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Written by: Carlo Bertoncello, Luca Biancardino and Giuseppe Calisi The dream of "La Dolce Vita" often leads American retirees to the sun-drenched coasts of Italy. However, once the suitcases are unpacked in a beautiful villa in Liguria, the reality of cross-border taxation sets in. For US citizens, this transition is particularly complex due to the unique "citizenship-based" taxation of the United States interacting with Italy's residence-based system. To illustrate how these cross-border considerations can arise in practice, consider the hypothetical case of John (75) and Susan (66), a retired American couple who have recently established tax residency in Liguria. John and Susan’s Balance Sheet John and Susan Bianchi have accumulated significant assets over their careers. Their primary objective is wealth preservation for their own retirement and eventually for their two children: Giorgia (31), who lives in the U.S., and Federico (36), who resides in Italy. Both children are married and independent, meaning John and Susan are a separate tax household. Their financial situation is structured through two brokerage accounts (one each), one U.S. revocable living trust to avoid US probate, and their individual retirement accounts (IRA). The Balance Sheet With financial planning, it helps to zoom out and take the helicopter view of the entire family net worth as the first step. We look at John and Susan household net worth before stepping into the Italian tax simulation.  A Tax Simulation As Italian tax residents, John and Susan are subject to tax on their worldwide income. In Italy, US Revocable Trusts are generally considered "fiscally interposed" (transparent). This means the Italian Revenue Agency ( Agenzia delle Entrate ) looks through the trust structure and taxes John and Susan directly as the beneficial owners of the underlying assets. Moreover, often the trustees are the same settlors, thus, despite the qualification of the trust by the Italian Revenue Agency (either transparent or not), as the settlors are Italian residents, also the trust will be considered subject to Italian tax law. For the tax simulation we look at the assets in Susan’s and John’s taxable accounts at Interactive Brokers. We will put more ink to paper to look at the details of tax treatment of foreign trusts in Italy in future articles. In future articles will delve further into the specific tax treatment of foreign trusts in Italy.   Redditi di Capitale (Capital Income) This category includes dividends and interest payments. Italy applies different imposte sostitutive  (substitute taxes) depending on the asset type. Combined, we have about €3.9M in their taxable accounts. The assets are structured as such: Let’s calculate the taxes capital income for equities: For the bonds instead, we have to use two different tax rates because the portfolio is split between US Treasuries and global corporate bonds. Let’s look at the tax calculation: Tax rate on white list government bonds: 12.5%  Tax rate on corporate bonds: 26% Cash/Money Market (€301k): Assuming a 3% yield, generating €9,050 of interests. Total Tax on Redditi di Capitale: €25,068 In the above mentioned cases of equities and bonds, it shall be considered that the taxable base is the gross amount of the dividends/interests, as commissions, other costs and US taxes are not deductible from Redditi di Capitale . However, under the Italian-US Double Tax Treaty (DTA), US ordinary taxes might be offset. Taxes on financial instruments are full of exceptions and require a deep knowledge to avoid mistakes: one of these exceptions is about non-harmonized  ETFs. Keep reading for more information.  Redditi Diversi (Capital Gains) This represents profit from selling assets. Unlike the US, where long-term capital gains have preferential rates, Italy taxes realized financial gains at a flat rate. Scenario: John and Susan rebalance their portfolio, selling some equities for a realized gain of $43,094. There is one caveat with holding ETFs in their portfolio and capital gains tax in Italy: Susan and John cannot harvest their losses. We will explain that in a moment, stay with us!  The point is that capital gains, only with reference to ETFs, are considered Redditi di Capitale , that means the capital gains are seen as an interest. On the other hand, capital losses are considered Redditi Diversi . Gains and losses from these two categories of income (Redditi di Capitale and Redditi Diversi) cannot be offset. Thus, capital losses cannot be used to harvest the capital gains from ETFs; however they can be used against capital gains of other financial instruments, such as shares and bonds.  Among the exceptions already mentioned, it must be taken into account that withdrawals from Roth IRA, generally are not recognized as tax-free by the Italian Revenue Agency, so they might be subject to tax in Italy. IVAFE (Tax on Foreign Financial Assets)  This is Italy’s "wealth tax" on financial assets held abroad. It applies to the market value of the assets at year-end. IVAFE applies to the asset values converted to EUR using monthly exchange rates approved by the Italian Revenue Agency. Also checking and savings accounts are subject to IVAFE but only if they exceed the annual average amount of €5K. For checking accounts IVAFE is calculated as a flat tax of €34 per account per annum.  It must be noted that alternative  investments, such as paintings or musical instruments, under certain circumstances must be included in the Italian tax reporting obligation (section RW of the income tax return), but they are not subject to the wealth tax. IVIE (Tax on Foreign Real Estate)  John and Susan own a property in the State of Washington, and being a tax resident in Italy implies paying taxes on your worldwide income. When owning properties outside Italy, tax residents must pay tax on foreign real estate called IVIE. Let’s see how much Susan and John have to pay for their US property and how to report it to the Italian tax authorities?   Usually the taxable base is equal to the purchase price of the property converted at an approved exchange rate at the time of the purchase. Let’s assume that John and Susan bought their US property in March 2009 and paid $325K for buying their property in the State of Washington. For calculating IVIE we need to convert the purchase price to euros at the historical FX rate. For simplicity, we are going to use the average mid rate for the month of March 2009 (USD to EUR 0.78).   