I am moving to California from New Zealand. Most likely in December this year. I have some US ETFs in my brokerage account, so the questions is if it's better to sell them before I move and then re-purchase. Would I need to pay capital gains tax in the US on that sell? Or US taxes would apply only from the date of my arrival to the US?

  • Welcome new user. How many yrs do you plan on staying there? – Fattie Nov 13 '18 at 3:54
  • At least 2-3 years. Potentially permanently. – Anton Tananaev Nov 13 '18 at 3:55
  • Do you not have NZ taxes to deal with on that sell/rebuy strategy ? – xyious Nov 13 '18 at 16:12
  • There will be NZ taxes, but by my calculations they would be less than US capital gains tax. Also, I would need to pay them either way, as far as I understand. – Anton Tananaev Nov 13 '18 at 21:01
  1. Consult a professional.

  2. Consider moving in January, or at the very least not starting work in the USA until January 1st. Your tax liability may be small for the portion of your income that occurs in December, but it hardly seems worth the paperwork.

Also be aware that the IRS taxes several things that NZ does not. You are aware of capital gains tax, but if you have any self-employment income in NZ, the USA wants an additional 12.9% of that for Social Security and Medicare that is not covered by the Foreign Earned Income allowance. A clean break (and again, a clean break at the start of a new tax year) is well worth it.

It's also worth planning your exit strategy. Will you be contributing to a 401(k) or IRA? If you move back to New Zealand, is your custodian going to allow you to keep those accounts active (mine does not)? If you withdraw money from your 401(k) after retirement, is it going to be worth reporting all your world-wide income to the IRS?

FWIW, I first moved to the USA in December 1995, and stayed there 10 years. If I go again it will be in January.

  • Thanks for the answer. Unfortunately starting in January is not an option at this point for several reasons. – Anton Tananaev Nov 20 '18 at 1:45
  • What are you going to do with your 401k account if you are not allowed to keep it? Withdraw with penalty? – Anton Tananaev Nov 20 '18 at 1:47
  • Still discussing it. Getting very close to divorcing my (American) wife so I can give it to her. – Rupert Morrish Nov 20 '18 at 1:48

If you are a citizen, you move abroad and keep your citizenship, the U.S. will continue to tax you.

If you give up your citizenship, you may have to pay an exit tax if their average annual tax based on the past 5 years of earnings as well as your net worth. The assets will be marked to market on the date you leave.

Understanding how tax law applies to you is often an exercise in futility. I read this article and it made my head hurt: https://moneymattersforglobetrotters.com/what-should-i-do-with-my-us-investment-accounts-when-i-move-overseas/ . I'd suggest that you consult with an account who specializes in this area.

  • I'm not a US citizen, so at the moment I am only taxed on US dividends, not capital gains. But when I move to the US, will I be taxed for the whole year or just from the first day I arrive? I guess you are right that it's better to consult professional. – Anton Tananaev Nov 16 '18 at 21:30

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