Losing Someone is Hard and Navigating Cross-Border Inheritance Taxes Doesn’t Have to Be: How to Avoid Costly Mistakes | From The Trenches with James Boyle

The intricacies of inheritance tax issues are probably the last thing you want to think about after losing someone. We’re making it easier to make financial arrangements for receiving an inheritance after a loved one passes away on this episode of We’re the Brits in America.

Host Richard Taylor – dual UK/US citizen and Chartered Financial Planner – offers practical advice for expats on navigating these challenges to promote financial security and compliance, including how to avoid the potential pitfalls of Roth IRA conversions.

In this episode of From the Trenches on We’re the Brits in America, Richard Taylor and James Boyle – Lead Financial Planner at Plan First Wealth – explore:

• Navigating Inheritance for Expats
• Challenges when receiving an inheritance from non-US persons.
• The crucial importance of filing Form 3520 to avoid severe IRS penalties.
• Complications with Trusts and Offshore Bonds
• Issues with UK-centric advice for US persons.
• Potential tax problems with foreign trusts and passive foreign investment companies (PFICs).
• Roth IRA Conversions
• Explanation of Roth IRA conversions and their benefits.
• Potential pitfalls like affecting healthcare premiums and tax brackets.
• New considerations following recent legislative changes.
• Importance of a Cross-Border Tax Advisor
• Benefits of having a qualified tax advisor to navigate international tax intricacies and offer valuable US tax help.

More about We’re the Brits in America:  With the right financial advice, landmines that threaten expat wealth can be avoided. Often encountered by US-connected expats, these financial landmines are more numerous, more hazardous, and less understood than almost anywhere else in the world. As a result, non-cross border professionals, wealth advisors, and even international advisors are often unaware of them. But don’t worry, We’re the Brits in America has you covered.  We’re the Brits in America is dedicated to helping ambitious U.S.-connected expats and immigrants navigate those challenges — and thrive. Whether you’ve moved to the U.S. for opportunity, or are an American seeking adventure and growth abroad, our job is to equip you with the tools and insights you need to succeed.

If you’re enjoying the show, please consider leaving a 5 star rating and review to help the mission, which is to help expats and immigrants thrive in America. Visit planfirstwealth.com to learn more about our services and connect with Richard Taylor on LinkedIn.

We’re the Brits in America is affiliated with Plan First Wealth LLC, an SEC-registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.

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. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.

About Richard

Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.

As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).

Connect with Richard on LinkedIn

TRANSCRIPT:

Richard Taylor, Founder of Plan First Wealth:
[00:00:12 – 00:00:49]
Welcome to we’re the Brits in America, a Plan first wealth podcast dedicated to helping ambitious expatriates and first generation immigrants thrive in America. I’m your host, Richard Taylor, and Plan first wealth is a business I founded and run today a and we work with successful expatriates, immigrants and internationally minded Americans living across the US to make the most of their opportunity and avoid the expat landmines. Okay, let’s get back to this week’s show. Welcome back to another episode of from the Trenches. This is a show where my colleague James Boyle and myself bring you behind the scenes at Plant first wealth as we work with clients and we build this business. Hi, James.

James Boyle:
[00:00:49 – 00:00:50]
How’s it going, Richard?

Richard Taylor, Founder of Plan First Wealth:
[00:00:50 – 00:00:53]
It’s going well. It’s going really well. Thank you. Summer is ending.

James Boyle:
[00:00:53 – 00:00:55]
Late summer school next week.

Richard Taylor, Founder of Plan First Wealth:
[00:00:55 – 00:01:05]
Yeah, Back to school next week. So my, my routine is about to get completely well. I’m going to go from having a very relaxed routine to a very regimented routine. And my life completely changes when the kids are back at school.

James Boyle:
[00:01:05 – 00:01:08]
So now is this a good thing or do you look forward to this?

Richard Taylor, Founder of Plan First Wealth:
[00:01:08 – 00:01:09]
Not really, no.

James Boyle:
[00:01:10 – 00:01:11]
Yeah, yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:01:12 – 00:01:15]
Not at all. So my summer is ending too.

