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The U.S. State Department estimates that as many as 6.8 million U.S. citizens live abroad. A significant portion of these people also work in another country.
These expats face different legal concerns than those citizens who work and live within the territorial boundaries of the United States. Here are some suggestions and legal issues for American citizens working abroad to consider.
Help for Expats
· Get to know your new country. Familiarize yourself with the local culture, political climate, and geography of the area, and as well as what civil liberties and political rights foreign residents possess. Identify any safety concerns specific to the region. Also research the availability, quality and eligibility for medical care, and consider health insurance to cover private treatment and medical evacuation to the United States if an emergency occurs.
· Understand the laws. Anyone considering settling or living for an extended period abroad should seek professional legal advice beforehand. For example, is your trust, will or power of attorney legally enforceable in your new home? Also understand the legal enforceability of any contracts you sign. You should not assume that U.S. law necessarily applies. Familiarize yourself with the local traffic laws and licensing requirements if you intend to drive.
· Ensure that you are working legally. If you are planning to work abroad, ensure you are legally authorized to work and live in the country. Immigration and residency laws differ greatly from country to country. Your employer should be able to assist you in this process. If dual citizenship is a possibility, consult with counsel and carefully analyze the implications of taking such a step.
· Pay your taxes. U.S. citizens are responsible for filing U.S. federal income tax returns while living abroad. If you live and work outside of the U.S. and its territories, your tax return filing due date is automatically extended to June 15; however, any taxes owed still must be paid on the April due date to avoid penalties. The U.S. Internal Revenue Service has comprehensive information on how to file your taxes from abroad, the regulations and procedures you must follow, and a wide variety of forms and publications to guide you through the process. See IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. Also, be aware of any tax treaty that may reduce or eliminate your particular tax obligations. Finally, the United States has agreements (so-called “totalization agreements”) with certain countries that eliminate dual Social Security taxation. These agreements need to be considered when determining whether employees are subject to U.S. Social Security and Medicare taxes, and how your future benefits may be affected.
· Understand reporting requirements. Understand the Foreign Account Tax Compliance Act and the reporting requirements imposed by the Financial Crimes Enforcement Network Form 114, Report of Foreign Bank and Financial Accounts. Also, if you transport currency or monetary instruments abroad or back to the United States, you will need to file the appropriate report.
· Know if the Affordable Care Act applies to you. U.S. citizens living in a foreign country for at least 330 days in a 12-month period are not required to get health insurance coverage under the Affordable Care Act for that 12-month period. Uninsured citizens living abroad who meet this definition are not required to pay the fine that other uninsured citizens may have to pay. U.S. citizens who are bona fide residents of a foreign country (or countries) for an entire taxable year are treated as having minimum essential coverage for that year.
· Get to know your embassy or consulate. Your U.S. embassy or consulate can provide you information and support, including passport services, emergency services and assistance with children’s issues including adoptions. U.S. embassies or consulates assist with births, deaths, marriages and divorces involving U.S. citizens abroad. The federal benefits units in certain embassies and consulates assist citizens in applying for claims, processing name and address changes, applying for Social Security cards and other services. Finally, consider enrolling in the U.S. State Department’s Smart Traveler Enrollment Program, where your contact information is stored, enabling the State Department to contact you, your family or others in case of an emergency.