Italy allows the deduction of US property tax paid in the same fiscal year. Often, US taxes on real estate are higher than Italian taxes, so frequently happens that IVIE is not due. Total Annual Italian Tax Bill (Estimated) Combining these figures, John and Susan’s estimated annual Italian tax liability on their assets is $52.5K as summarized below: All amounts calculated are presented for illustrative purposes only and are based on multiple assumptions made in order to simplify the reasoning. Special Investigation: The "Non-Harmonized" ETF Hurdle While the simulation above assumes a standard 26% tax rate on equity dividends and gains, John and Susan must navigate a specific hurdle regarding their US-domiciled ETFs. The Italian Regulator and Agenzia delle Entrate  distinguish between harmonized (EU-compliant/UCITS) and "non-harmonized" funds. Because US ETFs do not comply with EU directives, they are classified as non-harmonized. Historically, and according to strict interpretation, income (dividends) and capital gains from non-harmonized funds do not qualify for the flat 26% substitute tax. Instead, they are added to the taxpayer's ordinary income and taxed at progressive IRPEF rates, which can reach 43% (plus regional and municipal add-ons of ~2-3%). Implications for John and Susan: If the Agenzia delle Entrate applies the ordinary income tax rates to their US ETFs: The Dilemma: They cannot switch to European ETFs (UCITS) because the US would view those as PFICs (punitive US tax). They are caught between US PFIC rules and Italian non-harmonized fund rules. Better Alternatives? Direct indexing and individual stocks and bonds. To solve this, John and Susan should consider restructuring their portfolio to hold individual stocks and bonds rather than ETFs. Direct Indexing:  Instead of holding an S&P 500 ETF, they can use a "Direct Indexing" strategy - often available via US custodians for accounts >$100k (i.e. Interactive Brokers) -  to buy the actual shares of the 500 companies or any other major index. Tax Impact:  Income and gains from individual stocks  and bonds  are always taxed at the flat 26% rate in Italy, regardless of whether the company is US or EU-based. Result:  By holding the underlying securities directly, they bypass the "non-harmonized" penalty entirely, securing the 26% Italian rate while remaining perfectly compliant with US tax laws (no PFICs). The Critical Decision: Choosing a Tax Regime To pay these taxes, John and Susan must choose one of three regimes. For US citizens, this choice is critical to avoid conflict with US tax rules (FATCA and PFIC). Let’s clarify what these different regimes are and how they differ from each other.  Option 1: Regime Amministrato (Administered Regime) In this regime, you move assets to an Italian bank. The bank acts as a withholding agent ( sostituto d'imposta ), deducting the 26% or 12.5% tax automatically. Pros : Simplicity. Anonymity from the Italian tax return agency. Cons for Americans: The PFIC Trap :  Italian banks typically sell European Mutual Funds (UCITS). The US IRS classifies these as Passive Foreign Investment Companies (PFICs). PFIC taxation is punitive (often >50% tax rate) and requires onerous reporting (Form 8621). Investment Restrictions: Due to EU PRIIPs regulations, Italian banks usually cannot sell the US ETFs that John and Susan currently own. They would be forced to sell their efficient US portfolio and buy punitive PFIC funds. Option 2: Regime del Risparmio Gestito (Managed Savings Regime) Here, a professional asset manager makes decisions for you. Pros : Taxes paid by the manager, and avoid the non-harmonized ETF hurdle. Cons for Americans:  Tax Mismatch: This regime taxes accrued gains ( maturato ). You pay tax if the portfolio value goes up, even if you don't sell. The US taxes only realized gains. This creates a timing mismatch for Foreign Tax Credits. You might pay Italian tax in 2024 on accrual, but have no US tax to offset it against, leading to potential double taxation. Option 3: Regime Dichiarativo (Declaratory Regime) In this regime, John and Susan keep their assets in their US brokerage accounts. They calculate their own taxes and report them on the Italian tax return ( Modello Redditi PF ). Pros : PFIC & FATCA Compliance: They keep their US ETFs, avoiding the PFIC nightmare. Their US accounts are fully compliant with FATCA. Control: They control when to realize gains, allowing for tax planning. Foreign Tax Credits: The timing matches. They pay Italian tax on realized gains/income, which generally aligns with the US system, allowing them to claim the Italian tax paid as a credit on their US return (Form 1116) to reduce US taxes. Cons : Requires a knowledgeable commercialista  (Italian equivalent of CPA) to calculate the taxes (converting USD to EUR) and file the return. Even better? Working with a team of tax professionals in Italy and the U.S. who can support you with both jurisdictions.  Option 4: wealth planning using structures Italian law permits the use of specific legal structures, such as holding companies or Italian trusts, which may offer different tax treatment depending on structure and implementation. It is crucial to verify that these options align with individual financial needs and goals, as they necessitate specialized cross-border planning. We will delve deeper into these structures in future publications. Stay tuned for further insights. Conclusion: The Verdict For John and Susan, and American expats in their position, the Regime Dichiarativo  may provide the most coherent alignment with U.S. tax rules. However, the appropriate regime depends on individual circumstances.Adopting the Regime Amministrato  or Gestito  would require moving assets to Italy, likely forcing the sale of their US portfolio and the purchase of PFIC classified European funds. A tax disaster in the eyes of the IRS. By staying in the Regime Dichiarativo : They satisfy FATCA:  Their US accounts are transparent and compliant. They avoid PFICs:  They retain their efficient US domiciled financial assets (ideally in the form of single stocks and bonds). They may optimize Foreign Tax Credits:  They pay the (total amount of the taxes in €) in Italian taxes via the F24 model and claim this amount as a credit on their US tax return, mitigating double taxation. Living in Liguria offers a wonderful lifestyle, but it requires a "Declaratory" approach to finance: keep your assets American, but do your full Italian reporting. The lesson from Susan and John's story is that building their new life in Liguria is possible, and how investment strategies cannot work away from your life strategy. It’s more than just about growth or income, it’s about positioning your assets in the right places, with the right tax structure that supports the life you have chosen. And sometimes, it is not possible to do it all yourself. With the appropriate cross-border financial and tax advice, these are surmountable hurdles. Don’t let them distract or derail you from the life you want to live.    When you want to help other people tell them the truth, when you want to help yourself tell them what they want to hear.  — Pablo Picasso Want to learn more form Carlo Bertoncello and Luca Biancardino ? Visit their website: BertoncelloBPA or email them at segreteria@bertoncellobpa.it DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2026 Dunhill Financial. All rights reserved.