James Boyle:
[00:01:15 – 00:01:16]
Yeah. Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:01:16 – 00:03:21]
All right, let’s get into this. I’m going to start off this week by telling you about a situation I encountered to see if it. If maybe anyone else recognizes this and help other people avoid making quite common mistakes. And then we’ll crack on from. Yeah, so I think it was last week now I met with someone who is on the verge of receiving an inheritance. This is really common. So even people who have been here for decades and who have essentially cut all ties to the UK in terms of accounts and think that they are completely 100% now domesticated, for want of a better word. And, and they’re not an expatriate, even though they are always an expatriate, but they’re not an expatriate, they’re a citizen, all that stuff. So they think, they think what we talk about doesn’t really apply to them. Still, a lot of these people will at some point receive an inheritance, and this was one such person. And we had a great conversation, really lovely chat. Turns out there’s two really common things going on here that he was not aware of. And had he not had a conversation with us, I think could have ended up costing him dearly in the future. The first one, and the most obvious one, is he is going to receive an inheritance from a non US person and that inheritance is going to be above $100,000. Now, there’s no tax to pay on that in the us or there’s usually no tax to pay on that in the US if they receive it as cash. Tax is dealt with at the state level in the UK. But any gifts and inheritances from non US persons have to be reported on Form 3520. And if they’re not, the IRS can and will, because they are very hot on this, they will penalise you. And that penalty starts at, I think it’s 5% for every month this form is late. And it’s literally just one or two lines on this Form 3520, which is normally for trusts, foreign trusts, you have to report that you get, you’re getting this, this inheritance of more than $100,000 and they’ll charge you at 5%, which goes up 5% a month for a maximum of, I think, five months anyway. The maximum is 25%. So. And you get there pretty quickly, you know, because normally when people realize, they realize like years later, not, not weeks later, by which point the penalty is 25% and they are super hot on this.

James Boyle:
[00:03:21 – 00:04:00]
Yeah, I know you have more to say here, but this is such a common thing that we hear week in, week out, Right. Like you said, you might be out of the UK for 20, 25 years, everything’s buttoned up, maybe all your accounts are even closed. You think of yourself as a US person with US assets, you get an inheritance. Very common. Right. For the people we work with. And then equally as common, I would say, is just not realizing that that can have specific reporting requirements and like you say, the penalties can be obscene. I mean, it’s, it’s. And to your point, this is after potentially inheritance tax has been assessed in the uk, right.

Richard Taylor, Founder of Plan First Wealth:
[00:04:00 – 00:04:32]
So, well, or even, you know, there’s a case going through the tax courts at the moment of a Chinese woman who moved here and was given some money by her parents to buy a house and this kind of good stuff. She used TurboTax, which sends a shiver down my spine anytime I hear that associated with an immigrant or an expat, used TurboTax, had no idea about this form. Later on, reported it on 3520, and provided what she believed to be a reasonable course statement which would hopefully abate penalties. The IRS have pursued her for it 25% of the gift from her parents and it’s in court right now.

James Boyle:
[00:04:32 – 00:04:35]
And she’s a student, I think. Right. Or she was.

Richard Taylor, Founder of Plan First Wealth:
[00:04:35 – 00:04:49]
She was, I’m not sure, to be honest with you. Yeah, I think she was. But I don’t want to mix up my cases here. But either way, you know, so, so even if, even if they win, and I hope they do eventually win, how much money she spent on legal fees.

James Boyle:
[00:04:49 – 00:04:58]
And the mental stress. Right. The anguish. Yeah. Having to fight, fight the IRS in court, not a position that anyone wants to be in.

Richard Taylor, Founder of Plan First Wealth:
[00:04:58 – 00:05:13]
And she wasn’t sure there was no unpaid tax. And the reason we’re bringing this is we, we encounter this. But you know, a lot of people here are going to receive a gift and, or an inheritance from outside the US at some point and very few people are aware of this filing requirement.

James Boyle:
[00:05:13 – 00:05:14]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:05:14 – 00:05:44]
And it’s such a little thing, but it can have huge consequences down the line. So that was the first thing. You want to bring that to everyone’s attention. That pays for itself. You can have a cross border tax advice, you can pay a little premium to have a cross border tax advisor for 10 years, for 15 years. Yes, you’re paying a little premium and it more than pays for itself in that one thing. Right. You’re not, you’re paying for people’s, you’re not paying for them to fill out the forms, although you obviously are. You’re, you’re paying for expertise. You’re paying for them to know about this form and to head off any problems. That’s what you’re paying for and it’s worth it.

James Boyle:
[00:05:44 – 00:06:08]
And the peace of mind. Right. Knowing that these kind of landmines, number one, do exist, many people don’t know about them, doesn’t protect them. Obviously if the IRS were to come after you and you know, number two, knowing that if it does crop up or one of these situations does present themselves, which inevitably it will, some flavor of this, some version of this, knowing that you’re in good hands and you have good advice to resolve it when it comes.

Richard Taylor, Founder of Plan First Wealth:
[00:06:09 – 00:06:46]
And I’m not encouraging anyone to take any action against tax advisors, but a legitimate defense is I worked with a cross border tax advisor. That’s a much stronger defense than saying I work with TurboTax, because there is, and this is not me making up, this is actual case law. There’s a test that is applied where you have to use, if you want to rely on the use of a tax advisor for a reasonable cause, that tax advisor has to be suitably Qualified, skilled, experienced in your, your field. So for us that means working with a cross border tax advisor, not TurboTax or Jim around the block, who you’re his only expat client that wouldn’t qualify.

James Boyle:
[00:06:46 – 00:06:47]
Yep.

Richard Taylor, Founder of Plan First Wealth:
[00:06:47 – 00:06:51]
So it’s multiple levels of protection essentially.

