The idea of living an expatriate life has always seemed exciting, exotic and alluring. That was before the nations of the world closed their borders, reopened them and—sometimes—closed and reopened them again. Also, that was before a large percentage of the American workforce realized it could accomplish its work without going to work. What is involved to work as an American expatriate?
Now the real possibility presents itself that Americans may decide to become expats long before the theoretical age of retirement. In past times U.S. retirees socked away their 401Ks for the distant day they could head to balmy vistas of which they spent decades dreaming. Now, mid-career, mid-echelon workers are checking out foreign work permit rules and private schools as well as their climates. Still, for retiring workers the allure of retiring and just enjoying life in paradise remains powerful.
Accommodating the Nuts and Bolts of Foreign Finance
Most travel advisors are quick to point out that every potential host nation has different rules about how money must be handled, reported and transferred. Of course, you will be required to make financial reports in the U.S. as well. Above all, you will need an accounting system that lets you confidently keep track of your expenses, income, interest, taxes and so forth. The key feature of any financial system needs to be flexibility. You must be able to set your own account parameters and adjust them as completely and as often as is necessary. You will surely need a pay stub template that goes beyond the traditional one or two memo lines of a check register.
Making Decisions About Your Money Before You Go
Before you start dealing with funds in foreign places, you can prepare yourself by making important decisions and changes with your current income, savings tools and retirement accounts. Here are a few questions to consider:
- How many savings funds do you need? Traditionally, it is considered wise to diversify your savings accounts. Remember, however, that each source of income and expense must be reported and may be scrutinized, resulting in some truly complicated dealings. Also, how quickly might you need to get to significant financial resources?
- What are the exchange rates doing? Chances are you have not paid more than passing attention to currency valuations. More important than the value of a foreign currency against the dollar is the direction that value is moving. Getting rid of your debt may also be a hedge against unfavorable exchange rate fluctuation.
- Should you open an account in an international bank? This may be useful if for no other reason than being able to transfer money with no bank fees.
Remember Your Self-Employment Tax
This aspect is particularly important for the pre-retirement folks who are still pulling in a nice base salary as a contract worker for a stateside employer. Yes, you are responsible for paying U.S. self-employment taxes. There is a threshold of income you must surpass. However in general, if you are bringing in a livable wage, the IRS will want you to account for that. The IRS website has a page that is devoted to directions for ex-pats who need specific information, including how you can access help just like a regular homebound American.
Over There But Working Here
The whole idea of a workforce of Americans meeting high production demands in the U.S. while living in beautiful, distant lands is a new concept that was virtually unexpected before it just started happening. This does not mean that employers and human relations officers have not already begun responding to this new type of existence. Personnel managers are recommending a series of protocols that American businesses can adopt. These include things like language training and cultural lessons. These are intended to make the whole expat-virtually-working-in-America life a lot more practical and functional. After all, it serves the interest of the company for which you work for you to have a pleasant, productive experience as you labor from your hammock beneath the palm trees.