Getting Real: The Transition and Beyond
Don’t pack your bags just yet. The devil, as everyone knows, is in the details. Here are the major issues that you’ll most likely confront when transitioning to a new life. Of course, it’s impossible to anticipate every eventuality, but with a positive attitude and a bit of flexibility, and a little help from a network of resources, you should be able to join the millions of Americans already enjoying a rewarding life somewhere outside of the U.S.A.
Most people have heard of the International Driving Permit, which valid is 150 countries. These permits can be obtained in the United States from two organizations—the American Automobile Association (AAA) and the American Automobile Touring Alliance (AATA). For around $10. What most people don’t realize is that while the permit is valid as long as your driver’s license is, most countries will require that you get a local license within a year of residency. Depending on the country, and even what U.S. state has issued your license, you might only have to take a written test and pay a small fee. Otherwise, you might have to start all over from Driver’s Ed. In Europe, for instance, this process can cost you over $1,500.
Frank
Orosi, Costa Rica
If you come here with a valid driver’s license and you go to the driver’s license facility and you show them that license, they give you a physical, an eye exam and all that stuff, and then they just issue another license.
Moving a pet to another country involves all the hassles that go along with moving humans, plus a few more. Usually, a dog or cat (and other rabies-carrying animals such as a ferret) is required to have its own immigration paperwork. A veterinary certificate of health, which includes rabies vaccinations, deworming, and other measures, is usually required and often the pet must be microchipped, too. Some countries require a lengthy quarantine. Island nations in particular, such as the U.K., Australia, the Philippines, New Zealand, and Indonesia have completely eradicated rabies and don’t need a new case coming through customs, are most likely to quarantine pets, though the U.K. has recently waived the requirement if the owner follows a program which must be undertaken a full six months before the pet is scheduled to arrive. For detailed information, you’ll need to consult the embassy or consulate of the country you’re planning on moving to and get their detailed instruction. A good source for pet entry requirements internationally can be found at www.letsgopets.com.
When you consider what appliances to bring, be aware that there are 13 varieties of electrical outlet configurations in the world, many of them not compatible with others. In most cases, it’s better to purchase adapters in the country where they will be used. Voltage is usually delivered in 110v or 220v-230v AC doses. If your device is not made for that standard, you will also need a voltage converter. Laptop cords have converters built in and the plug cord is removable from the power pack. These are easily available in computer shops in major cities, but if you’re heading into the outback, you’ll need to order it from the computer manufacturer in advance. Other digital devices (camcorders, etc.) are similarly adaptable. Since many of our beloved consumer electronics are chargeable via USB, simply sort out your computer’s power source and the rest of the process connects the same anywhere in the world you go. You’ll find a comprehensive breakdown of the electrical systems and sockets or adapters required at www.kropla.com. The site also covers international television standards, telephone compatibility (hardware and software, mobile and landline), and much more.
With the exception of parts of Asia and a few other “special economic zones” scattered around the world, brand-name consumer goods, particularly electronics, are far cheaper in the United States, often to the extent that you could pretty much cover your plane fare back to the States for particularly high-ticket items.
Also worth keeping in mind is that QWERTY is not the international language of keyboards. While any operation system can “read” a foreign keyboard as if it was a U.S. English type (though a few odd characters and functions might not work right), the actual letters and symbols you see on the keys will be different, often resulting in a frustrating typing experience. This is particularly important with laptops, where U.S.-style replacement keyboards are harder to come by. As for your cell phone, assuming it’s unblocked or jailbroken and of fairly recent vintage, it’s likely tri or quad band and will work with any local SIM card. If it’s any older, it won’t do you any good beyond Canada.
If the laws of probability hold, you’ll be moving (or have already moved) to a place where a saner healthcare system prevails. As for finding an English-speaking practitioner close to you, the International Association for Medical Assistance to Travelers (www.iamat.org) provides members with a searchable database of English-speaking doctors in 90 countries. You can also find a list of healthcare practitioners, facilities and even air ambulance services at your local U.S. Embassy’s website (www.usembassy.gov).