James Boyle:
[00:06:51 – 00:07:00]
Yeah. There’s a spectrum. Right. And as you know, I know and probably our audience does by this point. We see every iteration along the spectrum.

Richard Taylor, Founder of Plan First Wealth:
[00:07:00 – 00:07:00]
Right.

James Boyle:
[00:07:00 – 00:07:14]
We’ve seen people sell file and, and just flat out answer questions incorrectly. Right. Or they misread it or I mean something as simple as do you have any foreign financial accounts? And they know they do and they click no. That’s kind of one extreme.

Richard Taylor, Founder of Plan First Wealth:
[00:07:14 – 00:07:25]
Right, I knew you were gonna bring that up. Yes, folks, we have seen this. Yeah, we have, we have, we’ve reviewed tax returns for our clients and for the people we’re potentially gonna work with and we have seen this.

James Boyle:
[00:07:25 – 00:08:02]
Yep. And that’s always true. Right. But we do see it. And then there are cases where, and obviously we’re talking about TurboTax. Really any of these, I don’t have to name any other names, but they’re all popping up in your head now as we talk other self directed tax advice schemes or platforms where they just give bad advice. I mean literally where they’ll have an AI bot or whatever it is, an aside where you click a little question mark and say do I need to file this? And sometimes they just give flat out incorrect information. And if you’re in a position where you don’t know what the right answer is, that can be really misleading and dangerous. Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:08:02 – 00:09:06]
So the other part of this jigsaw was not only they are receiving an inheritance from a non US person or estate, part of their inheritance is also going to be in the form of a trust, or rather should I say there is a trust. And the trust, which this is very common for the uk, the trust, the asset of a trust is an offshore bond. In conversations with the adviser of this trust to maybe apportion the bond to him because in the. You can do this, you can, you can, you don’t have to surrender the platform, you can a portion segments of it. I’m not gonna get into the details here because it’s immaterial for our listeners, but essentially the advisor of this trust is UK advisor and he’s getting very UK centric advice which not only isn’t helpful to as a US person is outright dangerous because you know what’s inside this bond, right? It’s full of PIFCs. So the tax treatment of the bond itself is completely different and then it contains PIFCs. This is like double. So the information is received regarding the tax is almost the opposite of what it really is for him. And then there’s this permanent problem of pifix. Jeff, we have received your feedback. Passive foreign investment.

James Boyle:
[00:09:07 – 00:09:16]
I was just going to say we have had a very valued listener provide some feedback about. We sometimes fall into jargon, so we’ll try to be more cognizant of that.

Richard Taylor, Founder of Plan First Wealth:
[00:09:16 – 00:09:53]
So, yeah, there are these non US investments punitively taxed by the US non US ETFs, mutual funds. And that would create, first of all, trusts. British trusts and US beneficiaries can be very, very tricky. Then throw in offshore bonds and pay fix and you’ve just got a unholy, a potential unholy mess on your hands. And we had a great conversation. I’ve directed him to a great tax advisor who’s going to help him navigate that. And then maybe on the other side of this, there’s stuff for us to do and help as well. And I suspect what I have helped him avoid that is a enormous landmine. Yeah.

James Boyle:
[00:09:53 – 00:10:28]
And all innocuous. Right. I know we keep coming back to this point, but the UK trust advisor didn’t have any ill intentions. Right. Just isn’t well placed to comment on US issues. Inheriting something that they didn’t even know was there or how it was structured, that can cause issues. So these aren’t people trying to pull one over on the irs. Right. But the reality is that that’s not going to protect you if the IRS does come knocking. Right. You need to know how to resolve these issues as they come up, these landmines. And they do. It is almost inevitable. Being an expat in the States, these things can and will show up.

Richard Taylor, Founder of Plan First Wealth:
[00:10:28 – 00:10:58]
Well, that’s why I’ve shared this story. I’ve shared this story because I suspect every single person listening to this episode has either received a gift or inheritance or will receive a gift or inheritance at some point. And I suspect the vast majority will be above $100,000. Some, not all, will have other complications like trusts and property and bonds and pay fix. But I think practically every single person listening to this will be affected by this topic in some way and hopefully this will help them avoid some of these landmines.

James Boyle:
[00:10:59 – 00:11:30]
Yep. It’s one of those things. I don’t know. I’m sure you’ve experienced this too, Richard. But as we, as we speaking of late summer into fall here, as we go into our portfolio review, Season. It’s one of those things where very often we hear from our clients, people we work with. You know, my parents or I have an aunt or someone is aging right and they’re getting older and we don’t know what’s going to happen. And we are constantly ringing that bell. It doesn’t mean you’re going to owe a tax but if you do come into inheritance, know that there are reporting requirements if it’s above a certain amount and you want to make sure you’re.

