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Stocksy
Stocksy

Don't Move Overseas Until You Read This

Maybe the #beachlife or #retiredlife or #offthegridlife is calling you?

There are about 10 million Americans living outside the United States currently — a number that’s more than doubled in the past 20 years, according to the State Department. Their reasons for leaving range from career moves to romance to a lower cost of living. 

But before you pack your bags and update your passport, you’re going to need to do a little research.

International moving fees

These typically range from $1,000 to $10,000 plus, depending on the distance, the weight and the type of shipping. For example, moving from the United States to Canada typically costs between $1,600 and $7,000, while the average cost of relocating to Australia from the United States is $10,500, says Joey Sasson, the vice president of Sales & Logistics at Moving APT, a moving company.

Car insurance

Usually you will need an alternative policy when moving abroad, says Aliza Vigderman, the director of content at Autoinsurance.com, based in Brooklyn. But you may be able to stick with your provider. GEICO, for example, offers GEICO financial services GmbH, which you can get overseas. “Check with your provider before you move to see if you can transition your current coverage to your new homeland,” Vigderman says. “If not, you’ll need to look for a new policy.” 

Taxes

The United States is part of the rare group of countries (only the United States and Eritrea) that have a citizen-based tax system, says Alistair Bambridge, a U.S.-based partner with Bambridge Accountants, specializing in taxes for American expats. “This means, as an American citizen living overseas, you are still required to file a U.S. tax return each year and declare your worldwide income back to the U.S.,” Bambridge says. When you add your total income in your current country, you can claim any taxes you paid as a foreign tax credit on your U.S. tax return. If the tax rate in the foreign country is higher than the U.S. tax rate, there will be no further taxes to pay. But if the tax rate is lower, then the U.S. taxes will likely be due as a top-up of the difference, he says. The taxation will normally occur with earners who make more than the $100,000 or the equivalent in the country of residence. 

“This can be avoided if you go through the process of renouncing your citizenship; however this is a long, arduous process which many people tend to avoid,” Bambridge says. 

If you consider yourself to be a digital nomad (a person earning a living working from various locations), your taxation will entirely depend on where your place of work is based. So if you’re working for an American company, the chances are high that not much will change. But if you’re working for a company overseas, you will be required to file U.S. income tax returns, and will also be subject to taxation in the country that the company you work for resides, Bambridge says.

Owning property

If you rent your American residence while you live abroad, you must report this income on your U.S. income tax return, Bambridge says. This leaves you subject to income tax on the income you receive from this property, and will probably leave you liable to state taxes, he says. States may also require you to file a state tax return in the year you move overseas. States such as California and New York have very complex state taxation protocols for expats. “If you were considered a resident in one of these states, it is recommended that you consult a specialist in the taxation of American expats,” he says. 

Investments

Investing as an overseas citizen can be difficult, due to the Foreign Account Compliance Act (FACTA), Bambridge says. “It is recommended that if a financial advisor is being used, that they work closely with your accountant if you should have one,” he says. “This is because it is easy to end up being taxed more than you have invested.” 

Health insurance abroad

You may not be eligible for health coverage in your destination country immediately, even if that country provides global healthcare to citizens, says Stella Cooper, the CEO at Payday Loans UK. If you’re a student, your university is required to offer insurance. And if you’re on a permanent resident or work visa, you may be able to apply for publicly funded health care. Still, Cooper says, there could be a waiting period before you can get access to the insurance, so it’s essential to purchase insurance to ensure you’re covered from day one.

Passport

Dogs typically need a rabies shot at least three weeks prior to departure, according to the USDA. Your pet will also need his own passport, which is required to be stamped by the APHIS before leaving, says Mariska Reinerink, a holistic money wellness coach who moved from the United States to The Netherlands. 

Phone

If you need to keep a U.S. phone number, open a VOIP account before leaving,  Reinerink says. “It’s harder to do once you’re there, as they look at the IP address, which then doesn’t match the area code you want,” she says. “By having a VOIP number, and Internet, I’m able to continue running my business in Canada, while living wherever I want.” 

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