On the Money is a monthly advice column. If you’re looking for advice on spending, saving or investing — or any complicated emotions that may come up when you’re getting ready to make a big financial decision — you canSubmit your question in this form. Here, we answer two questions asked by Vox readers, which have been edited and condensed.
I immigrated to the US just two years ago. I am retired in my original country and have pension and some savings, but I feel that this money is not enough to support our future retirement life in USA. What should I do?
Dear Retired,
I’m enough of a personal finance expert that if you don’t have enough money to support your future life, you need to find ways to make more money.
Unfortunately, I’m not enough of an immigration expert to advise you on the different ways you might be able to make more money — so I reached out to Ellen Sullivan, owner and attorney. Cambridge Immigration Law.
“The first thing you need to figure out is whether you have the legal right to work in the U.S.,” Sullivan told me. “Then you need to see if your work permit comes with any restrictions.”
Sullivan, who has practiced U.S. immigration law for 19 years, explained that many lawful permanent residents have unlimited work permits that allow them to work anywhere. “Some people have work visas that tie them to a specific employer, but many people have the ability to work wherever they choose or wherever they find work. You can work in an office or you can work at Walmart.”
You may also want to consider other ways of generating income, such as investing. “People can invest in the United States regardless of their immigration status,” Sullivan said. “This includes investment in property and real estate.”
If you have the ability to invest in real estate – which may or may not be an option for you right now – you may be able to generate additional income by renting out your property. “Being a landlord is considered an investment and not a job,” Sullivan explains. “This means that you can be a landlord without a work permit.”
No matter how you choose to earn income, you’ll want to make sure you follow any applicable tax laws, both in the United States and in your home country. “Any income you earn in the United States may be taxed, and you may also be subject to tax requirements in your home country,” says Sullivan. It can be worth talking to a tax professional about your potential tax liability, especially if you’re unclear about what you might owe.
I asked Sullivan if they were considering working under the table, which is what an immigrant wants to know. He explains that there are two separate issues – the first is the work itself, and the second is the tax you have to pay on your earnings. “If you choose to work without a permit or if you choose to ignore your tax obligations, it is a civil and criminal violation,” he said.
Many people earn money through informal, semi-legal jobs — such as cash-paid nannies or tutors — and many people assume that such work does not need to be reported to the IRS. This is a wrong assumption, and it can hurt you in the long run. You must file a tax return with the IRS every year, even if you are an undocumented immigrant with an informal job.
Another factor to consider as you plan the next phase of your life in the US is whether you should move to a lower cost of living area. I don’t know where you live, or if you want to live where you want to be close to family or community, but moving to a less expensive part of the country would allow you to survive without your pension and savings. Get another job. That said, many US adults continue to work in some capacity after retirement — so your situation is neither unusual nor unusual.
In other words, welcome to America.
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Do you have personal finance questions? Submit them here.
I am 65 this year. I would like to know if I will be penalized if I invest in stocks, bonds or any other type of investment while I am on social security disability?
dear 65,
As far as I understand, you probably won’t be penalized if you invest while on Social Security disability — but again, that’s a question I’ll have to turn to the experts.
“You can definitely invest while on Social Security Disability (SSD),” says Andrew Latham, a certified financial planner who shares financial insights. SuperMoney.com. Latham explained that investment income is generally not considered “earned income,” meaning it won’t affect your SSD benefits.
That said, you still need to keep track of your net worth. “If you’re also on Supplemental Security Income (SSI), be aware of the strict asset limits: $2,000 for individuals and $3,000 for couples,” Latham told me. “You can still invest, but that’s probably if you do well and earn more than the asset limit Reduces or disqualifies you from your SSI benefits“
I asked Latham if putting money into investments would take away from your net worth pool. If you are an individual with $3,000 in assets, for example, can you invest $1,000 and keep your SSI benefits? Latham said no. “Investing excess assets will generally not help with SSI, since the principal amount of investments including stocks, mutual funds, savings bonds and more are counted as assets.”
I had a conversation with Jim Wang, the owner WalletHacks, which I consider a go-to resource for these types of questions. “I researched this when I was helping my parents when they started collecting Social Security benefits,” Wang explained. “Social Security Administration, on their website, says they only include wages from your job, net profit from self-employment, bonuses, commissions and holiday pay. They do not count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits.”
So far, it looks like you’ll be able to invest without penalty while on Social Security disability — but there’s one more detail you need to be aware of.
“To put money into an IRA or Roth IRA, you must have income,” says Mark Barnes, an enrolled agent and family office director. Copper Canyon Tax and Accounting Services. If you don’t earn — and many people on Social Security disability don’t — you can still invest in a brokerage account. However, you may need to prepare for tax implications.
“There are no tax deductions in a brokerage account, and the earnings, interest and dividends produced will hit your tax return and result in increased taxable income,” Burns explains. “Brokerage accounts aren’t bad, but many advisors are using a cookie-cutter approach to investing and clients end up with too much taxable activity on their tax returns and it’s completely unnecessary.”
You bet I would have stopped my advice column a few paragraphs ago, right? Unfortunately, it gets more complicated.
“If disability is your only income, a few dollars in interest or dividends won’t really affect you. It would probably be taxed at 0 percent and not enough to make your disability or Social Security taxable,” Barnes told me. “If you’re married and your spouse has income, you’re probably already paying taxes on disability or Social Security income and More consideration should be given to investments.”
There you have it, 65. Yes, you can invest; No, you probably won’t be punished; And yes, you should consider the potential tax implications before making any investments.
And, I always remind people — don’t invest money you can’t afford to lose.