Richard Taylor, Founder of Plan First Wealth:
[00:11:30 – 00:12:11]
Working with the right advisor and you know, we need to move on from this topic but you know, we say this all the time and I wonder how often it lands and how often people just think, oh, you know, that sounds important, that sounds that, yeah, okay, I’ll remember that. And then they won’t. And we have two sorts of clients. We have clients who work with a cross border tax advisor and we know that because we, you know, usually connected them and we’re involved in that relationship really critically. I don’t know if people realize that, but when a client works for a tax advisor who we have a relationship with, we are also involved in that relationship. And I, and I know for these clients it’s going to be taken care of, I don’t need to worry about it. And then the other clients who either very few do it themselves but the ones that do all the work with the local person and I wonder, you know, hopefully we’ll be around to catch it that year, but you never know.

James Boyle:
[00:12:11 – 00:12:23]
I don’t want to dwell on this too long, but every once in a while and we’re always open, right. For the people we work with or if they have tax advisors in place, we’re always happy to have a conversation. We can jump on a joint call, we can be cc’d in emails.

Richard Taylor, Founder of Plan First Wealth:
[00:12:23 – 00:12:24]
We’ll work with them.

James Boyle:
[00:12:25 – 00:12:52]
Right? We want to work with them. But there are times, and I know you’ve seen this, where we get cc’d on an email, we’re copied in and you can just tell that the advice is not complete. Right. Or it is just nothing against a local CPA or someone who’s American and US based. They just don’t have the first clue about international matters. And, and there is bad advice that gets shared. Yeah. More often.

Richard Taylor, Founder of Plan First Wealth:
[00:12:52 – 00:13:18]
And let that be a warning people because there will be people thinking, oh I’ve got someone on the corner and they seem they know what they’re doing, they don’t. You know, if you’re saying they seem to know what they’re doing, and it’s a local person who hasn’t got expats. They don’t not. They do, I’m sure in their, in their regular line of business. When it comes to you and these additional issues, they don’t. Anyway, let’s move on. You’ve got something for us on Roths and the. Do we have to call it this? The one big beautiful act I’ve taken.

James Boyle:
[00:13:18 – 00:13:31]
To abba, my favorite band name. Let me pull up my notes here. So Roth conversions are a topic that come up fairly often, right. And particularly for our clients.

Richard Taylor, Founder of Plan First Wealth:
[00:13:31 – 00:13:32]
With good reason.

James Boyle:
[00:13:32 – 00:14:08]
Yes, it’s a powerful strategy when it makes sense. There are circumstances that lead us to believe there are green flags. Almost right. When it makes the most sense and it’s sort of most basic form, a Roth conversion is converting a portion of your pre tax dollars, right? You have dollars or funds in a 401k or a traditional IRA. Those are pre tax. It’s converting them to a Roth account which is post tax and provides tax free growth. And then upon distribution, those withdrawals are tax free as well.

Richard Taylor, Founder of Plan First Wealth:
[00:14:08 – 00:14:19]
So it’s a form of not to love about that. Tax free growth and then tax free withdrawals, everyone. This is why we love Roths. Tax free growth, tax free withdrawals. Win, win.

James Boyle:
[00:14:19 – 00:17:49]
Yep, yep. So that’s high level, right? Obviously we’ve had the ABBA OBBA passed in the summer, a lot of which is being worked out or how it’s going to be implemented specifically, tax brackets aren’t changing, right. So we still have, you know, 22, 24% where we’d be looking at conversions typically. But there are a couple new items that you have to be aware of. So in particular, probably the biggest headline item here is the senior deduction, right? We have this temporary extra senior deduction for people 65 or older, 6,000 for the year for single, 12,000 for joint. There is a phase out. So keep in mind, when you perform a Roth conversion, you are paying taxes in that year. That counts as income. You want to be extra sure that your analysis on these conversions is now incorporating this senior deduction. That’s number one phase out. Start at I think it’s 150,000 modified adjusted gross income for the year. So that adds a wrinkle because now all of a sudden if that Roth conversion is going to tip you over and start to reduce that senior deduction, maybe the tax savings aren’t as attractive. The other piece that we talk about often is irmaa, right? So Medicare premiums, if you go above a certain amount of income. There’s a two year look back. I believe it’s two years. That can increase your Medicare premiums also then potentially defraying some of the benefits of the Roth conversion. Those are the two big ones in general, if you’re someone, and this is a common situation especially for, for the audience we work with, right, These people are active, they’re traveling, they’re doing stuff. They get to 57, 58, 59, they’re starting to get the itch. Maybe they don’t want to be changed to the desk, they don’t want to be in the office anymore, they want to go sailing, traveling, whatever those things may be. Very often there is going to be a window there, a golden opportunity where all these things line up. You have low income because your other sources of income haven’t started. Your Social Security, your UK state pension, maybe some private pensions, those haven’t kicked in yet. You’re going to have a few 1, 2, 3, 4, 5 very low income years where this kind of strategy becomes extremely attractive. And if you’re not looking at it, you certainly should be. It’s something we do for our clients. But even with these new wrinkles from the obba, there is still some room here and arguably there are elements of it that actually make it more attractive. Things like extending the lower brackets that were set to sunset next year, those are now extended indefinitely. Might give you some more wiggle room to kind of fill up those lower tax brackets. Especially like I say, if you’re in a low income period in retirement and anticipate years of higher income in the future, there’s all kinds of downstream effects, right? It’s going to decrease your required minimum distributions. RMDs for the jargon heads out there, those are withdrawals you have to take after your RMD age, usually age 73 for our audience. And again, it gives you this flexibility in retirement. Now you have different tax vehicles. You might have a pre tax bucket, a post tax, a taxable brokerage account. And now you have these Roth assets that can help complement supplement your full income plan in retirement.