The UK government introduced an advantageous savings vehicle in 1999 and has increased the maximum amount that we can save in those several times since. At the time of writing in 2023, we can contribute up to £20,000 to such a plan annually. There are 4 types of ISA: Cash ISAs - A Cash ISA functions mostly in the same way as a standard savings account. However, if you have a Cash ISA, you will not pay tax on the interest you earn, whereas if you have a savings account with a bank or building society, you will pay Income Tax on earnings over £1,000. Stocks and Shares ISAs - Your money is invested in assets like shares, bonds, property, and commodities in a Stocks and Shares ISA (also known as an investment ISA), and you don't have to pay tax on capital gains or income (interest and dividends). Innovative finance ISAs - You can become a lender with an ISA by lending to qualified individuals and businesses using an online peer-to-peer lending platform in exchange for a defined amount of interest over a certain length of time and paying no tax on the interest you earn. Lifetime ISAs - You can save for your first home and/or retirement by contributing to a Lifetime ISA, and you won't have to pay tax on your earnings or capital gains. The government will add 25% to your investment (maximum £1000). Your maximum contribution for the year is £4,000 and if you are not using the money for your first home, you can access funds after turning 50. Cash ISAs are considered typical international bank accounts in the United States, with interest taxed at ordinary rates. When it comes to stocks and shares ISAs, though, you'll need to be cautious in determining the underlying investments. If the investment is in individual shares or bonds, the income is treated similarly to interest from a cash ISA, with income flowing to the appropriate section of the return (for example, schedule B, D, etc.) based on the nature and classification of the income produced. We will cover all three of the issues that are controversial regarding setting ISAs up for Americans in the UK. The three issues are PFICs, HMRC reporting funds, and the tax situation between the jurisdictions. PFICs If you walk into many of the high street banks, they won’t even permit you to buy one of their off-the-shelf ISAs (except for a cash ISA). With this, they are actually doing you a favor as the IRS in the United States would classify these investments as PFICs (Passive Foreign Investment Companies), which can become very costly from a tax vantage point. You can find plenty of information on the internet on why Americans should avoid this at all costs, even if you take the QEF election. HMRC The HMRC has a strict list of funds that meet their qualifications and are approved as offshore reporting funds. We utilize this guideline even for ISAs to keep all our clients’ portfolios consistently independent of whether they invest in a tax-advantaged wrapper or in a general investment account. Tax Situation The real reason that funding an ISA becomes controversial for Americans is the tax situation. In the UK, the growth and distribution of an ISA will not be taxed. However, the US does not recognize this tax advantage and will, therefore, tax the account as if it were a regular investment. So, why would we want to shift the tax burden from the UK to the US? Simply because US capital gains tax rates on passive income are lower than UK tax rates. For the UK tax year 2023, the tax-free dividend allowance is £2,000 (reducing to £1,000 from April 2023 and £500 from April 2024). Dividends above this level are taxed at: 8.75% (for basic rate taxpayers) 33.75% (for higher rate taxpayers) 39.35% (for additional rate taxpayers) Capital gains also have a tax-free allowance of £12,300 (reducing to £6,000 April 2023 and to £3,000 April 2024), but thereafter you will pay 20% taxes (unless you're in the basic rate tax band) which, apart from those making a significant salary, is higher than the rate in the US. Therefore, you're better off paying US taxes and avoiding UK taxes by placing the money in an ISA. With all these complications of even setting up an ISA for this small portion of the American population in the UK, you will find only a few firms that offer them properly. Dunhill Financial has partnered with Morningstar Wealth Platform (formerly Praemium) to offer compliant portfolios that can be utilized in ISAs. Morningstar Wealth Platform (formerly Praemium) issues 1099s to make your US taxes as simple as possible and we ensure that we use no PFICs (i.e., all US-listed securities) and that all funds are HMRC reporting funds. To learn more about this offering, please see our portfolios here . Get in touch with our expert advisors to see how they can help in your situation. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

When the government approaches or reaches its debt limit, it creates a situation where there is a risk of default on the country's obligations, which can have serious economic consequences. This is the typical card that the radical right plays in budget talks and we have seen it twice in the last decade. In the event that both parties can't come to an agreement, we would most likely see: Sharp increase in unemployment Double digit drop in GDP US Dollar dropping by Brexit-sized levels. That being said, it’s still only a single digit probability and therefore we aren't making any one-sided trades that could go against us when it’s more likely approved (gold, volatility or inverse funds). We may make some tweaks to decrease our USD exposure and invest more in non-US assets to play into longer term trends but also help minimize the losses of this black swan event, should it materialize. The last time the radicals pulled this, Warren Buffett's Berkshire Hathaway's debt became better rated than US government debt. These shenanigans have increased the price to borrow across the board and therefore we are all worse off for this behaviour. That being said, the government has more tools in their back pocket to avoid an outright default and it would be in their best interest to do so. While the debt ceiling brinkmanship often generates concern and uncertainty among investors, there are several reasons why we shouldn't be concerned. 1. Historical Precedence: The US has experienced debt ceiling debates and temporary impasses in the past, but it has always managed to avoid defaulting on its debt obligations. The government has implemented various measures, such as employing accounting techniques or utilizing available funds, to ensure that debt payments are made on time. 2. Political Incentives: Both major political parties understand the potentially catastrophic consequences of a default. Despite differences and disagreements, lawmakers have consistently demonstrated a willingness to reach a compromise and raise the debt ceiling to avert a crisis. The debt ceiling brinkmanship is often a part of political negotiations and posturing, rather than a genuine intent to default. 