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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Money SAHM

12 replies

MoneyHoneyBunny · 20/08/2020 16:21

NC for this, as could be outing when added to other posts. Naice ham, pom bears, cancel the cheque, snapped and farted etc.

Kind of inspired by another thread which got me thinking, but not a TAAT. I'm not even on that one, just skim read it earlier.

Right, this is a bit...complicated.

I'm a SAHM. I am a US citizen, but also hold a British passport now.

I'm married to a Brit and we live in the UK.

We have never had a joint account, as we just never got round to it and were happy enough to keep everything separate while we were both working (pre dc). DH pays me an allowance (which I appreciate, sounds a bit draconian). However, there is a good reason for this.

If we open a joint account, I have to report all the income going into this account to the IRS. A fun quirk of the US tax system is that all its citizens, have to report, and sometimes pay tax on, all their income and bank accounts, investments etc, no matter where they live.

I currently just report my own accounts, because, according to my accountant, they aren't actually interested in what my DH earns, they are only interested in what is in MY accounts. But obviously, a joint account would still be one of my accounts, so this might lead to us having to pay tax to the IRS every year, which seems a bit unfair, seeing as the only person in our household who is earning any income, has never lived in the usa and certainly never worked there and he already pays tax in the UK. I spoke to a financial advisor briefly, who said it was a good idea go keep finances fairly separate. Unfortunately, none of them will advise me in an official capacity, (I have asked quite a few of them), as they are only interesting in people with half a million dollars or more to play with, or else they won't touch US citizens living abroad with a barge pole, as it is a total minefield.

Anyway, I received some money, £15k or so, recently. Yes, I reported it all to my accountant and the IRS! £15k is what I have left. Dh and I were discussing what to do with it. He wants to put it into the mortgage, but I want to keep it in savings for myself, seeing as I don't have access to the quite large amount he has saved while working. We both own our house and both names are on the mortgage. He obviously pays all bills, including the mortgage.

I have some savings already, so this would be to add to it. But, I can't put into a personal pension, or at least, I have to be very careful which personal pension I choose, as some are seen by the IRS as a sneaky way of hiding assets from them, for which they may tax me punitively and my understanding is that it would potentially be a lot of money! Again I can't ask for help from a professional really, as none are able to help me. So my savings are all I have for my old age at present. I'm not anywhere near retirement age yet, but still. I can put into an employer pension scheme and will do that if and when I start working.

If it matters, our dc is due to start childcare in a few weeks and I'm planning to look for work, but obviously this isn't the best time to be job hunting! I'm also retraining and not planning to stay a SAHM forever, by any stretch. Planning two days childcare till next year, increasing after that when dc is a bit older, so I can work four and a half days a week and hopefully pay into pension etc.

AIBU to ask to hang on to this money for my savings? Perfectly willing to accept I am! It was just the other thread with all the "you must have access to your DH's money if you're a SAHM" warnings, got me a bit worried.

OP posts:
WannabeMathematician · 20/08/2020 16:32

It does seem very precarious. I think I'm this case you would be right to hold on to the 15k in savings if that's a similar amount to what your husband has. If it's less than £15k he has could you keep a similar amount for yourself and put the rest into the mortgage? Or ask him how much he has in his pension and say that those savings will go into your pension in a few years time so it'll be fair that way.

However, the tax advice seems very weird. I get that the US government taxes your global income, but the majority of Americans I know don't earn enough to for the US government to care due to some reciprocal agreement on tax. Maybe it's different as you are not working? But I thought that there wasn't a wealth tax in the US. Just a thought.

burritofan · 20/08/2020 16:35

Oh, god, I would absolutely keep it in my savings in those circs – and in “pandemic, global recession” circs, too, actually. Much better off in your pocket than in the mortgage where it’s harder to liquidate it should you need to.

Didiusfalco · 20/08/2020 16:41

How much do you want to hold on to your US passport? A friend in similar circumstances relinquished hers.
Definitely don’t put the £15k in the mortgage though.

yoyo1234 · 20/08/2020 16:47

Sounds horrendous. No financial qualifications here so just asking ( sorry). So even if you get a typical employee job where you are taxed at source the IRS could tax you further? If you put money into a pension ( which here you get tax relief for up to a certain amount) you could be taxed by the IRS? If you then have difficulty paying the IRS tax on the pension savings and take money out of the pension this could lead to penalties ( and may hinder tax relief on later contributions).

