There are countless reasons why you could be one of the 9 million US expatriates, living in a foreign country be entertaining the idea. But before you pack your bags and moving halfway around the globe, you need to consider the impact on your finances.
Finally, there is a lot of planning involved with taking a plunge into international waters. Between work visas and to find out, what to do with taxes the amount of coordination and paperwork can connected enough to rotate your head.
Five ways move abroad can affect your finances
Before you start daydreaming about an Office overlooking the Eiffel Tower, start your ducks in a row, and take a look at our list of important financial information about the expat life.
(1) Find a company sponsor your employment will make things a lot easier
Tries first move, worry later about landing a job? Not so fast, Megan Fitzgerald, an experienced American Expat and founder of the international career consultancy says career by choice. “The challenge for the backup anywhere even a work permit not so bad, completely impossible, depending on your situation”, says Fitzgerald, distant from Singapore working with expats worldwide from the. “” “Things are always changing, so I never advise someone who go only to a country would show up and think, ‘Oh, I’ll be able to get a job.'”
In many cases, foreign Governments are not going to give you a work visa, if you already lined up a job offer, job search time yourself so you will be a company that helps set to handle the paperwork for you. We know this is easier said than done. But the key is, in the local market hard to find the talents you emphasize, be, says Fitzgerald. “I do is with my clients help them to understand their unique value and how to communicate effectively and in a culturally relevant manner”, she says. “Above all local talent, just not offer the benefits of investment in their unique combination of skills and capabilities, which can recognize others, [That way], companies.” So research talent shortages in the countries you goals and see, where your skills need to fill could.
A note: If you are married, check what are the local laws on the fulfilment of the spouses work visas. Usually an expat employees work visa does not refer to a spouse, and one would have to get separate he or she. And in some countries your spouse are not even allowed to work after Fitzgerald. “So that’s it is often [they are part of a] one of the biggest challenges in the families overseas income household, and then they get the opportunity to go abroad, but only one person guaranteed work permit”, she adds.
(2) Even if you are just moving to a new Office with the same company, is to negotiate, possibly your employment contract
What happens when your job with a U.S. company, sponsoring and paying for your move abroad? Make sure that the conditions of the contract with a magnifying glass before signing on the dotted line, says Jonathan Lachowitz, CFP®, founder of investment management, specialized white Lighthouse iterate on cross-border financial planning.
Make sure, there are certain provisions in your contract, such as a clause that brings home for the case that you lose your job at the overseas protection providing repatriation costs once your contract is over and a mapping of an independent tax consultant, because your taxes are more complicated. Also, says L.r., not take Department of your employer’s human resources department or the relocation specialists who have rented all the answers you need. “
” Some relocation specialists are OK, but many of them paid, transfers, do so [they may say], “Oh, go to this bank” or ‘Go to the insurance agents’ “, he says. “Make your own independent investigation. And find a gentlemen, a similar move made recently. Learn a lot of other people who can the border before you, and they tell you what go directly on their way.”
(3) Be ready, you have file two sets of tax returns
Find your US tax returns is a pain? Now, once you move more difficult much abroad, your tax situation get. “People recognize the complexity of their fiscal situation [once they become expats]. You tend to think ‘Oh, I have a simple situation’, “Says L.r..” And they assume the same situation, as they must go to hundreds of people to do? [But] the facts and circumstances of each situation is different. “
Your taxes makes particularly complicated is that local taxes file must be in your new country you what learn that means tax laws and regulations of the expected country of residence, says L.r..” But Furthermore, you are also required to submit to a U.S. tax return – this means, you can owe taxes at the end of back to the States.
The good news is that the U.S. tax code provides some provisions that can help reduce or eliminate the possibility of double taxation for expats. For example, you may be entitled to tax credits, or you can qualify exclusion for the foreign earned income, to be able to exclude the expats to pay taxes on a certain amount of foreign income (for tax year 2015, for example this amount was $100.800).
Of course it will help if you obtain from local tax and financial planning professionals, “because it can certainly be a shock to the system, if you suddenly, that identify your tax burden is actually increased through the acquisition of the international mission” says Mary Louise Serrato, executive Director of the Expat interest group of American citizens abroad.
4 you have to the Internet and mobile apps have made banking easier than ever changing financial services
Remote, but that does not necessarily mean that you may use the same bank, credit card company or brokerage firms that you stateside used.
Serrato says that is partly foreign legislation, which can prohibit U.S. banks and investment companies from selling their products across borders. “So if these institutions see they have an American who no longer resides in the United States, they have concerns, they might violate foreign laws – and therefore close the accounts of Americans who can prove, they have a residential address” adds them.
Caused foreign banks taking foreign account tax compliance Act (FATCA) 2010 American customer on the other side feel free. FATCA demanded by foreign financial institutions, including banks, insurance companies, stock brokers, and trusts, to report whether their customers US citizens are. The law was created to detect offshore tax evasion by Americans, whether they live in the United States or abroad. As a result of the reporting requirements, Serrato says, many foreign banks are now reluctant to deal with US customers, penalties or a possible U.S. avoiding Department of Justice investigation.
So, before you go abroad, open research, the local banks situation and your ability to a bank account abroad, or if your current US Bank provides Expat services. Also, L.r. says it would be a good idea, at least two U.S. accounts – two bank and two credit card accounts – in case you suddenly strangers themselves with zero Bank access in one country to find.
5. Your retirement savings may be affected by an overseas move
And what about your 401 (k) contributions? “In some cases, if you go abroad for a short period of time and you work for a reasonable sized they contribute can keeping on an expat package, that allows you to your 401 (k) plan”, said L.r.. In other cases, you can not as lucky and end up losing your ability to contribute a 401 (k) (including any employer contributions, you have in the States to get).
May also be required in some countries, to local Retirement or pension plan help, Serrato, but says that can bring its own set of questions. Namely, these contributions in this country tax-free cannot, be seen but may be for U.S. tax purposes.
“If you happen to live in the UK or Canada, most foreign old-age provision may apply to double taxation,” L.r. adds. “Or at least in very different time periods taxed – as in the year the contribution is made on the U.S. tax return, [but] at the time of the distribution abroad. “So this is an area of great concern and great mystery to people.”