U.S. citizens are itching to travel and work abroad more than ever. If you are considering working remotely or moving abroad, consider these seven factors.
#1 Employment & Visas
Your current employer may allow you to work remotely. If you are eyeing an international destination, take the time to speak to your employer about the details.
Are you leaving your U.S. employer to pursue a new opportunity in the EU? Many EU countries offer fast-tracked migration schemes to allow foreign workers to fill specific skill and labor shortages.
Moving for love? Foreign countries generally allow family reunification for marriage or committed partnerships.
#2 Banking & Financial Services for U.S. Citizens Living Abroad
Do your homework before you move! Banking as a U.S. citizen abroad can be a headache. The U.S. can and will monitor American taxpayers who have foreign financial accounts. The additional scrutiny and reporting means that not all foreign banks welcome Americans warmly.
Another surprise is that your current bank or brokerage/financial institutions may limit or discontinue services when you notify them of your address outside of the United States.
#3 Family Issues
Family considerations are broad, but we encourage you to consider the impact on the entire family as you plot out your move abroad.
- If you have children, are you thinking about local or international schools? Both have benefits, drawbacks, and potentially waiting lists.
- Are you moving with a spouse? They may need their own work authorization to obtain employment.
- Do you have aging parents or young adult children who will stay in the U.S.? The Global pandemic taught us that families may not be able to travel freely if they do not have the right visas.
#4 Tax Planning
Planning must begin before you go!
- U.S. citizens and green cardholders have mandatory U.S. income tax filing requirements, regardless of where you live and work
- Most countries outside the U.S. operate on residence-based taxation, meaning you will also need to file a foreign tax return
- There are tax treaties between the U.S. and many countries to help alleviate double taxation, but they can be complicated
- Planning is key because many income items will be taxed and treated differently between the U.S. and foreign tax regimes.
- If you self-prepare or work with a local U.S. accountant who does not specialize in expats you may unknowingly omit important foreign information filings, underreport income or overpay taxes
Insurance (health, life, personal, etc.) can differ greatly from the US system.
- Double-check all your current insurance policies, what you can keep, and what do you need to purchase.
- Depending on your length of stay abroad, you may be able to keep U.S. policies in place.
#6 Citizenship & Residency Status
If you are itching for a second passport or long-term residency in a foreign country be sure to consider the following as you begin your planning:
- Not all countries allow Americans to hold dual citizenship, so check the requirements if you have your heart set on achieving this status.
- Long-term residence is also attractive for many but often requires a high level of fluency in the official language.
- Check your visa and be sure to understand how your residency status changes should you leave the employer or are made redundant as a foreigner
#7 Investment Planning
It’s ok to manage your own assets but be sure you know the tax and reporting obligations no matter how and where you invest.
- Investment regulations vary widely from country to country.
- Ensure your investment advisor acts as your fiduciary, meaning they are working in YOUR best interest, not theirs.
- Take the time to understand the local tax implications of your portfolio and understand that many foreign investments are taxed and penalized from a U.S. tax perspective.
- Your U.S. retirement account may be your biggest investment account, so understand how your new country categorizes your accounts to avoid a surprise tax bill.
Even if your situation is simple be sure to do your homework before you make a move. Life abroad can be rewarding but quickly become frustrating without the right planning. If you have specific questions feel free to reach out to me.
About the Author
Arielle Tucker is a Certified Financial Planner™ and IRS Enrolled Agent. She's spent the last decade living between the US, Germany, and Switzerland and is passionate about helping other U.S. expats and Americans living abroad achieve their dreams with the right financial and tax planning. You can learn more about Arielle and Connected Financial Planning by clicking here.