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Spring Clean Your Finances as an Expat

May 15, 2023
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4 Tips to Manage Your Finances While Living Abroad

Spring can inspire new beginnings and fresh ideas. It can also be a great reminder to check in on your personal finances and how you’re managing money.

Regardless of what season it is in your current country of residence, this time of year is a great opportunity to revisit your financial progress throughout the first quarter and make any necessary adjustments going forward. Following are four financial tips to help you start the season off strong and stay on top of your finances as an American living abroad.

Tip #1 – Review your tax status.

As a U.S. expat, it sometimes makes sense to pre-pay taxes in your country of residence before year end. By doing so, you can document on your U.S. tax return the amount you paid in foreign taxes in order to qualify for the U.S. Foreign Tax Credit.

The end of first quarter is a good time to review your accounts with your accountant to determine whether it makes sense to begin paying some taxes to your country of residence, such as capital gains taxes on investment gains.

Tip #2 – Review your eligibility for the foreign earned income exclusion (FEIE).

In 2023, U.S. expats can exclude up to $120,000 in foreign earned income for each qualifying taxpayer. To qualify, you must meet two criteria:

  1. Have a foreign tax home
  2. Meet one of two additional criteria:

Now’s a great time to review your eligibility for the FEIE in light of the applicable criteria.

Tip #3 – Organize your files and financial documents.

Maintaining up-to-date, organized financial records is important for everyone, but it’s especially vital for U.S. expats. Navigating the financial challenges of multiple tax jurisdictions, residency requirements, cross-border investment accounts, foreign earned income, etc. can be an overwhelming challenge. However, you’ll have a much easier time if you consistently maintain organized files.

Take time to establish a system for organizing both hard copy and electronic documents. Consider storing hard copies in a locked filing cabinet. Electronic documents can be stored in the online vault of your financial planning software (if you have one), in the cloud or on an external hard drive kept in a secure location. Once you’ve established your organizational system, be sure to update your records and back up your files on a regular basis.

Tip #4 – Review any tax treaties that exist between the United States and your country of residence.

A key to successfully managing your U.S. expat investments throughout the year is taking advantage of any tax treaties held between the United States and your country of residence.

Now’s a great time to educate yourself on various strategies to reduce your tax liabilities and make any necessary changes to remain in compliance. Your Creative Planning International wealth manager is focused on helping you reduce your taxes wherever possible, and will advise you on strategies to navigate the complexities of any existing tax treaties and eliminate double taxation that can occur as an American living abroad

Could you use some help cleaning up your finances as a U.S. expat? Creative Planning International is here for you. We work with Americans abroad and cross-border families to help maximize their wealth and avoid costly mistakes. As expat fiduciary advisors, we understand the complex interaction of multi-jurisdiction tax and regulatory regimes and take into account currency management, diversification, tax and other considerations as we help you plan and invest for the future.

If you are an American living abroad and could use some help optimizing your financial life, request a meeting with a member of our team.

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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