By Brandon Miller, CFP–
A Venn diagram of romantics and pessimists probably wouldn’t have much overlap, but both groups seem to dream of living abroad. Romantics read A Moveable Feast or The Motorcycle Diaries or Eat, Pray, Love and see themselves leaving familiar shores for more exotic places to call home. Pessimists don’t like the direction the country is headed in and dream of moving someplace cheaper and more in line with their views.
Whether you want to embrace a new country or run away from this one, moving abroad gives you lots to think through, including your housing, banking, and healthcare. Thorough planning can go a long way in making your transition to expat go more smoothly.
One thing many of my clients are surprised about is that Uncle Sam still expects some love come April 15. U.S. citizens need to file a return and pay taxes on any worldwide income regardless of where they reside. Foreign financial accounts must be reported to the IRS, even if they don’t generate any taxable income.
Some other considerations before you start packing:
Will you live abroad all year or just part time? Living overseas doesn’t have to be all or nothing. As a part-timer, you may not need to sell your U.S. house or buy a foreign one. Your current bank may have global partners that let you easily access your money when you’re out of the country. Health insurance is a different story, though, as Medicare, the ACA, and many domestic providers do not cover medical expenses outside the U.S. You may need to get an international health insurance policy if the country where you live part-time does not provide public healthcare that you can access.
Living abroad fulltime generally requires more decisions. Should you sell your U.S. house or rent it out for extra cash? Is it better to rent or buy a home (if possible) in your new country? You’ll most likely need to open an account at a bank where you’ll be living. Does it also make sense to hold onto an American bank account and credit card, as not all foreign banks offer the same amenities? And if your country of choice provides public medical care, should you supplement it with international health insurance for the flexibility to visit private hospitals and clinics?
What type of visa do you need? Your destination and the purpose of your stay will determine what’s required. An entry visa may suffice for students and tourists, while a resident visa may be needed to own property, get work, etc. If you plan to work while abroad, see …….