Banking, Money and Taxes in the USA

The banking system in the US is sophisticated and safe. Expats will easily be able to connect with their bank accounts overseas. Using credit and debit cards to pay for goods both locally and internationally is standard practice in the States. 

Almost all international banks are represented in the US. Those with large operations include HSBC, Citigroup, Barclays, Deutsche Bank and Credit Suisse. Expats who have an account with one of these banks will find that they can assist in opening an account in the US as well. 

Major banks in the USA include the Bank of America, Citibank, JPMorgan Chase and Wells Fargo. All of these banks offer access to a variety of bank accounts, a network of ATMs, internet banking and branches in most major cities. 

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Money in the USA

The official currency is the US Dollar (USD), which is subdivided into 100 cents.

• Notes: 1 USD, 2 USD, 5 USD, 10 USD, 20 USD, 50 USD and 100 USD

• Coins: 1, 5, 10, 25 and 50 cents, and 1 USD 

The US is both a cash and card society. Both methods of payment are accepted almost everywhere, although some of the smallest outlets may not take cards. Bank branches can be found in all major US towns and cities. ATMs are well dispersed. 

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Banking in the USA

Banking in the US is extremely competitive. An array of services and rates can make choosing where to open an account confusing. It is often easier to maintain an overseas account, open a US-based account at the same bank, and transfer money back and forth. It's possible to relocate successfully without opening an American account. Expats on short stays usually choose to use their overseas accounts.

To open a checking account, expats moving to the US should confirm with their bank what forms of identification are required. Generally speaking, a passport, immigration information, social security number and proof of address are expected. Expats without a social security number will likely be able to substitute this with another number, such as a passport number, a tax number, or an alien identification card number.

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How to apply for a social security number and card

Expats moving to the United States will need a Social Security Number (SSN) before formally starting a job. This is used to report one's earnings to the government, and in this way, it is similar to the National Insurance (NI) number in the UK.

Those residing but not working in the US are generally not eligible to apply for a Social Security Number.

Some businesses, such as credit companies and banks, will ask for a Social Security Number, but in most cases, alternative identification methods are accepted. It isn't necessary to have an SSN in order to get a driver's licence, register children for schools, or to get private health insurance.

All social security cards should be kept in a safe place, but it is possible to get a replacement if it is lost.

There are two ways to get a Social Security number, depending on whether one is an immigrant or non-immigrant. Immigrants, or permanent residents, can apply in their home country before departing for the United States as part of the process of filing for an immigrant visa. Alternatively, a social security office can be visited in person upon arrival in the US. Non-immigrants only have the latter option and can only apply once in the country.

There are offices in all towns and cities. Wait 10 days after arriving in the US before applying at a social security office to allow time for the necessary documents to be available online. There is no charge for a social security number. The process takes about two weeks. When completed, applicants will receive a card bearing their Social Security Number.

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Taxes in the USA

Tax laws in the US are hugely complex and made more so by expatriation. Individuals are subject to federal tax at graduated tax rates ranging from 10 to 37 percent of the individual's income. In addition, immigrants and most non-immigrants are also subject to Federal Insurance Contributions Act (FICA) taxes, which are made up of Social Security and Medicare taxes. The FICA tax rate is fixed at a certain percentage and is divided equally between the employer and the employee. 

Most states and some local jurisdictions impose an additional state income tax. State and local jurisdictions may also levy property and sales taxes that differ widely by state, county and city. State and local taxes differ considerably both in amount and regulation. 

Paying taxes as a resident in the US

The determination of tax residency is important as residents are subject to tax on their worldwide income in the same manner as US citizens. A 'resident alien' is defined as a foreign national who meets the provisions of either the Green Card Test or the Substantial Presence Test. 

• Green Card Test: A foreign national who is lawfully admitted to the United States for permanent residence (i.e. receives a Green Card) will be considered a resident alien for federal tax purposes.

• Substantial Presence Test: A foreign national will be considered a resident alien for a given calendar year if the individual has been physically present in the United States for at least 31 days during the year and in total 183 days or more in the current and the two preceding calendar years.

US residents are required to file an annual individual tax return, disclosing their worldwide income received that given tax year. US residents who paid foreign income taxes on income from another country qualify for a foreign tax credit or deduction.

Paying taxes as a non-resident in the US

Individuals who are not considered residents for tax purposes are classified as 'non-resident aliens'. Non-resident aliens are subject to tax only on income derived from sources within the United States. US-source income includes remuneration from employment, self-employment and trade or business activities conducted in the US. 

Non-resident expats may also be exempt from some forms of taxation, such as Social Security and Medicare taxes.

Tax advisors in the US

The United States has an extensive network of tax treaties that further complete the taxation of both resident and non-resident expats. Professional tax advisors are widely used by US citizens even with less complicated tax returns. It is thus highly recommended that expats moving to the US hire a tax planner specialising in expat taxes.