Uninsured Americans who require hospitalization overseas run the same risk of being driven bankrupt as they do at home. Medicare is severely limited when it comes to healthcare services or supplies obtained outside the U.S.. Private insurance companies aren’t much better, unless you requested a specific option that covers you overseas, particularly once you’ve been there longer than a typical vacationer. In many countries, proof of insurance is required before they’ll let you live there. If you settle in for the long haul, and are comfortable enough to entrust yourself to the medical care of your new country, you can look into buying into an insurance plan and probably for a lot less. If you’re lucky enough, you might even be able to sign up with your new country’s national health plan. Until then, you may need a special policy to tide you over. While it’s not advisable to go anywhere without adequate coverage, many countries have decent medical care that’s affordable out of pocket and you find many expats from Southeast Asia to South America paying for their healthcare on an as-needed basis.
Most (but not all) of the firms that will assist you with international coverage are based in the U.K. They include:
NOTE: While insurance policies geared to expatriates and long-term travelers will cover you if you’re sick or hospitalized, some E.U. countries require coverage from a domestically-approved insurance company before they will issue you a residency permit. Be sure to check the health insurance requirement before you commit to any policy or company.
Derek Patterson
For those that require illness/accident/emergency evacuation health and life insurance needs for months as opposed to many years, a Short/Intermediate Term health plan with medical evacuation and accident life insurance is a great option. These plans can be written from as little as five days to a total of two years or more. They are automatic, guaranteed-issue plans—which means “you apply for it, and you get it,” regardless of your medical history. (There are limited coverages, though, for pre-existing conditions.) Prices for a 30–39-year- old male/female are priced anywhere from $0.93 to $1.74 per day, approximately $28 to $52 per month depending on the level of coverage you choose. Those of Medicare/Retirement ages (65—69) range from $3.41 to $6.47 per day or approximately $102 to $194 per month. This type of plan is typically utilized for a Schengen, Work or Long-Stay Visa or other Consulate-required Visa application, but can be used in the long term, being rewritten every two or three years.
Worldwide Annual Insurance plans exist for those residing outside their country of citizenship for at least 50% of a policy year. Limits of coverage are $5 million per person per lifetime. The plans are designed to allow U.S. citizens to come back to the U.S. for up to six months per policy year. We have options as well for unlimited return to the USA without the six-month restrictions and are priced a bit higher. The insured can use a PPO network when in the U.S. and when outside the U.S. they are able to visit any licensed provider of their choosing regardless of network provider affiliation. They come in a “basic version” and a more “comprehensive-style” worldwide plan. These basic plans are lower in premium and have more streamlined benefits for the Expat that doesn’t need the “bells and whistles” of the more comprehensive plans. Prices below reflect including coverage back in the USA or Canada. Premiums are typically about 20% less if you were to exclude USA/Canadian coverage.
Annual premiums for a comprehensive plan are as follows (prices as of December ’10):
• 30–34-year-old male, $500 deductible=$1179
• 30–34-year-old female, $500 deductible=$2108
• 60–64-year-old male, $500 deductible=$5758
• 60–64-year-old female, $500 deductible=$5288
Annual Basic plan premiums as follows:
• 30–34-year-old male, $500 deductible=$1009
• 30–34-year-old female, $500 deductible=$1804
• 60–64-year-old male, $500 deductible=$4929
• 60–64-year-old female, $500 deductible=$4527
Coverage includes: Hospitalization, ICU, Surgery, Emergencies, Transplants, Medicines, Outpatient Services, Maternity, Newborn Care, Adult and Child Wellness, Complementary Medicine, Dental Emergency, Mental/Nervous Care, among others. Coverage for many pre-existing health conditions is also available, but most insurance companies require up to a 24-month waiting period.
In the unfortunate circumstances when death occurs during your trip, have you thought about where your bones will go? The average costs associated with repatriation of mortal remains is around $7,000 but can be as high as $20,000 if you happen to die in a far-off corner of the world. The plans include accidental death and dismemberment coverage, as well.
Optional Equipment
In most nations with a well-developed sense of commerce, a local plan might be available. But what if you plan to travel back and forth to the States? And what if standards of medicine in your adopted land don’t live up to the standards that you feel comfortable with? Costs associated with international evacuations from Europe to the U.S. average more than $40,000, and can well exceed $100,000 in Asia, Africa or South America!
Emergency medical evacuation programs can give you peace of mind. There are even programs available that will guarantee transport to your hospital of choice (world-wide), waive any limits to covering pre-existing conditions and also have no restrictions to the monetary limits of the program benefits. Some even cover both international and domestic transports. It is “door-to-door” medical care. These programs are not insurance but rather a membership program—no additional fees or co-pays required.
