56 KIPLINGER’S PERSONAL FINANCE^ 04/2020
benefits. (The Social Security Admin-
istration will deposit benefits to bank
accounts held in most foreign coun-
tries, too.) Gabrielle Reilly, a certified
financial planner who works with
expats, says that many of her clients
arrange large quarterly transfers of
money from their U.S. bank account
to their local one to keep fees to a
minimum. (An outgoing international
wire transfer often runs $30 to $50
or more.) Or, especially when dealing
with currencies that tend to f luctuate
widely against the U.S. dollar, such
as the euro, it makes sense to initiate
transfers when exchange rates are
favorable, says Reilly.
To avoid hefty transfer fees from
your U.S. bank account, consider a ser-
vice such as TransferWise. Transfer-
Wise applies a market-based exchange
rate to transfers (banks and other
services often use less-favorable ex-
change rates) and charges you a per-
centage of the transaction. Sending
$1,000 to a foreign account that holds
Mexican pesos, for example, recently
incurred a fee of about $11.Steer clear of roadblocks. You may run
into difficulties in both finding a bank
account abroad and maintaining one
in the U.S. The Foreign Account Tax
Compliance Act (FATCA), which went
into effect in 2014, requires overseas
banks to report to the IRS foreign
assets held by U.S. taxpayers or face
a stiff penalty. Some foreign banks re-
fuse American customers because of
the hassle, but “that’s been alleviated
somewhat” as banks have become more
familiar with the law, says Marylouise
Serrato, executive director of advo-
cacy organization American Citizens
Abroad (ACA).
Under FATCA, U.S. citizens residing
abroad must also report their holdings
in foreign accounts (including invest-
ment accounts) on Form 8938 if total
funds exceed $400,000 on the final
day of the tax year for married people
filing a joint tax return, or if balances
are higher than $600,000 at any point
during the year. For other taxpayers,the limits are $200,000 on the final
day of the tax year or if funds exceed
$300,000 at any time. In addition, you
must file a Report of Foreign Bank and
Financial Accounts (FBAR) with the
U.S. Treasury Department if your total
assets in foreign financial and invest-
ment accounts exceed $10,000 any-
time during the calendar year.
One other potential obstacle: Some
U.S. banks give the boot to expats who
have no permanent U.S. address. And
changing your mailing address to that
of a relative or friend in the U.S. may
not help you get around this problem.
Financial institutions may review
records from the U.S. Postal Service,
check your computer or smartphone’s
IP address when you log in to your
account online, or track where your
phone calls originate to figure out
where you reside. And if, say, you use
your sister’s address in California and
the state receives a copy of Form 1099
reporting your interest income, you
may be asked to explain to the state
why you shouldn’t have to file a tax re-
turn there, says Jonathan Lachowitz,
a CFP who works with expats.
One solution is to open a checking
account that the State Department
Federal Credit Union (www.sdfcu.org)
provides in partnership with Ameri-
can Citizens Abroad. Accustomed to
serving employees of the U.S. Depart-
ment of State, who work all over the
world, the credit union offers the
account to other Americans living
abroad who have no domestic address.
You must be a member of ACA to use
the account (annual fee: $70, or $55
if you’re 65 or older).Keeping your credit alive. Obtaining a
credit card from an issuer based in
another country is often difficult.
Credit systems operate differently in
other countries than in the U.S., and
the credit history you’ve established
in the U.S. isn’t usually useful to for-
eign issuers. You’re usually better off
hanging on to your U.S. cards. They
often offer superior rewards (such as
cash back or airline miles earned withevery purchase) than cards from foreign
issuers, you can use them to make pur-
chases on American websites (which
may block cards from issuers outside
the U.S.), and you’ll maintain a credit
history in the U.S., says Lachowitz. A
healthy credit profile comes in handy
if you move back to the states.
If you want to use a U.S.-issued
credit card in another country, make
sure it doesn’t charge a foreign-trans-
action fee. Most travel rewards credit
cards from major issuers don’t charge
such fees, and some issuers—including
Capital One and Discover—waive the
fee on all their cards.RETIREMENT
International Living evaluated foreign coun-
tries’ attractiveness to retirees based on
several criteria, including climate, health
care and cost of living. For 2020, these are
the top picks:DESTINATIONSThe Best Places
to Retire Abroad
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