Gyroscopic Investing

Hello all,

I'll be living and working in Germany for the next few years, but I doubt it will be a long term thing. Unfortunately, Germany does not recognize IRAs as a tax preferred account, or any other US accounts.

Given I won't be able to avoid/lessen my German taxes, I'm guessing the best way to minimize my tax liability is to look to the future and just contribute to my Roth IRA (I was previously contributing to my Roth IRA and IRA equally).

Anyone with experience with this sort of situation? If not, any thoughts?

Thanks!
Josh

So are you going to be filing and paying German taxes?

ochotona wrote: ↑Wed Sep 04, 2019 3:45 pm So are you going to be filing and paying German taxes?

Yes, I'll have to. I'll be working for a German company. Luckily, Germany only taxes the disbursements from US savings plans, not income/interest gained within them.

Also, taxes are higher here, so my foreign tax credits will ensure I don't need to pay US tax for my current income. Leaving me with the conclusion that a Roth IRA is the best way to shield from being taxed after-the-fact too.

Do you know what others on this board do, buy I-Bonds directly from TreasuryDirect? Those are tax-deferred, and cannot go below 0% interest. The interest earned on them has been good. You can buy $10,000 per person per year, so if you have a spouse / partner you could do $20,000 per year. You can get $5000 more back as tax refund in paper bond form, but if you're not filing in the US, that won't work. The only drawback is you have to deal with the funky website. Your money is not trapped, you can redeem the bonds, but you'll lose interest if sold before five years. It's a good hard-to-access cash vehicle, which make it less likely you'll blow the cash on some useless toy. In 30 years they stop accruing interest, so you need to cash in and pay taxes at that point.

Which brings up another point, if they raise taxes to a confiscatory rate in the next 30 years, that will push many people toward redeeming their I-Bonds before the taxes take effect.