3. Economic Impact: A default on US debt would have severe repercussions, not only for the United States but also for the global economy. It would likely lead to increased borrowing costs, destabilize financial markets, and erode investor confidence. Recognizing this, policymakers have a strong incentive to avoid such an outcome, providing reassurance to investors. 4. Central Bank Interventions: In the event of a debt ceiling crisis, central banks, including the Federal Reserve, can play a crucial role in stabilizing financial markets. They have the ability to inject liquidity, provide emergency funding, and implement measures to mitigate the impact of any potential default. 5. Long-Term Creditworthiness: The United States has a long-standing reputation for honoring its debt obligations. Despite periodic political brinkmanship, the country has consistently maintained its status as a safe haven for investors. The strength of the US economy and its commitment to fiscal stability make it unlikely that a temporary debt ceiling crisis would significantly undermine its creditworthiness in the long term. While it is important to monitor the progress of debt ceiling negotiations, investors should take into account the historical track record, the economic incentives, and the actions that policymakers and central banks can take to manage any potential crisis and the fallout. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

We’ve been reading a lot about the idea of reducing one’s carbon footprint as one of the main means to reduce carbon emission which are deemed to be the main factor in enhancing global warming. If you’re curious about checking out your carbon footprint, have a look here [ Carbon Footprint Calculator ]. While an active approach to changing your lifestyle based on carbon emissions might not be for everyone, it can still be an interesting thought process to review what we eat or where we travel and approaching our regular habits from a less obvious perspective. Have you, for example, thought about where that apple comes from that you’re eating? Supermarkets offer a wide variety of apples which can be locally source but also internationally from another country or even another continent. There’s a couple of interesting initiatives that aim to tackle the emission problem from various stand points. For example, bio-bean [https://www.bio-bean.com/renewals/coffee- recycling/] is a UK company using coffee grounds to create logs and pellets. With this they reduce the gases that develop during the natural decompositions process and create a new energy resource at the same time. Another fun option is growing some of your fruit or veggies at home. While this is not as easy for metropolitans without a garden, there’s now even options to grows your herbs and smaller fruit and vegetable at home with indoor smart gardens. Your harvest is organic and the energy you need to maintain it is less than having your tomatoes shipped from e.g. Italy to Germany. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 FMeX. All rights reserved. Distributed by Financial Media Exchange.

A well-structured estate plan can be invaluable to you and your family. It is common for people to put off planning their estates. After all, no one wants to anticipate his or her own death. In addition, many people may believe that only the wealthy require estate planning or that all that is involved is tax planning, which can be done “later.” They may well be wrong on both counts. Your level of wealth and the ultimate tax consequences of your estate become secondary to the planning and care of your family and other heirs. A well-structured estate plan, particularly for American Expats can be invaluable, especially when dealing with cross-border jurisdictions. Through it you can control the distribution of your assets and possessions, as well as name guardians for your children or plan care for other dependents. While the estate planning process can raise some difficult emotional and personal issues, your heirs will be glad you did it, and you will know that your wishes are assured. How to Begin? Your first step should be to assemble a competent, professional estate planning team. Your attorney, financial professional, insurance agent, bank trust officer, and/or accountant are all possible members of your team, depending on the size and complexity of your estate. They can help you complete an analysis of your current estate by looking at your financial position as of today and helping you analyze your family’s needs for the future. Does a family member have special needs or require medical attention? How much will an education cost when your children reach college age? How will your family’s overall cost-of-living requirements change? How will estate taxes affect your assets as they are currently held? The answers to these questions can help you develop an estate plan that will adequately provide for your family’s needs. What Information Should Be Gathered? A thorough estate analysis requires gathering any and all materials involving current or future income, property ownership, insurance, and legal arrangements already in place. This includes records of the following: Current income from employment and all investments Any expected deferred compensation All retirement benefits, from Social Security (including survivors’ benefits), IRAs, pensions, and profit-sharing plans Investment documents, certificates, passbooks, etc. Deeds to primary and vacation residences Personal property Life insurance policies of which you are the owner, the insured, or the beneficiary Trust agreements, if any Your will, if you have one Current and expected debts and obligations, including mortgage and loan balances, real estate liens, taxes payable, consumer debts, and estimates of funeral costs and estate settlement expenses. Once assembled, a complete analysis can begin, giving you the basis for a comprehensive estate plan. 7 Steps to Estate Preservation If you begin planning in a timely fashion, there are methods that may allow you to take steps to preserve your estate and minimize estate taxation while satisfying both the Internal Revenue Service and the courts. You can also potentially save your heirs needless effort and expense. Consider the following steps: Use Your Applicable Exclusion Amount to the Fullest. For 2022, the personal federal estate tax exemption amount is $12.06 million (it was $11.7 million for 2021). This means that when you pass away, the value of your estate is