A:

Globalization has made working abroad an option for many skilled workers, and the benefits of working abroad can be very enticing. However, bringing money back home from a different country is a complicated and probably costly task that you would be well advised to consider before accepting a position abroad.

If you're set on working abroad, it is to your advantage to warn prospective employers of your residence status in the country in which you plan to work, as well as how long you expect to stay. Although it is impossible to provide advice that suits every working ex-patriot who is moving back home, there are a few guidelines that apply to most countries. They include:

1. Status: Check with your prospective employers to see what your residence status will be if you work abroad, and be ready to give them a time frame for how long you plan to be working overseas. For most nations in the developed world, your residence status abroad has a huge impact on how you will be taxed when you try to bring money back to your home country. If you're changing your principal residence, you may not be required to pay taxes on the money you bring back home. If, on the other hand, your home government views you as someone who worked overseas for a year to earn a very high income and pay minimal taxes on it, it will be more inclined to tax your earnings when you try to bring them home. The more ties you cut with your home country, the less likely you are to be taxed on the money you try to bring back.

2. Skills: If your government views you as someone who went abroad to learn valuable skills or to make an impact on a developing country, you are likely to pay less tax when you return home. Facilitators of international trade and people who improve international relations are viewed favorably by most governments, and they pay lower taxes as a result.

3. Imports/Exports: If your home country does a significant amount of trade with the country to which you're moving, or if your home country will benefit from your working overseas, your government is going to be less inclined to apply a punitive tax rate to your foreign earnings. Your home country will be likely to favor your work overseas if you're increasing exports, importing new technology or bringing back relevant foreign-learned skills.

4. Work Permits And Visas: If your employer is going to be sponsoring your work permit or helping you get permission to work in another country, they're likely in a better position to get you a visa than you are. Most employers have better resources than the average individual for bringing workers into a country. If you have special skills that would make you an asset to your prospective employers (for example, being fluent in a different language than the one spoken in their country), they may be able to make a case for you with their country's government by proving a need for skilled labor found outside their nation's borders.

5. Income Levels: Generally speaking, if you're a highly skilled worker who earns an income significantly above the average in your home country, working for a foreign employer in another country for even more money is going to cost you when you try to bring that money back home. The government will most likely ask you for its share upon your returning home.

As always, it's good to plan ahead. Before you make any firm commitments to work abroad, check with both your federal government and the government of the country where you wish to work to have a good idea of just how much you will be taxed both at home and abroad.

Finally, if you do work abroad, you may feel the effect of a change in the exchange rate. Foreign-exchange risk can be hedged against, and it's worthwhile to consider its effects on your earnings. To learn more about foreign exchange and its effects on the money you make overseas, check out A Primer on the Forex Market.

RELATED FAQS
  1. Why should I invest?

    One of the most compelling reasons for you to invest is the prospect of not having to work your entire life! Bottom line, ... Read Answer >>
  2. Do we pay capital gains taxes on the profit if we sell the house?

    We have lived in our house in Washington state for 4.5 years, but we have only owned it for 1 year. ... Read Answer >>
  3. Is it true that you can sell your home and not pay capital gains tax?

    It is true in most cases. When you sell your home, the capital gains on the sale are exempt from capital gains tax. Based ... Read Answer >>
  4. Should we buy a new house or stay mortgage free?

    I have a house that is valued at $80,000. We would like to move, but because of this market we would break even. The home ... Read Answer >>
  5. What are the key points when getting ready to file for unemployment aid?

    Before filing for unemployment aid, you must be unemployed, have worked in the past, lost the job through no your fault of ... Read Answer >>
  6. Is there a capital gains tax on the sale of our home if we use the profit towards ...

    Since my job reduced my hours and uncertainty of income, we might have to sell our home. We would like to put the profit ... Read Answer >>
Related Articles
  1. Retirement

    Plan Your Retirement Abroad

    A real-world, step-by-step guide to making that dream of retiring abroad a reality – from visas to housing to healthcare and more.
  2. Retirement

    Retiring Abroad: Should I Sell My Home?

    You've decided to retire in another country. What should you do with your home in the United States?
  3. Wealth Management

    Buying a House Before Selling Your Own: Risks and Considerations

    Learn more about the financial risks and worst case scenarios associated with buying a home before selling your current residence.
  4. Retirement

    Going Back to China to Retire: A How-to Guide

    If your family comes from China, it may seem natural to think of retiring there, but it could be difficult to do so unless you know the rules.
  5. Professionals

    Advance Your Career With A Finance Job Overseas

    Many finance jobs have moved overseas, creating exciting opportunities. Find out how to get in on the trend.
  6. Retirement

    What Taxes Do I Owe On Retirement Accounts Abroad?

    If you're a U.S. retiree, but previously worked abroad, here's what you need to know about taxes on foreign pensions and retirement accounts.
  7. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  8. Home & Auto

    Top Tips For First-Time Home Buyers

    Follow this step-by-step guide to make your homeownership dreams a reality.
  9. Home & Auto

    Top Tax Advantages of Buying a Home

    Don't forget these deductions and credits that homeowners can use to reduce their tax bill.
  10. Entrepreneurship

    How to Boost Productivity When Working at Home

    Working from home is on the rise. Here are some tips on how to maximize productivity when working from home.
RELATED TERMS
  1. Corporate Inversion

    Re-incorporating a company overseas in order to reduce the tax ...
  2. IRS Publication 54

    A document published by the Internal Revenue Service that outlines ...
  3. IRS Publication 516 - U.S. Government Civilian Employees Stationed Abroad

    A document published by the Internal Revenue Service that details ...
  4. Retention Tax

    A mandatory tax placed on income that is earned on investments ...
  5. Main Home

    A term used by the Internal Revenue Service (IRS) to define the ...
  6. Economic Refugee

    A person who leaves their home country for a new country, in ...
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center