Richard Taylor, Founder of Plan First Wealth:
[00:17:49 – 00:18:27]
Absolutely. Still, reasons to be doing Roths and Roth conversions, especially for early retirees is such an opportunity for early retirees to get some of that money out of their IRA into a Roth ira. But you just got to be really careful, right? You’ve got to be really careful that you don’t inadvertently cause an increase in tax elsewhere or in the case of Irma, an increase in premiums. And we tend to do this in conjunction with the client’s tax advisor and just more to be aware of one.

James Boyle:
[00:18:27 – 00:18:54]
Other piece, and this just occurred to me because we have clients in this situation. Healthcare subsidies you want to be careful of as well. So there’s phase outs for credits for healthcare. Now as everyone knows, this is all up in the air at the moment, but those are also something to keep in mind and should be incorporated into your analysis. Something that we look at, right. If you’re receiving subsidies for health coverage, you very likely don’t want to jeopardize that for Roth conversions.

Richard Taylor, Founder of Plan First Wealth:
[00:18:54 – 00:21:45]
Gosh, there are numerous tripwires, aren’t there? Then a lot of moving pieces deduction. There’s the Irma thing taken into account and Irma, I can add some real money to your annual Medicare. Those who don’t talk about Irma is your premium for Medicare and the more income you make, the higher your premium. And we’re talking like real money here. And if you have a huge hit on your income because of Roth conversion, that’s, that can have a significant impact when you come to do your, when you, when you start getting receiving these premium invoices. So yeah, yeah, lots of, lots of taking lots be aware of. Okay, we have some listeners questions we’re gonna, we’re gonna hit really quickly, right, really quickly because we’re running out of time here. I’ll take the first one. And we, we have received more. So if anyone’s listening to this thinking, oh, that’s not my question. We’re gonna, we’re gonna tackle, we’re gonna hit some of these over several episodes. But one of the questions I got was about a someone, an expat dual citizen sending their dual citizen child to college in the uk, to university, I should say in the uk, what tax reporting requirements are there? So I’m not gonna spend a lot of time here because really the answer is everything you would, you know, all the same reporting requirements still apply. There’s, there’s no. Yeah, I think if I remember rightly, in the uk, if you a student, I don’t know if this is still the case, but if you’re student, you’re not even taxed, so you’re really not thinking about tax or reporting. But yes, as a US citizen, if you go back, if you go to the UK as a student, everything applies. So if you’ve, if you have earned income or if you have interest income below, above a very low threshold, it’s like $1,250 unearned income, you have to submit a tax return. So if you Have a job that’s paying over that. Even in the uk, I think you’ll have a. To submit a US tax return, I don’t think you have to pay tax because you’ll be able to call on an exclusion, but I think you have to submit a tax return. And then there’s all the same FBAR and FACA reporting requirements. So if they have a UK account, which I’m sure they do, and at any point, at any point, the combined value is more than $10,000, then all those accounts are reportable on the FBAR. FACA, which would have an 8938 requirement. For these foreign accounts, foreign assets, it’s much higher. I think it’s $200,000 or $300,000 at any point in the year. So it’s much, much higher. But there are all the same requirements. Now, I think there might be some differences if you claim them as dependent on your tax return, but bottom line, there’s no different. As if you. As if I was going back to work in the uk. All the same.

James Boyle:
[00:21:45 – 00:22:03]
Yeah. No, no. Maybe put a little bit differently, but saying the same thing. There’s no special protection if you’re an American student abroad. Right? Yeah, yeah. You’re still under, under, you know, it’s your responsibility to file the same way you would if you went over to work or you were someone else.

Richard Taylor, Founder of Plan First Wealth:
[00:22:03 – 00:22:12]
And this is less of a thing in the uk. Although I guess maybe if someone was like a. Is it a Fulbright Scholar or do they come here? Or a road scholar, maybe?

James Boyle:
[00:22:12 – 00:22:14]
Road scholar, A road.

Richard Taylor, Founder of Plan First Wealth:
[00:22:14 – 00:22:16]
I think Fulbright comes here, Rhodes goes there.

James Boyle:
[00:22:17 – 00:22:18]
Never knew that.

Richard Taylor, Founder of Plan First Wealth:
[00:22:18 – 00:22:18]
Scholarships.

James Boyle:
[00:22:18 – 00:22:19]
Good to know.