calculated and any amount more than $12.06 million is subject to the federal estate tax unless otherwise excluded. A married couple has a combined exemption for 2022 of $24.12 million Plan a Gifting Program. Further tax shielding is gained through use of the annual $16,000 gift exclusion, which is indexed annually for inflation. This allows gifting (in the year 2022) of up to $16,000 each, to any number of donors annually without payment of gift tax. (When a spouse is involved in the gifting program, the annual exclusion will increase up to $32,000). Provision must be made for the immediate use of the gift by the donor; gifts of future interest will not qualify. Professional assistance and careful structuring of your gifting program are, therefore, essential. Draft a Will. A will is a formal, legal document instructing your survivors in the settlement of your estate. It is crucial to the success of an estate plan that your will be properly written by a qualified, experienced legal professional and witnessed simultaneously by two parties. Establish Trusts. Utilizing trusts can be an excellent method of accomplishing long-term estate planning goals. Trusts, while seemingly complex, are simply very powerful tools designed to help individuals handle a variety of family and tax-related problems. Plan Your Charitable Bequests. The value of all property transferred for “charitable” or “public” purposes is deductible, with certain limitations, when determining valuation of an estate for tax purposes. Utilize Life Insurance to Its Fullest Advantage. Life insurance can fulfill two important functions in your estate planning. First and foremost, it can provide for the immediate cash needs of your spouse or other beneficiaries. Second, and of equal importance, the use of an irrevocable life insurance trust (ILIT) can prevent inclusion of your life insurance proceeds in your estate and help your executor pay your estate tax bill without having to sell estate assets. Title Assets Properly. The simplest and least expensive estate planning technique for married couples is to take title to assets as “joint tenants.” This will exclude assets from probate and may eventually save legal costs. [Note: Residents of community property states should remember that all income and assets acquired by a married couple living in those states, except for individual gifts and inheritances, are considered community property, half of which is included in each spouse’s estate valuation.] Remember: You Can’t Take it With You The careful planning of an estate can require a great deal of expertise. If you surround yourself with a professional, supportive team as you begin the process, work through its many stages and adjust your plans over time, you can prepare yourself – and those you love – for the future. Get in touch with our expert advisors to see how they can help you navigate the bumpy road, so you can enjoy the journey ahead. #EstatePlanning #FinancialPlan #RetirementPlanning #FinancialAdvisor DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2022 FMeX. All rights reserved. Distributed by Financial Media Exchange.

Living and working abroad can be an exciting, satisfying and profitable experience. But on the flip side, there are tax considerations that come into play, as well as concerns about planning for a secure retirement. One of them is the ability to make regular contributions to an individual retirement account (IRA) from wages earned abroad. While in general the rules governing IRA contributions remain the same whether the earner lives in the United States or outside the country, there are additional tax considerations that govern foreign earned income. In broad generalities, the first $ 126,500 earned as a foreign employee or though self-employment abroad is eligible for a foreign earned income tax exemption. Expats may also claim a tax exemption for foreign housing costs. Taking advantage of such exclusions, though, can limit the dollar amount of individual contributions to either traditional or Roth IRAs. The earnings cap for a Roth IRA for a single filer is $161,000 modified adjusted gross income (and phase outs start at $146,000), so the window of eligibility for "taxable income" can become rather narrow. For married filing jointly, the limit is $240,000 with phase out starting at $230,000. Regular IRAs bear no income cap, but contribution eligibility is available only to those with wages or earned income greater than the foreign exclusion amounts. An alternative for American expats is to claim the foreign tax credit on taxes paid in their country of residence. By doing this, the foreign income is taken into account in the tax calculation but the taxes owed in the US will be offset against the taxes already paid in the country of residence. All earnings are then deemed taxable income which increases the eligibility for IRA contributions. This works in high tax states in Europe, but not so well in low tax states like the UAE. The wise course of action, for any American earning money in a foreign country is to consult with a reputable tax attorney or accountant. Planning is necessary in order to reap the extensive benefits of living and working abroad, in addition to assuring a secure future by continuing contributions to retirement accounts. Get in touch if you need guidance, one of our qualified advisors would be more than happy to assist you. All numbers referenced are for tax year 2024. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

One man's trash is another man's treasure as the saying goes. This is also the case when it comes to investments. If you happen to have a loss in your accounts, a good strategy might be to sell it to harvest the loss. Why? Simple, you can offset $3000 of loss against your earned income and you can carry forward the rest of the losses indefinitely to pair against future gains. That way you can prevent large taxable gains over the long term. What happens if I really like the stock long-term? You can use one of two strategies: I - Double up your position in the short term and after you avoid the wash sale rule (30 days), sell the first lot. II - Sell the first position, buy a correlated position and switch back after 30 days. For instance, sell Coke and buy Pepsi, after 30 days you can switch back. The rule defines a wash sale as one that occurs when an individual sells or trades a security at a loss, and within 30 days before or after this sale, buys a “substantially identical” stock or security, or acquires a contract or option to do so. (Source: Investopedia) Our advisors would be happy to help you with similar strategies to help you manage your losses. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2022 Dunhill Financial. All rights reserved.