Rates can run from as low as about $200 per year to over $500 per year for an individual, depending on whether they spend most of their time domestically or internationally. There are also plans available for short-term trips that cost from $70 to $150. All ages are eligible, even up to age 85 with certain restrictions.
For Extreme Expats Only
Traveling to Iraq, Rwanda or the Gaza Strip? If you don’t currently have life insurance, it may be harder than you think to acquire a conventional life insurance policy. As of December 2010 there are over 60 countries that are recognized “underwriting hotspots” for war and terrorism—that equates to 31% of all countries around the globe!
Hot Spots: Afghanistan, Algeria, Angola, Azerbaijan, Burundi, Central African Rep., Chad, Colombia, Congo Republic, Cote D’Ivoire, Dem. Republic of Congo, Egypt, Eritrea, Ethiopia, Georgia, Guatemala, Guinea, Haiti, Indonesia, Iran, Iraq, Israel, West Bank (Israel), Gaza Strip (Israel), Jammu (India), Jordan, Kashmir (India), Kenya, Kosovo, Kuwait, Kyrgyzstan, Lebanon, Liberia, Madagascar, Malaysia, Morocco, Nepal, Nigeria, Pakistan, Philippines, Qatar, Russia, Chechnya, Rwanda, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sri Lanka—North and Eastern Provinces, Sudan, Syria, Tajikistan, Thailand, Togo, Turkey, Uganda, Uzbekistan, Venezuela, Yemen, Zimbabwe.
The solution is high-limit accidental death insurance, referred to as AD&D. It can also have a dismemberment clause added and a special rider for travel to those 60 “hotspots” around the globe. These can be written for durations as short as two weeks to one-year terms or longer.
Worried about terrorism? Get a terrorism medical insurance rider on the policy. This has become commonplace since 2001. If an insured person is injured as a result of an act of terrorism, and the insured person has no active participation in the act, the plan will reimburse eligible medical claims subject to a $500,000 lifetime maximum. Pricing can be as high as 25% over the normal premium. Claims incurred as a result of nuclear, chemical or biological weapons or events are never covered.
There are also terrorism life insurance riders. The limitations of coverage are very similar (not covering nuclear, chemical or biological weapons or events), and it will additionally not cover those individuals who are “actively participating” in acts of war or terrorism (obviously).
One last thing to consider strongly when traveling to say, Mexico, Colombia, or Middle East, where it’s not unusual for people of affluence to be abducted on the street and held for ransom, is a policy they call Kidnap, Ransom and Extortion. These types of policies provide not only ransom benefits but also informant money, crisis management services, accidental death, legal liabilities, rehabilitation, personal security consultation, negotiation services, family counseling and more, depending on how extensive you’d like your coverage to be. Costs for a K&R plan are dependent on many factors including net worth, business activities, travel itinerary and previous threats or incidents, etc. The average K£R policy limit of coverage is usually around $i million and for one year of coverage for an average case starts at about $1000 and goes up from there.
Do you want to bring along your desktop computer, your wardrobe, your grand piano or your Prius? Depending on how long you’re going away for, and your attachments to the material aspect of your world, you can choose to sell it, store it, or give it away. And whatever’s left has to fit in your suitcases or it must be boxed and shipped. You can find international movers in your local yellow pages or at hundreds of sites on the Internet. But beware. It’s a minefield out there, and moving scams make up a hefty portion of the complaints filed with various consumer protection organizations. One solution is to only deal locally, with a mover whose place of business you can verify. There are also a number of organizations that certify movers in the United States. These are:
There are many ways to move your stuff, none of them cheap. Depending on how much you’re willing to shell out, you can have a bunch of burly movers show up with packing material, and inventory, pack and ship your goods while you sit on the last remaining chair and sip tea, and the same in reverse can be had at the other end. The more work you’re willing to do yourself (short of actually loading it onto a container and sailing the vessel to where it’s going) the more you’ll save.
Regardless, unless items are particularly valuable or indispensable, you’re probably better off letting them go and re-accumulating once you’re settled.
Remember, while your basic personal and household items can be brought over without any flags being raised, import taxes may apply to unused items, very valuable items or items in excess of what that country deems sufficient for personal use. Cars can be problematic—in Costa Rica, for instance, imported automobiles are levied a tax equal to the value of the car itself. Firearms, if you own any, probably will be banned. For a list of import rules, you can contact the embassy or consulate. A fairly comprehensive list can also be found at www.world-widemovers.com. The site also has a database of international movers searchable by location, a packing checklist, and many other moving-related resources.
