important to understand your specific tax obligations before you make the move. Our advisers can help you navigate the tax system to ensure you don’t incur any penalties.
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When you move, you might not get a Social Security Number (SSN) right away, so it’s important to register with the IRS and get a ITIN number as soon as possible, which will allow you to file income tax returns.
US tax residents are taxed on their worldwide income, and must report all income from wages, dividends, investment interest, and rental income.
The IRS determines an individual’s tax residency status based on two factors:
Green Card Test: If you obtain a green card, and therefore recognised as a lawful permanent resident of the United States, you will be considered a tax resident.
Substantial Presence Test: The IRS will consider you a tax resident if you were present in the United States on at least 31 days of the current year, and 183 days during a three-year period (consisting of the current year and the two years prior.)
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Income Tax
There are two types of income tax chargeable in the US, Federal income tax and state income tax. All tax residents must pay federal income tax on their worldwide income. State income tax obligations can vary greatly, with some states such as Florida and Texas imposing no income tax whatsoever, and others such as California and New York taxing progressively.
Federal Income Tax charges can vary slightly if you are filing with a spouse, or depending on whether you have children, but the 2024 federal income tax brackets for a single person are as follows:
Check the state income tax rates depending on where you will be living to calculate how much total income tax you will owe.
06 Social Security And Medicare Withholding Tax
As well as income tax, most tax residents will also be required to pay Social Security contributions of 12.4% and Medicare withholding taxes which are 2.9%.
07 Property Tax
Property taxes vary widely across cities and states in the USA. Expats who own property will be subject to property taxes based on the value of the property. The national average property tax rate is 1.02% of the value of the property.
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Capital Gains
Capital gains taxes will apply to any profits you make from the sales of assets such as investments, stocks, bonds, dividends, cryptocurrency or real estate.
Short-term capital gains (on assets that have been held for less than a year) are taxed as if they were regular income. Individuals with capital gains from long term assets, however, can benefit from lower tax rates. The current brackets for 2024 are as follows:
09 Inheritance Tax
If you’re planning on retiring in the USA, you may be considering what will happen to your estate and how it will be distributed to your loved ones, should you pass away.
Fortunately, the US has very favourable inheritance law, in fact there is currently no federal inheritance tax in the United States. However, 6 states do enforce their own specific inheritance tax rates; Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania.
It’s important to seek professional advice and ensure your estate is in order before you move to the States, to make sure your family get the most out of their inheritance.
10 Healthcare
The healthcare system in the US can be notoriously difficult to navigate and understand. Once you move, you will be fully responsible for all healthcare costs, including prescriptions, routine check-ups and any emergency care you may require.
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Healthcare bills can be extremely expensive, so it’s imperative to make sure you have a fully comprehensive medical insurance plan before you land on American soil.
Cigna Global, Aetna International, Allianz Care, Geoblue, IMG and Bupa Global all offer health insurance plans for Brits moving to the USA. Do plenty of research to ensure you select the right plan for your individual circumstances.
Consider factors such as coverage, customer service, flexibility, excess payments and the network of healthcare providers that each policy offers.
Our Verdict
Despite the possible struggles to get the right visa and the complexities of the tax system, the United States of America remain a great option for British expats who are seeking a new life abroad.
The stark diversity and rich opportunities guarantee that your move will be an exciting adventure- don’t allow financial complications hold you back.
The Wealth Genesis is regulated by the SEC to provide investment and retirement advice to British expats and US residents. Out advisers are all dual qualified, holding both US Series 65 and UK Level 4 certification.