Preparing to Move Overseas? Read This First
Have you decided to live the #beachlife or the #retired life or just the #offgridlife? Before you move, here’s what you need to know about everything from establishing residency abroad to health care, taxes, visas and costs.
1. Your U.S. health insurance may not cover you.
As soon as you move abroad, you’re in charge of paying for your medical expenses, as your United States health insurance won’t let you submit any assertions, says Elena Jones, a personal finance expert at FinanceJar. Based on the options of your plan, private U.S. medical insurance may only provide minimal coverage for urgent situations outside the country. Medical expenses abroad aren’t covered by Medicare or Medicaid either, says Anna Sosdian, the co-founder of StartAbroad, a relocation specialist company based in Costa Rica.
2. You may not immediately qualify for coverage in your new country either.
While many countries have free public health care provided by the government, don’t expect it to kick in for you as soon as you arrive. Once you become a legal resident, you can sign up for the national health care in your new country. In some countries, including Portugal and Costa Rica, you pay into social security and receive free or inexpensive health care at the point of service, Sosdian says.
3. You can (or may need to) purchase international insurance.
The easiest—although probably the most expensive—route is to purchase international health insurance from a company such as Cigna, GeoBlue or Aetna. You can typically get similar coverage to any insurance you’re receiving in the United States, but you have to watch out for how they treat preexisting conditions—so be sure to read the fine print.
“It’s a good place to start until you figure out your new country’s health system,” Sosdian says. “A lot of expats want to supplement national health care with private insurance as well: In most countries, that will give you access to private hospitals and clinics with shorter wait times for procedure, more English-speaking staff and more modern facilities.”
Kimberly McCauley, a travel blogger living in Istanbul, purchased private insurance that also covers her when she returns for short visits to the U.S. She also had to have insurance to be eligible for a Turkish visa. Much depends on the country, so it’s important to look into the requirements and recommendations for your destination.
1. You have to file U.S. taxes until you renounce your citizenship.
The U.S. is one of only two countries in the world that taxes based on citizenship. Translation: If you’re a citizen, you have to file taxes even if you aren’t living in the country. “That said, you have to file, but you don’t necessarily have to pay anything,” Sosdian says.
2. However, you aren’t taxed on foreign income until you meet a certain cap.
The Foreign Earned Income Exclusion and the Foreign Tax Credit can help you here. If you’re earning money outside the U.S., you don’t have to pay taxes on $112,000 of income.
3. You may be able to deduct foreign taxes.
If you’re paying taxes to another country, you can often deduct those taxes from your U.S. tax bill. Need help? Many nations have American-trained financial advisers with qualifications and experience comparable to American CPAs, Jones says. They are acquainted with the subsequent prerequisites for disclosing the components of offshore bank accounts as well as other tax laws in the United States.
Opening a bank account
1. File the right forms first.
The No. 1 thing you need to know before opening a bank account abroad is the report of Foreign Bank and Financial Accounts (FBAR). This is an annual form required by the IRS for anyone with assets abroad above $10,000. It’s not a big deal—unless you don’t file; then, fines can be up to $100,000, Sosdian says. If you have more money abroad (more than $50,000), you should know about FATCA, which requires US taxpayers holding foreign financial assets to report these, according to the IRS.
2. Research your rights.
Prior to opening a bank account, research your rights. Some banks reserve the right to simply shut down your account if you don’t follow their rules or if they think there is an issue. It’s very important to understand your bank and their regulations.
3. Find out if you need residency—or a residence.
Some countries won’t allow you to open a bank account without a residence permit. Others require at least an address. In this case, you can research which American banks have outlets in your new country to avoid needing to open a new account at all.
Getting a visa
Getting a visa depends widely on the country, McCauley says. For example, Turkey isn’t offering visas very easily at the moment, but this goes in waves, McCauley says. On the other hand, it’s very easy to get a visa in Mexico if you have sufficient pension funds coming in every month or assets proving your financial solvency, says Simona Ksoll, a business strategist and mentor for women over 40 based in Playa del Carmen, Mexico. Panama, Belize and New Zealand are other countries where it’s relatively easy. Often, getting a visa requires you to prove that you have a certain amount of money, says Stephanie Vollmer, a freelance marketer currently living abroad in Germany (she previously lived in South Korea teaching English). The Philippines, for example, requires you to have at least $20,000 in your bank account to live there, Vollmer says. If you’re concerned about getting a visa, speak with an immigration attorney prior to moving.
1. Save up for the move.
Moving costs add up; make sure you set aside what you need for things such as visa and residency applications and housing deposits, which can vary widely by country.
2. Do your research.
Read up on the culture, language, other necessities such as transportation (or will you get a driver’s license?) and even products. McCauley says she brought her American electronics with her, as they’re hard to find in Istanbul. She also brought her shoes from the United States, as women’s shoe sizes tend to be smaller in Turkey.
“Travel bloggers are great resources, especially if you are based in the country they are blogging about, because it is their day-to-day life,” McCauley says. “They will be able to answer a lot of questions for you.”
3. Give it a trial run.
Make sure you live in the new country for at least a month before you make any permanent decisions. Ksoll suggests renting an apartment and living like a local to give yourself the experience and see how you like it.
Photo by simona pilolla 2/Shutterstock
Danielle Braff is a freelancer in Chicago. Her stories have appeared in the New York Times, Wall Street Journal, Crain's Chicago Business and more. She lives with her husband, two daughters, two cats and a dog.
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