Can you ( if okay with it) renounce your US citizenship and use your British one?

SherryPalmer · 20/08/2020 16:49

I’m in a very similar situation.

I do have a joint account though and report it on my fbar every year. It’s not interest bearing so nothing to pay any tax on.

I think there is a real problem for people who are not rich enough to make it worth paying for financial advice/ tax planning but risk making costly mistakes with their finances.

Would you consider renouncing your citizenship?

SherryPalmer · 20/08/2020 16:59

I didn’t actually answer your question - I would keep the savings in my own account. Both dh and I have relatives who separated and the man was very shady about splitting finances (including hiding money overseas). Because of this we make sure that we split our assets pretty evenly even if it’s not tax efficient.

If he has large savings and he wants to pay down the mortgage surely he could use his own savings?

MoneyHoneyBunny · 20/08/2020 17:22

Thanks all.

I'm keeping it.

It means overall we will have similar amounts in our respective savings. He will have a bit more.

His savings are in an ISA, which @SherryPalmer will maybe be able to confirm, are a bit of a no go for US citizens abroad? I agree with you too Sherry. This is a problem for people who end up making expensive, accidental mistakes. We can end up in trouble with the IRS or HMRC or both quite easily as far as I understand.

His income goes into a different account which we are going to discuss me becoming a joint account holder on. Yes, it will just be money coming in and going straight out again to pay bills and into savings, but it would make me feel more comfortable.

I don't know about renouncing citizenship. It seems a bit extreme, but I'm not discounting it entirely. I need a new US passport before I do anything. They won't let you renounce without one and I need one anyway, as I can't even transit through there on my british passport apparently! I've done it before but apparently they are cracking down and it is really not a good idea anymore.

OP posts:
ThePlantsitter · 20/08/2020 17:27

Worst time ever to renounce a citizenship that isn't UK, don't do it!!!

I think given the circumstances you are right to keep your money separate. Maybe it isn't officially a pension but effectively it is. Putting it into the mortgage seems like it could cause more tax issues for you down the line to me, though I am not an expert.

Climbingallthetrees · 20/08/2020 17:32

Do you ever want to live in the US again? If not I would look seriously at renouncing citizenship. Do you have joint citizenship at the minute?

MoneyHoneyBunny · 20/08/2020 17:37

I have a british passport and my us passport has expired. But, in the US, once a citizen, always a citizen (is mu understanding), so they will continue to ask me to report taxes even though I don't hold a current passport for there. It might be the same for UK passport holders (?) except the UK does not tax it citizens living abroad, unless they are somehow earning income in the UK at the same time. Nowhere other than the US and I think Eritrea does.

OP posts:
SherryPalmer · 20/08/2020 17:59

I have money in ISAs - obviously I have to pay US tax on them but I always come in under the personal allowance equivalent In the US so I never actually pay anything.

We don’t even live in the U.K. anymore but have a house there so I have to be wary of the IRS, HMRC and our local countries tax authority. It’s a nightmare and I think I will renounce in the next few years.

@ThePlantsitter
I’m not sure that the US is doing much better than the U.K. at the moment. Also the financial cost of being a US citizen is huge. I pay $300 a year to an accountant to file my taxes (and that’s the cheapest I could find), last year I had a hypothetical (aka not real) exchange rate gain when we remortgaged our house in the U.K. and had to pay $2000 in taxes. I’ve never lived in the US. I don’t have any US assets. But I have a US parent.

MoneyHoneyBunny · 20/08/2020 18:11

Ouch with the third country involved and you not even having lived in the US Sherry! Are you going to renounce?

I looked into it last year, but it was quite expensive through the lawyer I spoke to. I know you can DIY for cheaper.

I'm just not there yet. I wouldn't say I'm dying to move back there, but I always thought there was a small chance we might at some point. Don't know if it's worth the cost of filing taxes every year, but maybe. I mean, there was the stimulus cheque this year, so thay covers a few years filing I suppose.

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