In the last article on US credit scores for expats, we talked about why you ought to maintain your credit score even while living outside of America. While it’s important to know the purpose, what’s just as crucial is knowing the “how”, both in terms of knowing your credit score and in terms of building it even while living in another country. How do I pull my credit score? A common misconception is that you need to pay in order to receive your credit report. However, you may request a free copy of your credit report from any of the following three major credit agencies: Equifax® Experian® TransUnion® This can be done once a year at websites such as CreditKarma or AnnualCreditReport.com . Note that while you would not be able to use a foreign address for these requests, you may be able to use your most recent stateside address to verify your identity. What should I do with my credit score? It is considered good practice to request a credit report annually and to review it carefully for any errors or unexpected information (e.g. credit cards you unknowingly still have open, whether any have been opened in your name, any negative information, etc.) If you are living abroad and do not intend to apply for credit in the near term, it may also be a good idea to freeze your credit report to prevent new lines of credit from being opened in your name - this can be done by contacting each of the above credit bureaus and notifying them of your desire to do so, and they will in turn issue you a special PIN needed for viewing the report. Just remember to reach out to each credit agency to unfreeze it in the future as your needs change over time, as while frozen potential creditors will not be able to view your score without you providing them with the PIN. What if I have no or little previous credit history? As everyone has different circumstances regarding how long they lived in the US or their past spending habits, you may be living abroad with either little or no credit history in the US. This should not dissuade you from building it while living overseas, as you also have the option of applying for a secured credit card, in which you can deposit a set amount which establishes a line of credit for you for the balance. Using this card you'll be able to build your credit just like you would with a normal card, and over time could eventually switch over to an unsecured credit card once you have a sufficiently-established credit history. Feel free to contact us if you have any questions, one of our advisors will be more than happy to help. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2022 Dunhill Financial. All rights reserved.

If it does, think of higher inflation, lower economic growth, and global recession. The stock market has been awful through the summer of 2022 – declining in January, February, April, May, and June, with just the month of March recording positive numbers. Naturally, these declines and the accompanying volatility make investors nervous. At the centre of this volatility has been the price of oil. Oil prices have risen steadily since the end of 2020 when WTI Crude was commanding about $40/barrel. But since the early part of 2022, a barrel has consistently remained north of $100/barrel. But what if oil suddenly went to over $200/barrel? After all, US oil prices have already surged 170% since the end of 2020 and a rise to $200 would mean a further increase of about 50%. One well-known hedge fund manager spoke at the Financial Times Commodities Global Summit earlier this year and suggested that we might see $250/barrel this summer. Another analyst from RBC Capital Markets had this to say: "It is not unfathomable for prices to rocket to $200 a barrel by summer, spur a recession and end the year closer to $50 a barrel ($200 call options have been bid). To be clear, this is not our base case, but such a scenario does not sound implausible today." The Price of Oil – Supply and Demand Why does the price of oil change so much? The price of oil is affected by so many factors and so many uncertainties. The weather, transportation costs (via ship, truck, pipeline, etc.), and taxes also play a big role in oil prices. The oil market has been uncertain for several reasons. Just a few years ago when the U.S. was ramping up its oil production, the price soon dropped and that was followed by a drop in production. Oil producers – when they make less money – cut back dramatically on drilling and sharply reduce spending on exploration and production. Remember in 2014 and 2015 when many U.S. petroleum companies went bankrupt and thousands of their employees lost their jobs? In its simplest terms, it really is about supply and demand. But the supply side is not as easy to influence. Take the shale oil industry in North America, for example. Even if the entire industry decided they wanted to crank up production to increase the supply in an effort to bring prices down, it is still a 12 -18 month process. And besides the current price of oil, there are very few incentives (and arguably a number of risks given the current political climate) for any producers to take on the expense of trying to speed that process up. International factors also influence the price. Oil producers have been concerned about the Russia/Ukraine conflict, the health of the massive Chinese economy – with its high oil demand – and tensions in the Middle East, among other things. These geopolitical tensions just add to the uncertainty. Russia Does Matter From a research paper published by the Conference Board earlier this year: While Russia’s economy only accounts for 3 percent of global GDP, its crude oil production constitutes 12 percent of the world's total. Russia’s economy is only about the size of the state of New York, but it punches well above its weight in energy production. Russia accounts for 12 percent of global crude oil production. Much of that production is sent overseas, making Russia the second-largest oil exporter after Saudi Arabia. Of the 12 million barrels per day of crude oil that Russia produced in 2019, just 29 percent was consumed domestically. The remaining 8 million barrels per day were exported–primarily to European and Asian markets. In 2021, prior to Russia’s invasion of Ukraine, OECD Europe consumed nearly half of Russian crude oil exports and China consumed one-third. The remaining sixth was consumed in other parts of the world–with the US accounting for just 4 percent. Oil Prices and Gasoline Prices In a more practical sense, how does the price of oil affect the cost of gasoline? Pretty directly. Any change in the price of a barrel of oil directly affects the price of a gallon of gas. Barrel of oil. A barrel of crude oil holds 42 gallons. From this barrel will come about 12 gallons of diesel fuel, 4 gallons of jet fuel, and smaller amounts of propane, asphalt, motor oil, and various lubricants, along with about 19 gallons of gasoline. So it takes a barrel of oil, on average, to come up with about 1.5 tankfuls of gas in your average, non-diesel car. Considering all the oil products, each person in the U.S. consumes an average of about 2.5 gallons of crude oil per day, according to the Department of Energy. As a result, the price of a barrel of oil affects each of us beyond the pump, too. Back in March, analysts cited by National Public Radio projected that if oil hit $200/barrel, then the retail price of gas would average $5.84. That seems like a very low estimate, given that the average price of gas is around $5/gallon with oil hovering just over $100/barrel. If Oil Hits $200 or $250 If the price of oil skyrockets to $200 or $250/barrel, the impact on virtually every aspect of the global economy, global markets, and your investments would be significant. Of course, oil at $200/barrel would add to inflation, but it would have a severe impact on economic growth, likely pushing the global economy into stagflation (high inflation, low growth). Here in the United States, according to Bank of America estimates, oil prices at $100/barrel reduce US GDP growth in the year ahead by 1%, and at $200/barrel, the negative impact on economic growth in the US is estimated at about 2%. Working With Your Advisor The price of oil has been a major economic factor for years. The cost of energy affects virtually every aspect of the economy and the market, including your investments. The price of oil will eventually stabilize, producers and oil-producing countries will change their plans, and alternative energy sources will continue to develop. We continue to monitor all of these developments and welcome you to watch our last economic update for more information. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2022 Dunhill Financial. All rights reserved.

