Tax Complications of Opening US Investment & Bank Accounts While Living Abroad

[kindeagle]

I’m an American citizen who moved to Canada in 2011. While I should have done a lot more financial research, I was smart enough to keep my US bank accounts. Along with my bank accounts, I have a Vanguard investment account (only IRAs, no taxable account) and a US based credit card while using my parents' mailing address.

This is a topic that I don’t see discussed a lot on expat blogs, but what are the potential risks of using my parents' address with my current accounts or if I were to open up a taxable account with Vanguard or high interest savings account? They live in a state that collects income and capital gains taxes.

My current thought is that I should stick to buying US-domiciled ETFs through a Canadian-based online brokerage. Opening up any additional US financial based accounts could cause potential tax complications, like being seen by the IRS and the state tax authorities as a resident of state where I don’t actually live.

Am I missing something or am I on the right track? Why isn’t this topic more widely discussed online? Are people afraid of being tracked down because it’s kind of a gray area?

[gocurrycracker]

The IRS taxes all of your worldwide income, no matter where you reside.

If you tell Vanguard that you are a resident of Canada, they won't open a brokerage account for you. Many other brokerages will.

As a bona fide resident of Canada, you could provide said brokerage with your Canadian address as your permanent address and your parents' address as your mailing address. Receiving mail in a State is not sufficient to be considered a tax-resident of that State.