Art F.
Sihanoukville, Cambodia
When I came here, I had sold almost everything I owned. Everything else got packed into two suitcases or stored in my kid’s attic. Shipping to Cambodia is expensive and undependable. Things seem to get “lost” easily. You may also have to pay “duty” or “tax” to the local post office—again nothing more than extortion.
Leaving the country with children adds a few new dimensions to the process, nor does having them overseas make it less complicated. How will the move affect them? Certainly, the younger they are, the easier it will be to adapt to life in another culture. As for their education, this presents a problem, particularly in places where English is not the spoken language, or in less-developed countries where the standards are simply not up to par. You can always home-school, of course, or do what most expats do and educate your kids at an American or international school. If the location you’re moving to has any kind of American expat population, then more than likely there is a school for the children. The U.S. Department of State Office of Overseas Schools supports hundreds of schools around the world so that overseas government employees can have a place to send their children. A list can be found at www.state.gov.
For more choices check out: Worldwide Classroom: www.worldwide.edu
Because of an alarming uptick in international abductions, families where the child is not in the company of both biological parents may be subject to more intense official scrutiny, and often consent letters from either parent, divorce decrees, death certificates and other documentation of legal guardianship will be required.
Bruce Epstein
Orsay, France
Those parents with the means send their kids to one of the International schools; the rest of us have to tough it out. Our daughter, who was in second grade and spoke no French when we arrived, went to a Catholic elementary school (even though we’re not Catholic) because the local public school didn’t want “another immigrant.” For junior high, a nearby school was starting a bilingual section. By high school our daughter spoke fluent French. But she still had a very rough time. One of her teachers was so prejudiced that she refused to give any extra help, saying “ask your parents,” knowing full well that we wouldn’t be able to help. In the end, she was so turned off by the French education system that she didn’t even consider staying here for university; she went to Canada (Toronto) where she received a bilingual bachelor’s degree and is now happily living and working.
Many places allow foreigners to open bank accounts and some even allow you to keep your balance in U.S. dollars (this can be good or bad depending on where you think the exchange rate is headed). In other cases, some level of residency is required, which means you’ll have to run your financial life from an account in the States. If you’re paid from the U.S., try to set up a direct deposit arrangement, otherwise you’ll have to arrange for someone to deposit your checks for you. Most banks offer online bill pay, allowing you to pay bills over the Internet. Credit card companies are happy to bill you that way, too, and their exchange rate fees are usually better than changing the dollars yourself, so using them wherever possible solves a few problems. PayPal is another way international payments are made and collected. For the rest of your legal tender needs, ATMs have reached most corners of the world. Some U.S. banks have signed ATM-sharing deals with overseas banks, meaning you can use them without paying the often exorbitant fees per each use. If you need to know what your money is worth, you can find out the current value of any currency against the dollar or any other currency at www.xe.com. Many former Americans choose to keep two accounts—one locally, and the one they had in the U.S. Expect banks to charge a fee for wire-transferring money between accounts (around $25) as well as a percentage on the currency conversions when the money is received (usually around 3%, the difference between their “buy” and “sell” rate). If you are moving large sums of money and often, it pays to open an account with a currency broker, who will generally charge less both in transactions and in conversion fees. They are many out there and their deals vary from company to company, as do their reputations. You can find an online directory and reviews at www.forexfraud.com.
NOTE: Because of the prevalence of money-laundering, a host of U.S. and international agencies keep a close watch on money moving across borders and some countries place limits on how much currency can be imported or exported. Also, be aware that the IRS requires U.S. citizens to declare on every tax return their holding in a foreign account if it exceeded $10,000 at any time during that year. Stiff penalties are levied for those who don’t comply.
Marshall Creamer
Hong Kong
I have a local bank account in Hong Kong, and I also have an account in the U.S.
Setting up the account here in Hong Kong wasn’t a very hard process. I did a lot of research on this before I left the U.S. so I was able to have a copy of some bills with my U.S. address on them, and then I just needed my U.S. passport and housing contract in Hong Kong. (My company put me up in a Serviced Apartment for one month; I just used that address, and then changed it to my work address later.)
I kept my U.S. account because I have some investments set up through them, and I have a credit card there that I have a small remaining balance on, as well as a few monthly re-occurring bills that are automatically deducted from my checking account.
I just send money back to my U.S. bank account so that I have enough money to pay the bills I still have. I save most of my money in a regular bank account here in Hong Kong then make transfers back to the U.S. every few months.
