Category Archives: AmeriPREP Financial

All people have a responsibility to themselves and to their families to engage in responsible saving, investing, financial and retirement planning. Generally tax systems are designed to incentivize this. Because of US citizenship-based taxation, Americans abroad have special financial and retirement planning needs. They need specialized knowledge and specialized advisors. These posts identify and describe topics of specific interest to Americans abroad specifically and the expat world generally.

Renunciation/Relinquishment, The US Exit Tax And The Confiscatory Case Of NON-U.S. Pensions (U.S. Pensions Avoid This!)

Part I – Prologue – A Tweet Worth A Thousand Posts

For a “Readers Digest” version of the post that is to follow, simply click on the link in the above tweet!

To see examples of the deemed income inclusions and the U.S. tax owing click on the links to Appendices, B, C and D below.


Outline And Structure

This post is for the purpose of alerting Americans abroad and their advisors to a particularly difficult and unjust aspect of renouncing U.S. citizenship. The punitive treatment of the non-U.S. pension is a reason for many Americans abroad to consider renunciation earlier (when they are not “covered expatriates”) rather than later (when they may be subject to the confiscatory rules applied to “covered expatriates”).

Part I – Introduction – The General Message
Part II: Renunciation/Relinquishment and the confiscatory case of the “ineligible” (non-U.S.) pension … A Deeper Dive
Part III: Renunciation/Relinquishment and the retention of the “eligible” (U.S.) pension … A Deeper Dive
Part IV – Conclusion
Appendix A – How Internal Revenue Code Sections 877A and 877 Lead To The Confiscation Of The Non-U.S. Pension
Appendix B – Dual Status tax return with a 1 million USD income inclusion on the day before expatriation
Appendix C – Dual Status tax return with a 1 million USD income inclusion on the day before expatriation with a $100,000 tax credit carry forward
Appendix D – Dual Status tax return with (1) a full actual distribution of the pension in Canada on the day before expatriation (generating a foreign tax credit in the current year)


Part I – Introduction – The General Message

The warning! Some Americans abroad who renounce U.S. citizenship can expect to have punitive taxation imposed on the value of their non-US pensions. This is a tax imposed by a “deemed distribution” (not actual) of the the pension. Because there was no “actual distribution” those affected will need to find another source of funds to pay the tax. Significantly, the tax does NOT apply to U.S. pensions. Those renouncing who have U.S. based pensions may NEVER be taxed on the value of those pensions.

Once an individual’s net worth reaches 2 million USD, that individual is generally subject to this tax. This means that renunciation may become very costly. Americans abroad with non-US pensions and their advisors should be aware of (and plan around) this problem.

In this post I am joined by CPA Olivier Wagner who has generously provided excerpts from mock U.S. tax returns which demonstrate how confiscatory the U.S. Exit Tax rules are when applied to non-U.S. pensions (and therefore to Americans abroad). You will find his returns in Appendixes B, C and D at the end of this post.

The mock tax returns show that a U.S. citizen living outside the United States who:

– is a “covered expatriate”

– has a non-U.S. pension with a present value that includes a taxable amount of $1,000,000 USD

will be subject to an immediate tax of $344,963 triggered by renunciation of U.S. citizenship.

Because this tax is NOT imposed on those with U.S. based pensions, this tax applies disproportionately to Americans abroad, who earned their pensions while living outside the United Sates.

Of course, if he had renounced before reaching the 2 million USD net worth mark, he could possibly renounce and pay no exit tax on the value of his pension. Financial planners and other advisors take note!!

Continue reading

To TFSA Or To Not TFSA, Whether Tis Better For A US Citizen Living In Canada To Open A TFSA Or Not

Update March 29, 2023 …

On March 28, 2023 the Government of Canada officially announced that the Canadian “First Home Saving Account” will be available to Canadian residents as of April 1, 2023. As explained in this description of the “FHSA”, this will be of value to U.S. citizens who are resident in Canada. The circumstances surrounding the TFSA are similar to the FHSA. Here is a more complete discussion of US citizens residing in Canada and the use of the FHSA.

