6 Things Expats Need To Do To Be Successful |
Posted: April 30, 2023 |
Being an expat is fun, but it can also be challenging, especially if you forget about taxes and credit card limits. There are certain considerations to mind in order to be prepared for any situation. That there will be many unpredictable occurrences, expats shouldn’t doubt in the slightest. The first tip should definitely be: connect with the local expat community ASAP! Reach out before you even move abroad: look the community up on social networks. Tax ConcernsAll expats should thoroughly understand U.S. tax credits. That much is evident. However, woes don’t end there. Expats actually need to mind three types of taxes: 1. Taxes of the country they’re residing in 2. U.S. state taxes 3. U.S. federal taxes No matter where they earn their wages, as long as they are residents of the United States, American expats are required to submit federal tax returns and pay taxes on their earnings. On top of that, Americans who are residents and have income in the state are also due to pay the taxes. An American expat is considered a resident if:
American expats are considered to have income in the state if: They earn income in the state regardless of where they live They get pensions, retirement income and or any other government benefit in the state The states that don’t apply state income taxes to expats are Alaska, Florida, Nevada, South Dakota, Texas, Washington State, and Wyoming. New Hampshire and Tennessee apply a tax on dividends and interest income alone. California, South Carolina, New Mexico, and Virginia apply state income taxes to American expats who:
Prevent Double TaxationThere are three ways to prevent double taxation and all expats should definitely look them up. We’ll mention them briefly below, so make sure to look them up! Tax TreatiesThe U.S. has in place tax treaties with ca. 70 countries. Expats may set up a business in a country that has a tax treaty with the U.S. The Foreign Tax Credit (FTC)The FTC helps expats claim a dollar-for-dollar credit on foreign income taxes. Expats should obtain a foreign tax liability to qualify for the FTC. The Foreign Earned Income Exclusion (FEIE)If you can pass either the Bona Fide Residency test or the Physical Presence Test, you qualify for the FEIE. This program allows you to exclude up to +$107,620 of your foreign earned income. Decide if You Need a Health Insurance PolicyHealth insurance and taxes are the two most difficult conundrums for all expats, and no wonder! Different countries have different rules and you’ll need to decide whether you need an insurance policy to begin with. While some countries that grant digital nomad visas include health care in the package, others offer cheaper tax rates but don’t include health insurance. In either case, you’ll need to consider all of your options before deciding on the best course of action. Keep in mind that more and more insurance companies are designing flexible coverage appropriate for digital nomads due to the trend being on the rise. While this may mean more opportunities, don’t expect the packages to be cheap! Continual LearningFor expats to be successful no matter where they are, they should implement continued adult learning. This holds particularly true for digital nomads, but others can also benefit from the practice. First of all, expats should be aware that some traditions may prove to be a true cultural shock. Cross-cultural training is crucial for digital nomads, especially if they intend to hunt for jobs that bring together people from around the world. Next on, there are soft skills to consider. Obviously, digital nomads need certain soft skills because they will interact with people from other cultures. This form of knowledge is not acquired at traditional educational institutions like a university or a college, so make sure to brush up on it. Avoid BurnoutMake sure to watch for symptoms of burnout! Admittedly, this statement has been uttered so many times it’s become a byword, but still it should be reiterated. Expats (and digital nomads, in particular) often tend to panic when they first arrive, which may result in too much work (and certainly, high stress levels). Relax and enjoy your new place of residence. After all, there are so many things to discover that it would be a waste to stress out before you get to enjoy your new life a bit. Take a break. Discover a new café. Taste some local delicacies. Talk to the locals. Unwind! Find Your Way AroundReaching out to the local expat community is the place to start your new life. Get used to your new surroundings and learn the ropes of everyday tricks. As soon as you relocate, take a stroll in the neighborhood. Discover affordable retailers and food stores, study transportation alternatives, learn when and how to pay bills and taxes… There are simply so many exciting things to discover! Finding WorkLastly, if you’re planning to earn some money on the side, you should know how to go about looking for jobs. There’s nothing wrong with changing your priorities and viewpoints while abroad, especially if you’re moving countries. Although it is always possible to find freelance work, you should focus on attaining loyal clients. It’s best to start looking for dependable clients early on, before moving. Many expats also give a hand in teaching English language, but keep in mind that knowing a language doesn’t equal knowing how to teach it. Online TESOL courses are a perfect option in this case. Overall, expats need to be resourceful to get by. Mind the tips and enjoy the ride!
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