10 Financial Mistakes Americans Make When Moving Overseas

Written by Hannah Jeffs

Whether you are relocating for a career opportunity, retirement or a change of pace, moving abroad is an exciting step. However, it also comes with important financial decisions which can be easily overlooked.

Many Americans approach an overseas move as if they are simply relocating to another country. However, the reality can be more complex as US citizens remain subject to certain US tax and reporting obligations regardless of where they live.

The good news is that many of the most common and costly mistakes can be avoided with careful planning. Below are ten of the most common financial mistakes Americans make when moving abroad and how to avoid them:

1. Assuming You No Longer Need to File a US Tax Return

One of the biggest mistakes that American individuals make when leaving the US is thinking that they are leaving the US tax system behind.

Unlike most countries, the US taxes individuals based on citizenship rather than residency. This means that US individuals living overseas generally still need to file annual US tax returns, even if they owe little or no US tax.

In addition, many US individuals are unaware of the extra informational reporting requirements that can apply to foreign bank accounts and financial assets, including the Foreign Bank Account Report (FBAR) form. Failing to meet these filing obligations can result in penalties and may require previously submitted returns to be refiled.

How can this be avoided?

• Understand your US tax filing obligations before you move overseas.
• Keep clear records of any foreign income and taxes paid.
• Regardless of how simple or complex you think your financial situation is, consider seeking tax advice from a dual qualified professional who understands international tax and tax treaties for peace of mind.

2. Ignoring Currency Risk

When your income, spending and assets are spread across different currencies, exchange rate movements can have a bigger impact than you might expect.

An American living in the UK may earn and spend in pounds while keeping savings and investments in US dollars. This means that changes in exchange rates can affect how far your money goes, influencing everyday spending and saving plans.

Many expats only become aware of currency risk when exchange rate movements start to affect their finances directly.

How can this be avoided?

• Identify which currency will fund your future goals.
• Align your savings and investments with where you expect to live and spend money in the future.
• Avoid reacting to short-term currency fluctuations.
• Plan currency transfers carefully rather than being forced to potentially convert large amounts when exchange rates are less favourable.

3. Overlooking the Interaction of US and Foreign Jurisdiction Tax Rules

It is easy to focus on either US or local tax rules but overlooking how the two interact can create unexpected challenges. Income, investments, and inheritance can all be taxed differently in a foreign country than they are in the US.

Investments that were suitable while living in the US may become less tax efficient in a new country of residence. For example, many Americans are caught out by the UK reporting fund rules. Whilst their existing investments may have been suitable while resident in the US, they could result in unfavourable tax treatment after relocating to the UK.

Careful tax planning can help avoid unnecessary tax costs and ensure you make the most of available reliefs and allowances. Depending on your country of residence, a tax treaty with the US may be available. This can help mitigate double taxation by providing access to foreign tax credits or other forms of tax relief.

How can this be avoided?

• Understand the tax rules in your new country of residence before you relocate.
• Know when you will become tax resident and what that means for you.
• Understand how your investments are taxed and reported in both the US and your new country.

4. Not Having an International Estate Plan

Estate planning is often overlooked when moving abroad, but it becomes even more important when your assets and heirs are spread across different countries.

A Will prepared in the United States may not fully cover assets held overseas, and local laws can affect how your estate is distributed. Different countries may have their own inheritance rules and legal processes that also need to be considered.

Without proper planning, this can lead to delays, added complexity, and unnecessary costs for your family at an already difficult time.

How can this be avoided?

• Review existing Wills and estate documents after moving.
• Understand how inheritance laws work in your new country and how they interact with the US.
• Consider whether separate Wills are needed for different jurisdictions.

5. Neglecting Existing Trust Structures

Following on from the previous point, Trust arrangements can also be overlooked. Becoming a resident of a new country can have tax and reporting implications for Trusts, potentially affecting both the Trust itself and the Beneficiaries.

Trusts established for estate planning, asset protection, or tax efficiency may be treated differently after a move abroad. This could result in unexpected tax liabilities and potential additional reporting requirements. As a result, Trust arrangements that work well in the US should be reviewed when an international element is introduced.

How can this be avoided?

• Review any existing Trust structures before relocating.
• Understand how the Trust will be taxed and reported in your new country of residence.
• Consider the impact on both Trustees and Beneficiaries.
• Seek specialist cross border advice before making changes or distributions.

6. Overlooking Existing Investment Accounts

Many Americans move abroad assuming they can continue managing investment accounts exactly as before. In reality, a change in residency can create restrictions or complications with some financial institutions.

Living abroad can affect the way some investment accounts are managed. Certain providers may restrict services, limit trading activity, or require changes once you become a resident of another country.

How can this be avoided?

• Contact investment providers before relocating.
• Determine whether your account can remain open and be managed as usual following your move. If this is not possible, seek an alternative provider that is able to offer ongoing support.

