Globetrotter’s Dilemma: Should I Consider Living Abroad?

So, you're sitting at your desk, scrolling through Instagram, and all you see are these fancy folks living it up in foreign lands. They're sipping margaritas on a beach in Bali, hiking the Inca Trail in Peru, or casually strolling through the streets of Paris with a croissant in hand. Meanwhile, you're stuck in your cubicle or your home office, dreaming of a life less ordinary.  Seeing others enjoying their overseas adventures can certainly ignite a serious case of wanderlust. But before you start envisioning yourself selling all your belongings and moving abroad, let's take a moment to consider the financial implications of such a move.

THE OVERALL GOAL

First things first, let's talk goals. How long do you plan on residing in a foreign country? A few weeks? Months? Several years? What is it that you're trying to accomplish?  Learn a new language? Learn to cook a more organic diet? Give your kids exposure to another way of living? At the end of your time abroad, what is it that you hope you will have accomplished?  Before you start putting the financial pencil to paper, make sure you're clear on what you want to get out of the experience, as the overall goal will impact the choices with direct budget implications. (e.g. housing, groceries, transportation, entertainment). Remember that living expenses vary greatly from one country to another, so it's essential to think through your monthly expenses over your timeframe and have a realistic budget in mind.

LIFESTYLE

And while you're off in a foreign land, what do you want to do with your time? Are you hoping to squeeze in some sightseeing between Zoom meetings? Or maybe you want to take a career break and dedicate more time to leisure and personal growth. You might even be tempted to switch jobs altogether and try something wild and unexpected.  Consider the lifestyle changes that come with living abroad. While it may be tempting to envision a glamorous and carefree existence, the reality is that you'll still need to maintain a daily routine and a sense of normalcy. Be realistic about your expectations and think about how you'll incorporate exercise, find community, and engage in activities that excite you in your new environment.

WORKING ABROAD

Could your current job handle your jet-setting dreams? Start by asking your employer if they're cool with you working from another country. Sure, they might be okay with you working remotely from a different state, but crossing international borders could be a whole new ball game. Reach out to your HR department to clarify the company's policies.  If you need to convince your employer to support your move, focus on showcasing the potential benefits for both you and the company. Present a well-prepared case that highlights how your relocation can contribute to your professional growth and enhance your ability to meet company goals. Keep in mind that some companies may offer relocation packages or other financial assistance, so it's worth exploring these possibilities.

If your current employer doesn't offer international remote work, consider exploring opportunities with companies that have a global presence or international offices. This could open doors for new roles or positions that allow you to work abroad.  Identify the skills or qualifications you may need to secure employment in your desired location. Some countries may have language requirements or specific certifications, which could impact your options or timeline for moving abroad. Be prepared to invest time and effort in acquiring the necessary skills to increase your chances of success.

WORK VISAS and SAFETY

In most cases, if you plan on working in another country, you'll need to obtain a work visa. However, it's essential to carefully review the local laws and regulations, as there may be exceptions if you're simply working remotely from abroad while maintaining your current job in the U.S.

Another crucial step is to check the U.S. government's list of Travel Advisories for the country or countries you plan to visit. Staying informed about the safety conditions of your desired destination is vital for your well-being and peace of mind.

INTERNATIONAL TAXES

Now, let's dive into the world of taxes. Depending on the length of your stay abroad, you may be subject to different tax requirements. According to the IRS, U.S. citizens living abroad still need to follow the same rules when filing income, estate, and gift tax returns, as well as paying quarterly or estimated taxes. It's important to note that if you earn income in the foreign country where you work and live, you must pay taxes on that income, regardless of where it was earned.

Fortunately, the IRS provides several tax breaks for Americans living abroad. The foreign-earned income exclusion and foreign tax credit are two significant benefits to explore. To be eligible for the foreign-earned income exclusion, you must either be considered a "bona fide" resident of another country for one uninterrupted tax year or be physically present in another country for at least 330 days out of 12 consecutive months. If you meet these requirements, you may be able to exclude foreign earnings of up to $120,000 in 2023. If you're married and both meet the requirements, you and your spouse can each choose the foreign-earned income exclusion, potentially excluding up to $240,000 for the 2023 tax year.

Additionally, you may be eligible to claim the foreign tax credit if you're required to pay taxes to another country and need to file a U.S. tax return. The foreign tax credit allows you to take an itemized deduction for those foreign taxes or a tax credit. It's important to note that you cannot claim both the foreign-earned income exclusion and foreign tax credit on the same income.

STAY CONNECTED

Don't forget about your loved ones back home. It's important to consider how you'll stay connected with friends and family while abroad. Embrace virtual communication methods and make an effort to maintain those relationships. Plan regular video chats or send weekly check-in messages. Also, take into account the availability of direct flights back home in case of emergencies or if someone falls ill.

As you prepare to embark on this incredible journey, keep your financial well-being in mind. It's crucial to align your adventure with your greater values and long-term goals. Take the time to discuss your plans with your trusted friends and your employer, ensure you have realistic expectations about the lifestyle you would have, ensure you have the necessary visas, understand the tax implications, and maintain relationships with those you love back home. By considering these factors, you'll be better prepared to navigate the exciting and financially responsible path of working abroad. Bon voyage!