Introduction And Purpose

As the article referenced in the above tweet makes clear, a very small percentage of Canadians can expect their retirements to be funded by pensions. The message is that individuals have an obligation to themselves and to their families to engage in responsible financial and retirement planning. Governments have a clear, important and sustainable interest in assisting their residents to achieve and maintain financial stability. The tax laws in every country have provisions in their tax codes to both incentivize and facilitate this planning. They facilitate planning planning vehicles through provisions in their tax codes. Almost all of these planning vehicles are based on “before tax” advantaged vehicles (RRSP or Conventional IRA) or “after tax” vehicles (TFSA or ROTH IRA) which allow for tax free growth. Canada is home to many people who are dual Canada/US citizens. Canadian residents who are also U.S. citizens are subject to the U.S. tax code. This means that they are required to comply with the tax codes of both Canada and the United States (two of the most complex tax regimes in the world). But, what happens when the financial planning provisions in Canada’s tax law are not recognized in the tax code of the United States? What Canada giveth, the U.S. (possibly) taxeth.

The purpose of this post is to take a “deeper dive” into the mechanics financial planning and investing for U.S. citizens who reside in Canada. Most U.S. citizens feel completely disabled by U.S. tax laws. I don’t believe that this is necessarily true in all cases. This is intended to be one of a series of posts to address the specific issue of:

“Retirement And Financial Planning For U.S. Citizens Living Outside The United States”

If you have an idea for a topic send me an email. I encourage you to subscribe to this blog.

U.S. Citizens In Canada And The TFSA

I am frequently asked by Canadian residents who are US citizens whether they should open a TFSA (“Tax Free Savings Account”) in Canada. The purpose of this post is to discuss this very issue. As usual there is no “one size fits all answer” that is correct for everybody. In order to analyze this question I am joined by Oliver Wagner of “1040 Abroad” who has provided his thoughts, experience, commentary and some sample tax US tax returns which illustrate the various principles.

Continue reading

Financial Planning For Americans Abroad and By Americans Abroad


In the 21st century it has never been more true that:

On the one hand responsible money management, investing and financial planning is a necessity.

On the other hand Americans abroad have been severely disabled from those essential activities by the US tax system.

US citizens presumptively do NOT benefit from tax advantaged financial planning options outside the United States. The circumstance of US citizenship makes participation in non-US pension plans difficult. The PFIC regime operates to make even investing in non-US mutual funds a difficult proposition. Those Americans abroad who attempt to create private pension plans by using small business corporations will likely find that the CFC, Subpart F and GILTI rules make this difficult.

It’s entirely understandable that many Americans abroad have lost their incentive to care financially for themselves and their families.

The message is clear:

When it comes to investing, financial planning and retirement planning US citizenship is presumptively a disability!

That said, it’s essential that US citizens do NOT allow the US extra-territorial tax regime to cause them to NOT engage in retirement and financial planning! They must adopt a “can do” attitude and understand that even with the disability of US citizenship, they can – with the proper advisors – invest for retirement like the citizens of all other countries. In fact, those who are successful, can take pride in the fact that they succeeded NOT because they were American but in spite of being American! Those who are successful can proudly and defiantly say:

“I’m American, but I’m gonna invest for retirement anyway!”

For Americans abroad investing and retirement planning requires a positive mindset and often a competent advisor.

At a minimum, Americans abroad need financial advisors who understand what it means to be an American abroad.

Creveling and Creveling – Financial Planners For Americans Abroad By Americans Abroad

Investment advisors for Americans abroad is a growing industry. I recently had the opportunity to meet and talk with Peggy Creveling, who is one of the two Crevelings who is part of Creveling and Creveling a Thailand based financial planning firm. Investing and financial planning is a “long term” commitment in the same way that health and fitness is a long term commitment. Most people need a mentor and motivator. This requires that they meet the right kind of mentor who will guide them toward their specific goals.

As part of my podcast series for the American Expat Financial News Journal I had the opportunity to meet and chat with Peggy Creveling. This resulted in the following two podcasts:

Part 1 – From growing up in Ohio to West Point to Thailand – The Making Of A Financial Planner

Part 2 – Thinking about financial planning and investing – the difference between investing and speculating

Bottom line: Americans abroad really need to commit to investing and financial planning. You are likely to find the insights and thoughts of Peggy Creveling to be helpful!

