Can non-U.S. Citizens Buy an Annuity?

Annuity planning is a financial preparation that many people think about when they retire. We often encourage people around us, in their own financial planning, it's like doing a set of health checks in general, must be on their own living conditions, every year need to have good planning and review. Through professional tax consolidation, financial planning for everyone or the family can be better placed. If you are a new immigrant, or if you have recently changed jobs, you have married, had children, etc., there is a need for tax planning adjustments, and when your family goes to buy and sell a home, apply for a loan, pension plan, family savings insurance, etc. are all closely related to tax planning. Today, we will share some tax knowledge about non-U.S. citizens who buy annuities on the theme of "annuities."

Can non-U.S. citizens buy a U.S. annuity?

Many non-U.S. citizens with life insurance in the United States are exempt from tax exemptions. So, can they buy an American annuity? The answer is to review the requirements of the annuity company's approval requirements. There are companies on the market that offer annuities that non-U.S. citizens can buy U.S. annuities.

What are the tax provisions for the purchase of annuities?

Tax overview

Non-resident annuities in the United States are subject to a 30% withholding tax under IRC's Sec 871 a. Part of each annuity payment is considered the cost of the investment, while investment income is partly. Prepaid tax is subject to a 30% prepaid tax on the portion of the proceeds of the payment. Under U.S. tax law, income from an annuity is not interest income. Therefore, the investment interest exemption does not apply to this issue.

According to The Sino-US Tax Study, it has been found that because there is no special tax agreement on annuities between China and the United States, it is necessary to withhold 30% tax. If there is no Ann or tax return, non-U.S. residents must complete the W-8BEN foreign identity certificate withholding tax form every three years.

We all know that assets in the United States are subject to U.S. tax laws and foreign tax provisions, so individual ownership in assets, including non-U.S. citizens, is taxed. This means that the annuity should benefit from a tax extension. It also means that if you collect money before the age of 59 and a half, you will be fined an additional 10%.

Do annuities not held by U.S. citizens also have tax-deferred benefits? Or as a non-natural person (no tax extension, no 59-year midterm limit)

Planning precautions

We know that many non-U.S. citizens may have life insurance in the United States. Because of the low inheritance tax for non-U.S. residents ($60,000), non-U.S. citizens should consider IRC Sec's tax-exempt annuity planning issued by offshore life insurance companies to meet inheritance tax. Some offshore life insurance companies approve policyholders who meet U.S. tax standards. In this way, non-U.S. citizens with annuities should avoid inheritance tax through the 1035 exchange.

Summary

The stages of life are different, the landscapes are different, and the need for planning is not the same. We strongly advocate that finances should be planned as soon as possible, this concept, which provides for the financial consolidation of pensions, is even more important. The question of whether non-U.S. citizens can buy an annuity is something I hope will give readers more information today. Non-U.S. citizens can purchase an annuity and receive the same tax treatment as U.S. citizens. This includes an extended deduction, a LIFO distribution fee and a 10% fine for taking money before the age of 59.