Richard Taylor, Founder of Plan First Wealth:
[00:22:19 – 00:22:34]
Some, some scholarships are taxable in the U.S. i think. I think maybe tuition isn’t, but if it goes towards board and food, then it is. So you need to look into that as well. If, if you are a lucky recipient of such a, such an, such an award.

James Boyle:
[00:22:34 – 00:22:36]
That’s a good point. Yep. Yep.

Richard Taylor, Founder of Plan First Wealth:
[00:22:36 – 00:22:49]
We can do more on this. So if this is something people want us to expand upon rather than my hastily put together thoughts, then let us know. We will do more. But if that suffices, then good luck to you.

James Boyle:
[00:22:49 – 00:23:54]
We’ll have to. This is a peek behind the curtain. We’ll have to come up with some kind of fun cross border pun like mailbag flavored. You know, of the questions that come in because we want, obviously, if anyone’s listening, don’t be shy, send them in. We also had another longtime listener. And these are questions we get fairly often about healthcare essentially, and mostly focused on if you’re a US person leaving the us, maybe you’re a British expat who has citizenship now and heading back to the uk. A lot of different nuance here, but just to cover off some of the top line questions here, Medicare. Right. So for anyone listening, a lot of our audience, I’m sure is familiar. Once you reach age 65, assuming you’ve paid enough into Social Security system, you’ll be covered under Medicare as a retirement health care coverage almost entirely limited to the us. Right. So do not think that a Medicare plan is going to help you if you do relocate back to the uk. Approach it as if it’s US only because that pretty much is the truth. There are some Medicare and also people.

Richard Taylor, Founder of Plan First Wealth:
[00:23:55 – 00:24:21]
Also you’ve got. If you leave in the US on holiday vacation, you return to the uk, even if you’re going for the summer or ever, you need travel insurance. Yeah, my people who travel without. Without travel, yes, we have insurance for healthcare in America. If you’re in Mexico or Canada or the UK or anywhere, you know, they’re not going to, they’re not going to respect your Kaiser Permanente or sick or whatever it is, it’s just not a thing. You need travel insurance.

James Boyle:
[00:24:22 – 00:24:42]
Yep, absolutely. The other piece here, thinking of the uk, so to what extent will the NHS help, Right. Or provide coverage for an American? So the important thing to think about for the NHS is based on residency. So if you’re a UK resident, you should be covered. Emergency care is free for anyone.

Richard Taylor, Founder of Plan First Wealth:
[00:24:43 – 00:24:55]
It doesn’t mean having a house there and spending the summer there. Correct. That means being a tax resident. You have to be living there, which means you’re paying taxes there, which means, you know, that’s not, oh, I have a house and I spend some of there. That’s not a resident.

James Boyle:
[00:24:55 – 00:25:21]
Yep, exactly. And if you’re an American who’s moved over there, actually is. This was news to me, doing the research here, there is an immigration health surcharge. It’s very affordable. Right. Especially when you think about US healthcare coverage. I think currently it’s about £1,000 per year for adults. But you may, if you don’t have that residency, as you just mentioned, Richard, you may have to pay that surcharge. That will then give you full access to. To the nhs.

Richard Taylor, Founder of Plan First Wealth:
[00:25:21 – 00:25:25]
So if I moved back, would I have to pay that?

James Boyle:
[00:25:25 – 00:25:35]
I wonder, Based on the research I’ve done, I think since you. If you become a UK resident and you’re. You’d be a UK person, obviously at that stage you would get access to the nhs.

Richard Taylor, Founder of Plan First Wealth:
[00:25:35 – 00:25:38]
So when. Who, who would have to. Who would have to do the surcharge?

James Boyle:
[00:25:39 – 00:26:46]
My assumption is if it’s a temporary thing. So this, this article that I’m sourcing here is mentioning students, for example, going back to the student piece. Temporary workers. Yeah, that kind of thing. Travel insurance we just talked about. So like if you’re just visiting, consider travel insurance. Same thing. Here is a Brit returning to the UK entitled to nhs. They asked about national insurance contributions. Again, NHS is based purely on residency, not on national insurance history. There’s a number of items here, so aca, the Affordable Care Act. Going back to. Are American plans going to cover in the UK or Europe? No, essentially flatline, assume no. Talked about travel insurance. EU countries. We’ve gotten some questions about moving to the eu. As that becomes more popular, grows in popularity. Each of those are going to have their own system and rules. You have to do research. France, Spain, what kind of coverage you can look at. Those were the main.

Richard Taylor, Founder of Plan First Wealth:
[00:26:47 – 00:27:15]
Not just on health. Right. So you’ve got to be careful. So yeah, if you go back to talking about Roths new to the uk, great, Roths are respected. If you move to France, then I don’t think they are. Or maybe France does, but. But others don’t. If you have a trust and you move to the uk, you’re probably gonna be fine. If you have a trust, you move to France, you could be in real trouble. Like it is totally different. Like everything is totally different everywhere you go. And to assume it’s the same is very, very dangerous.