The overseas real estate game offers opportunities to purchase property at a fraction of what you might pay even in the collapsing U.S. market. For some, this means they can afford a dream home or condo. Profit-minded Americans can look to healthier markets abroad where they can buy properties and rent them out and/or flip them for a profit.
Before Getting Into the Game:
Know the Ground Rules: As in America, the real estate business in any country is likely to be more complicated than any layman can sort out. But you should get a handle on a few basics. Many countries require that all property be at least 51% locally owned, though Free Trade agreements have been slowly rolling back those requirements. Often, foreigners resort to forming a holding company with a local citizen named as shareholder to purchase their property. Some countries, like Mexico, have Eminent Domain laws wherein property is not technically sold, but given over in 99-year renewable leases. Centralized real estate listing databases are not the norm outside of the developed world, which means finding your dream property can involve a lot of shoe leather on your part or hiring an agent (reputable or recommended, preferably), who has his/her ear to the ground in the area you’re interested in.
If you feel confident enough to go it alone, you can probably save money even if you hire legal help with the contract work. In some countries, Germany for instance, the government will make you hire a notary, who is essentially an attorney, at a fixed fee to oversee the contract from creation to signing and take care of land registry placement and other technicalities. While they will not advocate on your behalf, they will make sure that the sale itself is legal and above-board, that funds are secured before the property changes hands, and answer any legal questions you may have.
Mortgage: Mortgage lending overseas seldom comes near the freewheeling extravaganza it was in the heyday of the U.S. real estate bubble and is rarely an option to newly-arrived foreigners, though it is an option in many countries for established residents with an appropriate and documented work and income history. Most Americans of modest means who buy property overseas usually use the equity from selling their current home in the States. Condos and houses can sell for as little as $50,000 or less in parts of Eastern Europe, Latin America and Southeast Asia, and a lot of people simply pay cash.
Beware of Scams: Nothing attracts grifters like real estate. The Internet is cluttered with “Buy Property Overseas” come-ons of dubious merit. Local listings and sites are a better source but nothing can replace a personal visit and asking a lot of questions to get a clear idea of what properties are worth and how much people are generally paying for them. These will likely be far less than what you might gather surfing the ‘net.
J.M.
Pushkin, Russia
We own a 1500-sq-meter plot of land on which we have built a 300-sq-meter paid-as-we-went house. Russian property titles are actual ownership, not long-term leasehold-erships. And there’s no regularly-recurring property taxes on your residence—so unlike in the U.S., you don’t have to pay rent to the government for the privilege of getting to claim that you “own” your house.
Kelly Kittel
Tamarindo, Costa Rica
We own one lot on a large finca that we used to cooperatively own with others but sold our share and just have that left. It’s for sale. Bought it years ago because of a family connection. You have to have a corporation here so that is one of the machinations of owning anything, even a car. Love the part of the country where our land is (S. Pacific) and hoped to build eventually but there are no schools near there for the older kids. Not as big of an expat community there as here because the main highway to there wasn’t paved until just recently. Now I expect it will grow. Much more lush and rainforesty there than here in the north Pacific where it is dry, savannah-like. So more birds and other wildlife there.
I would NOT recommend buying anything (no matter where you are going in the world) until you have lived there for a year. The seasons here change dramatically and you might buy in the dry season only to find out your lovely home is inaccessible in the rainy season! Roads are a big issue and most folks don’t see them in their full rainy-season glory when you can be up to your doors in mud. In general, it is best to rent and get a realistic feel for the area before buying, and there are lots of rentals here. Now it might be true that you would never visit in rainy season anyway, but still, you should know what it is like. There is always the concern of leaving any place unattended for any amount of time that you will have to reckon with. So it may be that your caretaker or property manager can’t get there though the mud either.
I have friends who have retired, bought their dream condo during their first or second visit here (in the dry season), and now regret buying. After spending a year or two getting it all fixed up the way they like it and getting a feel for chilling out there, they wish they had the freedom to rent here and there around the country and beyond instead of being tied to their condo. And condo life is not always for everyone, so best to rent one and see what it feels like being stacked on top of each other and attending an owner’s meeting to see if everyone can agree on anything from paint colors to community grills.
Another issue in CR is that you can’t own in the maritime zone. I don’t know all the particulars on how many feet from sea, etc. but usually to “own” a house like the one I am in means you are only leasing the land from the govt. for an extended time.