Despite the past rumours that the Trump administration would do away with the "Fiduciary Rule" from the US Department of Labor, Alexander Acosta the Secretary of the Department finally put it in effect on June 9th of 2017 and the implementation took place on January 1st, 2018. That leaves us with one question, what is this rule? Investopedia defines a "fiduciary" as a person or organization that owes to another the duties of good faith and trust. We would define it as someone that puts the clients' interests before their own. The US system has had the opportunity to register as a fiduciary since the SEC act of 1940 that was put in place by Joseph Kennedy, but it hasn't become popular until the early 90s and 00s. Why? Simple, it was more profitable to not sit on the same side of the table as your clients. So what should you look for in an advisor? I. That he/she is registered as a fiduciary II. That he/she isn't paid commissions from anyone and therefore you know exactly how much they are making from assisting you on your account. III. While past performance is not indicative of future returns, a financial advisor with a clean record on broker check is more likely to be clean going forward. If you're an expat, you should make sure that your advisor is regulated in your resident country as well as the United States. Many US expat experts are only registered in the US which leaves them misadvising you to use a fake address. They sometimes are only registered in limited capacities in their foreign countries such as to sell insurance in Europe instead of investments. While the regulation is improving over the course of time, it is still a buyers' beware environment. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Risk is an integral part of investing. No discussion of returns or performance is meaningful without at least some mention of the risk involved. The trouble for new investors, is identifying where risk lies and how to calculate how much risk to take. What Is Risk? The term “risk” in general means different things to different people. For some, it’s something they want to avoid all together. For many, it’s a natural part of life that they try to find balance with (not too much, not too little). Others see risk as an exciting opportunity. Risk in investing is not much different than taking risks elsewhere in life. It is essentially any form of uncertainty with respect to your investments that has the potential to negatively affect your financial welfare. No matter where you invest your money, there will be some risk. Since we cannot see the future, there is simply no way to avoid or eliminate risk if you want to be an investor, not even by having cash in the bank (inflation risk) . But you can learn to minimize and manage risk well. How much risk is too much risk? As fundamental as risk is to investing, many new investors think that there is a well-defined and quantifiable way to calculate how much risk is involved with a given investment. Unfortunately, there is not, but there are a lot of different ways to manage and deal with risk. Some investors like to pay close attention to market volatility (a concept used in stocks and bonds to determine the number of possible outcomes). Others like to keep a diversified portfolio that can counterbalance risks between different asset classes. Some will purchase various types of asset insurance. But choosing the right level of risk mainly involves understanding your ability to take on risk (your risk tolerance) and your willingness to take more or less risk than is theoretically right for you, i.e. your attitude to risk (or risk preference). Your attitude to risk generally determines the type of investments you will choose to invest in. There are a number of factors that will affect your attitude to risk: Your goals . Having goals is so important in investing because it’s difficult to make decisions without a clear vision of where you want to go. Are you saving for retirement? For a home? A kid's college fund? This will determine how risky you want to be with your money. Knowing your goals will help you measure how much risk you can absorb from a particular investment without compromising the achievement of the ultimate goal. Your age (or “investment horizon” as some call it). Your age is an important metric to understand how much risk you should take. According to investors and experts, the younger you are, generally, the more investing risks you can take because you have a long investment period ahead of you, which means you are able to absorb short-term ups and downs. Your income and future earning capacity . Generally, the higher your income, the greater your ability to cope with risk and respond to events. Your knowledge and experience . The more experience you have with investing, as well as the more knowledge you attain in a particular asset class, the more prepared you are to understand risks associated with a given investment and how to cope with the consequences. Your personality . People naturally respond to risk in various ways. If your personality leads you to worry whenever risk is present, a low-risk investment strategy may be best. On the other hand, if taking risks excites you then you’ll be more comfortable with an aggressive investment strategy. In the end, the best way to decide if a risk is too high, is to picture what it would be like to face the worst-case-scenario consequences. If the consequence of an event happening is unacceptable, it is best reduce your risk. On the other hand, recognizing that risk can be well managed and present the opportunity to make great investments is necessary to achieving wealth through investing. Would you be interested to find out more? Check our YouTube video , get in touch and one of our advisors would be happy to help. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2022 Dunhill Financial. All rights reserved.