James Boyle:
[00:27:15 – 00:27:32]
Yeah, yeah, yeah. Those are areas where you definitely want to. We actually had a call recently about a trust. Right. And that was the example given. You have a trust, you go to France, you want to be really, really careful because there is a very high chance of taxation there that probably could be avoided. You know, taking the right advice.

Richard Taylor, Founder of Plan First Wealth:
[00:27:32 – 00:28:52]
Yeah. But also France retirement accounts, IRAs are treated, are beneficially taxed versus other countries. So it really is swings around abouts. You’ve just got to know, you’ve got to find people who can help you navigate this. You really do. Okay, right. Should we just very quickly talk on the last episode I had Virginia Latoya Jaeger on again. She is fantastic. She is our resident international tax attorney and she came back on to talk about statute limitations and tax returns and how there’s usually a three or six year statute limitations, which is great. Which gives the UIRs three or six years to come after you for your tax. For inconsistencies or problems with your tax return. However, when a tax return is incomplete, and incomplete includes missing forms. So you might be submitted a 1040 tax return. But if any of the international forms that we so frequently talk about and deal with in this business and on this podcast, the 8639s, the 3520s, the 8621s, I’ll just keep lobbing numbers at you. But, you know, any of these forms are related to trusts, pensions, Pfix investments, which in our experience are so frequently missing, so common. This.

James Boyle:
[00:28:52 – 00:28:52]
Yep.

Richard Taylor, Founder of Plan First Wealth:
[00:28:52 – 00:29:12]
This means your tax return is not complete and therefore the statute of limitations is not ticking, which means the IRS can come after you on problems with it indefinitely. And apparently they do do this. And Virginia came on with receipts on times when they are doing. They are going back decades in some cases.

James Boyle:
[00:29:13 – 00:30:32]
It’s wild, you know, and I don’t want to, I don’t want to paraphrase Virginia for the specifics. Go ahead and go listen to that most recent episode because it was, it was so illuminating, something that we encounter very often. But I found it interesting, this idea that. Because on the surface it almost sounds, I mean, it sounds mean spirited. Right. It sounds like that’s not fair. Their view is that since it’s an incomplete return, the statute of limitations essentially never starts. Which makes a strange sense of logic. Right. When you think about it, it’s almost like, well, you never finished that return, so how could the statute of limitations have started? The countdown didn’t even begin. Yeah, 8938. You mentioned 8621s. All these forms that so commonly we find that taxpayers are deficient in or are missing or weren’t aware of, know that that leaves that statute of limitation open. And then another really important point I know that you underlined in that episode, Richard, is it’s not a narrow focus on just that missing form or just that piece that wasn’t filed that leaves your entire return open for audit, for reassessment, for penalties. I mean, this is a major issue and unfortunately it’s something we see fairly frequently.

Richard Taylor, Founder of Plan First Wealth:
[00:30:32 – 00:30:49]
Yeah. So go, go and give that a listen, folks. Just again, this, the more you know about this stuff. Well, first of all, you’ll go through like the five stages of grief. You’ll be in disbelief. And what’s the not deception. That’s where you kind of deceive yourself.

James Boyle:
[00:30:50 – 00:30:53]
Oh yeah. Rejection is it? Or denial.

Richard Taylor, Founder of Plan First Wealth:
[00:30:54 – 00:31:20]
Denial. You’re in denial. Then comes acceptance. And I promise you, I’ve been through all those st. But the More, you know, the better armed you are, the better equipped you’ll be if there are any issues you can resolve them. Usually, you know, you can voluntarily resolve this stuff and move and move forward more confident and without. Without these threats hanging over you, frankly. Yeah, right. Pick a mix. Well, you got anything good for us this week?

James Boyle:
[00:31:20 – 00:33:24]
Pick a mix. I have. I was gonna speak about a book which I can, I can mention, but I watched a fascinating documentary the other night called behind the Curve and it is a look at this feels a little quaint now. Seven years, six, seven years old. It is a look at the movement, call it, of people who genuinely and truly believed the earth is flat, that the Earth is not a globe. Now this documentary, I think it’s on Amazon prime right now. Thankfully it wasn’t piling on these people and making fun. And look at how ridiculous it is. Partially, I guess, very entertaining. Entertaining, but also a look at the psychology behind this kind of call it cult like thinking or rejection of material facts. I’ll give you one kind of teaser of something that happens. So they’re following this group that performs in their mind scientific experiments, right. To try to determine the veracity of their claims. The earth is flat, is it? Disk. And they buy this. And I’ll Forget the term $20,000 they invest into this gyroscope is effectively what it is. Right. It’s something that as the earth spins, it will show you, for example, 15 degrees of movement in an hour. They do all this work to get that set up. They have it all ready to go. They’re going to do the experiment. They do the experiment. One hour passes, 15 degrees as per the rotation of the earth. And looking dead down the barrel of the camera, the gentleman who’s running this experiment goes, that doesn’t make any sense. We’re going to have to keep doing this until we get the results we want. And there’s not a shred of irony. There’s no self awareness at all. It is the purest form of confirmation bias. We talk about this when it comes to behavioral finance and economics. The purest, most undistilled form of confirmation bias that I’ve ever seen. Frustrating in parts, fascinating, but if you get a chance to watch it, it’s called the curve.