7. UK Residents Bringing Non-Remittable Funds Onshore Without Planning Ahead

Many Americans who established residence in the UK prior to 6 April 2025 are often unaware that the source of their funds can have important tax implications. Depending on the individual’s tax status, bringing certain funds into the UK can trigger unexpected tax consequences if those funds include foreign income or gains that were earned during a period of UK tax residence but not taxed by the UK at the time it was earned.

Problems can arise when accounts hold a mixture of capital and untaxed investment returns. If records are incomplete, it may be difficult to identify which funds can be transferred to the UK tax efficiently.

A common mistake is transferring funds to the UK for a property purchase or everyday expenses without first understanding the tax treatment of those funds. Once a taxable remittance has occurred, it may not be possible to reverse the tax consequences.

How can this be avoided?

• Understand where your savings have come from before transferring money to the UK.
• If possible, keep clear records showing which funds are capital, income, or investment gains.
• Seek professional advice before making significant transfers to the UK.

8. Neglecting Retirement Planning

As with estate planning, retirement planning can easily fall down the priority list when moving overseas. Many US individuals continue saving into retirement accounts without considering the implications abroad, while others stop contributing altogether.

Questions often arise around retirement accounts and benefits when living overseas, including how 401k plans, IRAs and Social Security benefits are treated. It is important to understand how pension arrangements in a new country of residence will be treated for US tax purposes, and vice versa, as the tax treatment may differ significantly between jurisdictions.

How can this be avoided?

• Understand how your retirement accounts are treated in both countries.
• Understand your eligibility for US Social Security benefits and any equivalent government pension benefits in your new country.
• Consider where you plan to retire when making long-term investment decisions.

9. Failing to Plan Before a Property Purchase

After moving overseas, it is natural for many Americans to consider buying a home as a way to put down roots. However, purchasing property too quickly can be an expensive decision if circumstances change.

Property values, lending criteria and tax implications can differ significantly from those in the US. Many expats find that their personal circumstances change during their initial years overseas, making flexibility particularly valuable.

There is also the added consideration of currency risk. Buying a property in a foreign currency means that exchange rate movements can impact both the purchase price and the property’s value from a US dollar perspective.

Because of this, a property sale can sometimes generate a taxable gain for US tax purposes even when the profit in the local currency is minimal or non-existent.

How can this be avoided?

• Get to know the local property market before buying.
• Familiarise yourself with local mortgage and financing requirements.
• Understand how to navigate potential phantom currency gains on paying down non-USD denominated debt.
• Consider your long-term residency and lifestyle plans before committing significant capital.

10. Trying to Navigate Everything Alone

While it is possible to manage your financial planning independently, specialist guidance can help navigate the additional complexities and provide reassurance.

International planning encompasses a wide range of legal, tax, and regulatory considerations. Advice from professionals who work exclusively within one country may not always address the international implications of your situation. Given that tax and legislative rules are constantly evolving, we would recommend seeking specialist advice to ensure that potential risks and opportunities are not overlooked.

How can this be avoided?

• Seek guidance from advisers who understand cross border issues.
• Review your financial plan regularly as circumstances change.
• Try to review your financial situation on a proactive rather than reactive basis.

Why Cross Border Financial Planning Is Important?

An international move affects far more than your location. It can have huge financial implications and may require you to rethink aspects of your existing plan. Taking time to prepare can help you make informed decisions and avoid any costly surprises.

To support a successful relocation, it is important to review your financial arrangements and understand the potential challenges that may arise.

Effective financial planning can help you:

• Reduce the risk of double taxation.
• Structure investments tax efficiently.
• Coordinate retirement assets across multiple jurisdictions.
• Manage currency exposure.
• Protect family wealth through effective estate planning.

Most importantly, good planning can give you peace of mind. By understanding the common pitfalls outlined above and getting the right advice when needed, Americans can relocate overseas with confidence, minimising any surprises along the way.

The Legal Stuff

• The information contained herein is subject to copyright with all rights reserved. The document may not be copied, forwarded or otherwise distributed, in whole or in part, to any other party without our written consent.
• Nothing in this document constitutes investment, tax or any other type of advice and should not be construed as such.
• MASECO is not a tax specialist and we recommend that anyone considering investing seeks their own tax advice.
• The views expressed in this article do not necessarily reflect the views of MASECO as a whole or any part thereof.
• This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice.
• This document does not constitute a recommendation, offer or solicitation to buy or sell any products or to adopt an investment strategy.

Risk Warnings:

• All investments involve risk and may lose value. The value of your investment can go down depending upon market conditions and you may not get back the original amount invested.
• Your capital is always at risk.
• Fluctuation in currency exchange rates may cause the value of an investment and/or a portfolio to go up or down.
• Certain products which may be used within a portfolio in order to give exposure to particular investment strategies may not be regulated in the UK and therefore will not have the benefit of the protections afforded by the UK regulatory regime.

MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is registered with the US Securities and Exchange Commission as a Registered Investment Advisor.