“Today, it takes more brains and effort to make out the income-tax form than it does to make the income.” - Alfred E. Neuman Double Tax Agreements, or DTAs, also referred to as Bilateral or International Tax Treaties, are intended to help expats avoid double taxation (i.e. being taxed on the same income by two different countries). As Americans living abroad are often liable to both US taxes as US citizens as well as foreign taxes as residents of a foreign country, double taxation is often an issue. However, as you’ll see, the DTAs the US has signed don’t often help expats avoid double taxation after all. In this article, we’ll explain why, as well as when tax treaties can help, how to claim tax treaty benefits if you need to, and talk about social security and estate and gift tax treaties, too. In this section, you’ll learn about: • Does the US have tax treaties? • Do tax treaties benefit Americans living abroad? • When can tax treaties benefit expats? • How can expats claim tax treaty benefits? • How to file Form 8833 • What about social security tax agreements? • What about estate and gift taxes? Does the US have tax treaties? The US has signed tax treaties with numerous countries across the world, from Armenia to Vietnam. Each treaty contains a different set of rules regarding reduced rates and exemptions. Over 60 countries have signed a tax treaty with the US, and each different treaty covers a range of different scenarios and taxes, from corporation taxes to estate taxes. Many foreign governments want to attract American investors, and to make it easier, foreign countries will often include provisions in tax treaties that reduce withholding taxes on dividends, interest and royalties. Do tax treaties benefit Americans living abroad? Tax treaties can help Americans living abroad, but unfortunately only a few expats actually benefit from them. In most cases, the tax treaties that the US has signed include a Savings Clause that allows them to apply US taxation on Americans living abroad as if the treaty didn’t exist. Elazar M. Cole, an American resident in Israel, tested the Savings Clause provision when he reported a capital gain of a stock sale in 2010 but didn’t pay tax on it, stating that the US-Israeli DTA meant he didn’t have to pay. The IRS took him to court in 2016, and the court upheld the notion that the Savings Clause in the treaty meant that he would still have to pay US tax on the capital gain. Instead, most treaties allow Americans living abroad to claim the Foreign Tax Credit when they file their US tax return to avoid double taxation. It’s also worth noting that most US tax treaties contain a provision that allows the two countries to share and exchange tax information. When can tax treaties benefit expats? While rare, tax treaties can benefit expats living abroad. For example, there are some occupations that qualify for exemptions in many US tax treaties, most often for students, teachers, or researchers. Teachers and researchers are usually exempt from taxes for two to three years, while students and trainees often get four to five years under tax treaty benefits. After these periods of time are finished, the US considers you a resident of the foreign country. Other professions that can benefit from DTA provisions are professional athletes and sportsmen who are abroad training or competing, and entertainers who are performing overseas, depending on each treaty. Some tax treaties also have provisions covering the double taxation of dividends, or retirement income, or prevent withholding taxes for independent contractors (including freelancers). To provide an example, Article 17 of the US/UK tax treaty allows contributions to a qualifying UK pension plan to be tax-deferred like a standard US 401k. Distributions also receive exemptions, while UK state pensions are only allowed to be taxed by the country where their recipient is a resident. The way IRAs are treated in DTAs is covered in more detail in a separate article. The first ever tax treaty is thought to be an agreement signed between Great Britain and Switzerland on August 18, 1872 to prevent the double taxation of death (i.e. estate) taxes. The first US tax income tax treaty was signed with France in 1932.There are now over 3000 bilateral international tax treaties signed around the world. How can expats claim tax treaty benefits? Expats can claim tax treaty benefits by filing IRS Form 8833. So if you’re an expat living in a country that has a tax treaty with the US that has a provision that you could benefit from, you should attach this form to your annual American tax return. How to file Form 8833 Filing Form 8833 involves writing a brief description explaining the treaty provision that you want applied to your tax return. An example of when this may be necessary is if you were a resident in one country but carried out work in others, including the US, that may affect your ability to claim foreign tax credits. The statement should include information about your country of tax residence, your travel dates and purpose of travel (if relevant), the treaty provision you are invoking, and the types and amount of income that you believe is exempt from taxes, according to the tax treaty. What about social security tax agreements? Americans living abroad who are self-employed or who work for a US-based employer are still liable to pay US social security taxes. Many other countries require residents to pay social security tax too, which can lead to double social security tax liability for Americans. While double social security taxation isn’t covered in DTAs, the US has signed a separate set of tax treaties with 30 other countries to cover it, known as Totalization Agreements . If you live in a country that has a Totalization Agreement with the US, you will only pay social security taxes to one country, normally dependent on how long you intend to live abroad for. So if you are living abroad for less than typically either 3 or 5 years (depending on the treaty), you can continue making social security contributions to the US, and not in your country of residence. If you’re there (or intend to stay there) for more than 5 years though, you will contribute in your new country of residence. Totalization Agreements also stipulate that contributions made while you’re abroad to either country can be applied to your social security entitlement in either country, depending where you eventually retire. This means that you usually don’t need to get the full number of credits in the country where you retire to qualify to receive social security benefits in retirement. What about estate and gift taxes? While estate and gift taxes aren’t covered in DTAs either, again the US has signed a separate set of international estate and gift tax treaties with 15 other countries to avoid double taxation. These countries are Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the UK. Each treaty is different, with some covering just estate taxes, and others covering gift taxes too. The majority of Americans living abroad don’t need to use tax treaty provisions, as they can avoid double taxation by claiming either the Foreign Earned Income Exclusion or the Foreign Tax Credit. But there are still plenty of situations where a tax treaty may be useful, so it’s always worth consulting your tax advisor. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.