Expatriates, think and negotiate before you jump

Your Guide to State, Local, Federal, Estate + International Taxation

expatriates, international taxAre you jumping at the fact that you get to travel for work? Or maybe you’re jumping at the fact that you will be qualifying for the foreign earned income exclusion this year or next year and get to exclude a big chunk, if not all, of your earned income (2017 Foreign Exclusion amount $102,100). Either way, you should think before you jump into a contract to move overseas and work. As CPAs, we sometimes like to think tax savings are your biggest savings, but we know that is not always the case, especially with expatriates.

Before signing your next contract, you should really read through the details. What are you getting out of it or better yet, what are you NOT getting out of it? Expatriates really should do their due diligence and research and negotiate prior to signing a contract. Here is a list of some things to inquire or negotiate.

  • Foreign location and culture – What is the country, city like? May be you should have the company allow you to visit prior to committing.
  • Tax rates – What kind and how much tax will you be paying to the foreign country? Is it more or less than what you would pay here (U.S.) and does your company or contract include some sort of tax equalization benefit?
  • Relocation, housing – Is this cost all built into the contract or is there a housing allowance? Do you know how that will affect your tax situation?
  • Travel – Does your contract include travel home? Or does it pay for your family to come visit? (Don’t forget about the foreign earned income exclusion and qualifications about days in the U.S. (Including travel days to the U.S.) when planning travel.)
  • Tax preparation work – That’s a given, right? Everyone consults their tax accountant prior to making decisions. But wait! Don’t forget about your tax preparation work in the foreign country. Is that included or is there a referral or contact to be used?

Some other items to consider are language barriers, medical insurance, visas and currency. Check out this article that goes into a little more detail on all these items and that is too informative to pass up for expatriates. I hope you enjoy the article as I did and get everything you want out of your next contract!

If you have any questions, don’t hesitate to ask us (or your accountant, whoever it may be).

Chris Morrison, CPA