US Expats & Taxes – What You Should Know When Moving Abroad

To all the current and future expats, this is the ultimate guide on how to deal with taxes and how to possibly avoid paying them when you’re moving or living abroad. It can be a deal-breaker for you, and it can seem like an investment at the beginning, but the savings later on will be significant. So we’ve dedicated this whole article to help you deal with US taxes the best way possible. Plus, we added some extra tips on saving money, so stay tuned for that as well.

Do Americans living abroad have to pay taxes?

The short answer to this would be yes, absolutely. Every American citizen must file a US federal tax return and pay US taxes, no matter their location. So, it is something you cannot avoid, as long as you’re an American citizen. You’re still under the same rules as any other US citizen, you’re just in a different location.

The only effective way to avoid tax payment is to renounce US citizenship, or give up on your green card. Either way, you’ll lose your status as a citizen of the United States, so you need to do some thinking before taking this big step.

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Renouncing your US citizenship

The first and main way to avoid tax payment is to simply renounce your US citizenship. That way, you’ll no longer be a US citizen, thus the country won’t be able to tax you. But, is it worth the trouble? Once you renounce your citizenship, you’ll be free of paying, but you’ll lose some other benefits that come with owning it. For example, you’ll lose your right to own a bank account in most of the US banks, because the one main thing that banks ask of you is to have valid citizenship, and occasionally they’ll ask for a copy.

If you’re unable to provide that copy for them, they have the right to close up that bank account and you may lose some of the benefits you are used to. So, before even thinking of renouncing US citizenship, you should first consult with your accountant, lawyer, or specialized tax firm and find a solution for the possible consequences. If you still opt to renounce, we recommend you transfer your money to an international bank.

What will happen if you simply avoid taxes?

Avoiding taxes is a serious crime, and we definitely advise you against it. There are some serious consequences that come with this, and they depend on several things. Usually, you can face penalties, interest costs, and even charges and jail time, if the sum is big. But, the US is flexible in terms of Americans living abroad, and only if they weren’t aware that they’re supposed to pay taxes when outside of the US. no matter how many years of taxes you’ve missed, the IRS will only make you pay the last three years of federal task income. It is an easier, and much more effective way to make expats more compliant.

Taxes USA

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Other ways to save up money when moving abroad

Get your visa and documents sorted out

If you consider moving abroad, you need to get things settled back home first. For starters, get all your documents and your visa sorted out because it will cause some issues with your stay and it can be a great financial burden in the future. If you’re filing for a student visa, provide all the important documents from your university, and the same goes for a working visa. Make sure to have all the original documents with you, and leave a copy or two to people you trust back home.

Save beforehand

Save enough before even considering moving. You need to have enough to last you for at least six months after moving abroad because this is the period where you’ll settle down. Also, expat depression is a thing that can really throw you off track, so you should be prepared to leave comfortably till you adjust. Cut back on coffee dates, take-outs, and use public transport for a while. Before you know it, you’ll save tons.

Find a Remote Job

Find a job and a place to live before leaving your home country. The best option in this case is to find a remote job that you can keep before, during and after you move. This will help you earn continuously and you won’t be losing money. If you are planning to get there and then search for a job you might get in debt. Join social platforms, make professional profiles and start searching for a job before departing. Lately, remote jobs are thriving, and people are making some serious money online, so make sure to check them out. And if this is the case with you, make sure you are relocating to a place where stable internet connection is available. Unfortunately, there are still some corners of the world that have poor internet service and internet blackouts are possible. And well, even if you don’t see yourself working from home, remote jobs can be a great side-hustle or temporary option that will bring that extra cash without taking too much of your time.

Good Luck!

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