Will people moving to the US be taxed if they keep their money in a foreign bank?

August 26, 2005 7:42 AM

My boyfriend's parents are moving to the US from Singapore, and they're trying to minimize their taxes and financial penalties from their house they just sold in Singapore--ie: should they keep their money in a Singaporean bank, or a US one?

First--does their status matter at all? (Visitors vs permanent resident applicants vs permanent residents vs citizens?)

Does it matter what state they're in?

Will interest earned in a US bank be taxed before they're permanent residents or citizens? If so, what are the deductables ( or the non-taxable highest interest earned )?

Do they need to declare interest earned overseas? If so, will interest earned overseas (in Singapore) be taxable? Thanks!

posted by gramcracker to work & money (5 comments total)

Their status will matter if they are applying for a visitor visa while selling the house!

To obtain a non-immigrant visa a person needs to demonstrate that they have ties to the home country and intend to return to it. Selling your house looks a bit fishy don't you think?
posted by Pollomacho at 7:59 AM on August 26, 2005

What about a swiss bank?
posted by delmoi at 8:59 AM on August 26, 2005

Get thee to an immigration lawyer. These sorts of things are so complex based on wealth, age, income, trade, ties, status, the mood of the immigration official, papers filled out, know-how, time, etc.
posted by fionab at 9:16 AM on August 26, 2005

They should consult an attorney who is familiar with international english commonwealth tax law, as well as US tax law.

They should also be aware that US anti-terrorism and IRS officials look very closely at unusual international financial transactions.

Staying within the commonwealth, rather than going out to Switzerland or some other apparent tax haven will probably make the most sense. But check with someone who knows and whose professional reputation is on the line of they make a mistake.
posted by b1tr0t at 9:19 AM on August 26, 2005

I'm a US Citizen living in London. I'm not sure how relevant my experience is but here goes :

In my particular situation, any money brought into the UK is taxable as well as any income I generate inside the UK. I've got assets that sit in the US, income generating assets, and although I pay US taxes on that cash flow I'm not obliged to pay taxes on the UK side as the money never enters England.

In terms of savings, I've got my liqiud assets parked offshore (i.e., not in the UK). All taxed income (salary) goes into one account, and the interest this money generates goes into a second account. As long as I never bring the untaxed money (interest) into the UK I avoid UK taxes. I'm still obliged, however, to declare and pay taxes on this interest on the US side.

There's no need to add the complication of a Swiss bank account (they pay crappy interest btw), as most of the large global banks can do this for you. I'm not sure how much money we're talking about, but I'm a customer of HSBC Private Banking and they do this stuff all the time.

Other posters mention get a lawyer but I'd suggest start with a good accountant. I use KPMG to prepare two sets of tax returns (US and UK), but they're not cheap, running about 4K Sterling a year. They'll also advise on appropriate structures and work with your Private Banker to set these up and minimise overall tax obligations, but keep in mind that some of the structures get pretty elaborate.

I'm just a dumb country boy so I try to keep these things as simple as possible.
posted by Mutant at 9:31 AM on August 26, 2005