John Richardson – Follow me on Twitter @Expatriationlaw

Thinking About Financial And Life Planning For US Citizens Living Outside The United States


This week I am giving a (short) presentation on this topic. I created some slides that are designed to provide the categories for discussion. I thought I would share the slides in this blog post.

John Richardson – Follow me on Twitter @Expatrationlaw

Financial And Mobility Planning For “US Persons” With US/Australia Dual @TaxResidency

US citizenship taxation has made US citizens the most heavily regulated individuals in the world and subject to the most penalty laden and complex set of regulations the world has ever known. Those who wish to retain US citizenship or US Green Cards will have to learn how to navigate it.

An industry is slowly growing based on the need for US citizens to have complex and specialized advice. Meet Ashley Murphy:

Tri-citizen of the US, Australia and the UK & Principal of Areté Wealth Strategists Australia, a financial planning firm based in the US.

Better yet… here is a link to his video channel which includes a number of sessions focussing on those who are or who are planning to become US/Australia dual tax residents.

John Richardson – Follow me on Twitter @Expatriationlaw

US Citizens And Divorce: It’s More Complicated For Americans Abroad

Prologue – Divorce And US Citizens Abroad

Panel session – US Expat Tax Conference from Deborah Hicks on Vimeo.

Purpose Of This Post …

Divorce is difficult, traumatic and potentially very costly. What follows are links to three posts – written by David Ellis, CPA – which originally appeared at Tax Connections ins 2022. The point is that US citizens abroad are subject to BOTH US tax rules and the rules in their country of residence. The problem is exacerbated when a US citizen is married to a noncitizen.

The following three posts provide an excellent summary and analysis of how the Internal Revenue Code impacts US citizens living inside the United States or abroad …

Dividing Property In Divorce Tax Traps – Part 1

Dividing Property In Divorce Tax Traps – Part 2

Dividing Property In Divorce Tax Traps – Part 3

Dividing Property In Divorce Tax Traps – Part 4

Dividing Property In Divorce Tax Traps – Part 5

Dividing Property In Divorce Tax Traps – Part 6

Dividing Property In Divorce Tax Traps – Part 7

Dividing Property In Divorce Tax Traps – Part 8

Dividing Property In Divorce Tax Traps – Part 9

Dividing Property In Divorce Tax Traps – Part 10

Dividing Property In Divorce Tax Traps – Part 11

Dividing Property In Divorce Tax Traps – Part 12

Dividing Property In Divorce Tax Traps – Part 13

John Richardson – Follow me on Twitter @Expatriationlaw

US Social Security And Financial Planning With Dan Mazzola


For many people (including Americans abroad) Social Security programs (whatever they are called in other countries) are an important component of retirement income and financial planning.

During December 2021 I had the good fortune to host Dan Mazzola on a couple of podcasts. In the first podcast we discuss the inner workings of US Social Security. In the second podcast we discuss financial planning in general.

Here they are …

December 3, 2021 – Smarter Social Security

December 9, 2021 – It’s More About The Investor Than The Investment

Tax me now! Tax me later! Tax me never! Interview with expat financial planner Jimmy Miller

Prologue: In search of a tax haven …

Where to find that tax haven – let’s start with a ROTH IRA

The above tweet from CPA Gary Garter leads to a discussion that includes:

Continue reading

The Competent Authorities Should Agree That the Canadian TFSA Has The Same Treaty Status As The US Roth IRA

2018 Prologue

In 2018 I wrote a post arguing that it is reasonable to conclude that the text of the Canada US Tax Treaty should be interpreted to mean that a Canadian TFSA is – like a US ROTH IRA – a pension within the meaning of the Canada US Tax Treaty. The 2018 post was arguing for equal treatment without the intervention of the respective Canadian and American Competent Authorities.

The Punitive Taxation Of US Citizens Living Outside The United States Continues

I have previously and repeatedly made the point that:

The United States imposes a separate and more punitive system of taxation on US citizens living outside the United States than on US citizens living in the United States.

Continue reading