Richard Taylor, Founder of Plan First Wealth:
[00:33:24 – 00:33:29]
Yeah, okay, I’m going to have to. That sounds really. So most of them American.

James Boyle:
[00:33:30 – 00:33:37]
Yes, it is. Yeah. Not all of them, but it’s based in America. They do these conferences and things that are like in Arizona.

Richard Taylor, Founder of Plan First Wealth:
[00:33:37 – 00:35:14]
Well, yeah, I’m going to check that out. And my recommendation or my. From my recommendation for Pick and mix is a client recommended a history podcast to me and I, I’m devouring it. I can’t get enough of it. It’s called the Rest is History and it’s by a couple of British historians, Tom Holland, James Hambrook maybe. I think it’s just two good friends who have got a wealth of knowledge and a wicked sense of humor. If you like British humor and you like history, you will love this podcast. And I check it out this podcast. So I’m a huge fan of Dan Snow’s History. As people may be aware, they tend to be solo, single, episod, sometimes solo, often with a guest. These tend, these tend to be like series. I’ve just listened to a series on the first Punic War and then the second Punic War, Hannibal Rome. So they, they, they, they’ll go a bit deeper but it’s, it’s also about the, the banter these two have between them. It’s just wonderful. And I, and if anyone’s on the fence, very recently, the last two, three weeks, they’ve released a two part series on, on the assassination of Abraham Lincoln, which ties with the book I’m reading right now. So I wanted to read it, I wanted to listen to it. And my God, it is, it’s not only is it interesting, but it is so funny that you, especially the second one, these, they are, they’re, they are, they are cracking themselves up about silly American names. Thurlow Weed. And I think there’s a guy called Peanut Barnes and they are just in hysterics about American names.

James Boyle:
[00:35:15 – 00:35:16]
That’s, that’s fertile ground there.

Richard Taylor, Founder of Plan First Wealth:
[00:35:17 – 00:36:07]
Oh. So. And I’m, I’m walking down the street laughing out loud, people looking at me. I’ve got one point. I’m in the kitchen listening to my kids like Dada. What’s wrong? It’s just, it’s laugh out loud funny listening to them crack themselves off about silly American names. And then they’re obviously they start, they stop banging on conspiracy theories because apparently they did a series on JFK and, and a lot of Americans listeners reached out to them and said they didn’t take, they were too dismissive about the conspiracy theorists. They, they didn’t take them seriously enough. So then they’re just like ripping apart Americans having these silly ideas. And it’s just, it is, it’s interesting and I, I won. But I think I actually cried laughing at one point. So I highly recommend people go and check that out. I, you’ll, you will not regret it.

James Boyle:
[00:36:07 – 00:36:18]
Yeah, that is. That sounds. That sounds. That sounds good. There’s something about taking something that is historical and, you know, educational, and then just them having a blast helps a lot.

Richard Taylor, Founder of Plan First Wealth:
[00:36:18 – 00:36:25]
Oh, it was great. It was great, right? I think that’s what it’s done this week, then. James, good to see you again. And till next time.

James Boyle:
[00:36:26 – 00:36:38]
Yes, like and follow. Wherever you listen to podcasts you can, you can find us at our emails. Jameslanfirstwealth.com Richardfirstwealth.com Give us a review. 5 stars if you can, if you’re enjoying the content. And we’ll be back to you shortly.

Richard Taylor, Founder of Plan First Wealth:
[00:36:38 – 00:36:41]
And send us your questions. We will answer them.

James Boyle:
[00:36:41 – 00:36:43]
Yes, we’re listening. That’s for sure.

Richard Taylor, Founder of Plan First Wealth:
[00:36:44 – 00:36:45]
All right, thank you.

James Boyle:
[00:36:45 – 00:36:46]
Thanks, all. Take care.

Richard Taylor, Founder of Plan First Wealth:
[00:36:46 – 00:37:31]
Ciao. All right, folks, that’s another episode of we’re the Brits in America Under Our Belts. Thank you for listening. I appreciate it and I appreciate you. If you’re enjoying the show and would like to support the mission, which is to help ambitious expats and immigrants thrive in America, I’d ask you to subscribe to the POD wherever you listen and also consider leaving a rating and review. This stuff really does matter. Please help us get this information to the people who need it, that is your fellow expats. If you’d like to know more about how we might be able to help you, you can find us on our website, planfirstwealth.com, or you can look me up on LinkedIn. Do get in touch. We’d love to hear from you. As always, thank you to the podcast guys for their help producing this episode and the entire show. See you next time.