Ande Wanderer
Buenos Aires, Argentina
I was going to rent an apartment but I discovered that the rental market is saturated and it is practically impossible to find a reasonably priced apartment without a “guarantee” that says you already own property in the city. Believe it or not, it is much easier to buy if you have the money. So I bought property for the first time in my life (and I’ve never even bought a car worth more than $1000).
I found the apartment on a website called soloduenos.com (“Only Owners”). I bought my place directly from the owners in 2004, which at that point was still challenging as I spoke Spanish like a five-year-old on tranquilizers.
It is a 61-square-meter, two-bedroom walk-up apartment in San Telmo, the Greenwich Village of Buenos Aires. The most complicated part was the actual financial transaction because, like most owners, the people wanted to be paid in cash. I didn’t want to use Western Union, pay a 3% fee and have to walk the streets with $29,000—someone I know here was robbed doing just that. Instead I wired the money into their bank account. The bank’s policy was that the money had to be converted money into pesos, and then back to dollars, with heavy fees. No one wanted to lose so much money in the currency conversion. In the end we decided to split the bank fee but I had to play a little hardball at the office of the escribana doing the paperwork.
David Morrill, Partner: Cuenca Real Estate
Cuenca, Ecuador
Buying property in Ecuador is relatively straightforward. Foreigners have the same rights as locals to own property and you don’t need be a resident to buy. Ownership is simple and outright. It’s important, however, to have an attorney guide the foreign buyer through the process, do a title search and handle the money.
There are of course many downsides to buying here. There is no MLS (multiple listing service) system so price comparisons are harder to make. Many real estate agents are not licensed although there is a licensing process. There are often wide spreads between asking and selling price.
A buyer who does his or her due diligence and uses an attorney recommended by other foreigners will do fine.
Unless your travels take you somewhere truly primitive, you’ll never be too far from an Internet café. These places tend to be ubiquitous, not only in tourist centers, but even in poor Third World communities, where few have the luxury of a connection at home and thus must gather there to email friends, surf the web and run their escrow fortune and lonelyhearts scams.
If it’s just you and your laptop, wireless is available at over 296,000 locations in 145 different countries around the world. The United States is still the leader with China in second place, but the rest of the world is catching up quickly. Searchable directories of Wi-Fi spots can be found at:
The most exciting development for expatriates is the advent of VolP (Voice-over Internet Protocol) which allows telephone-like conversation over the Internet, anywhere, often for free. These are bundled along with many Internet messaging services like AOL, MSN or Yahoo! For an overwhelming majority of 21st- century expatriates, Skype is part of their vocabulary, their hard drive (and mobile device applications) and their life. This free, downloadable program (www.skype.com) works from any computer with a high-speed connection and a microphone (though a headset or USB telephone is recommended). Like any Internet messaging program, calls between Skype members are free. Skype also allows you to call any phone number at a reduced rate or on a variety of unlimited monthly plans, usually with voicemail, call forwarding, call-waiting, caller ID, email and SMS notification and more. They’ll even rent you a dedicated phone number so you can receive calls from outside phone numbers like any other telephone—a great way for those running a U.S.-based business from abroad to have a U.S. presence by having a U.S.-based number. The phone will actually ring at your computer wherever you are, as long as you’re connected to the Internet.
Depending on how much you depend on your computer to be your telephone, you could venture into the slightly-techie world of VoIP beyond Skype (and even Vonage, the other, more business-upscale, well-known VoIP brand), and find far better deals and often far better and more reliable connections. For an up-to-date list of what companies are offering and where, you can check out www.voip-info.org where they keep a wiki page that continually tries to stay abreast of the VoIP scene internationally.
Except for the purposes of delivering high-speed Internet to your residence, you will probably make do overseas, like most people who live there do, with a mobile phone. Indeed, the poorer a country is, the more cell phones they seem to have. The situation varies around the world, but generally, if you have established some kind of residency, you can usually buy a discounted monthly plan. Otherwise, you’ll have to go prepay. This can be cheap in Eastern Europe and Southeast Asia, but can easily run you hundreds of Euros a month in a place like France. Leave your plan back in the U.S. Your worldwide roaming plan is useless unless you truly do roam the world. The costs are much steeper than a local prepay and few people in your host country are going to pay to call a U.S. phone number (particularly from their mobile phone where typical plans would charge exorbitant per-minute fees) just to invite you to dinner.
If you insist on going low-tech, every country has a bewildering variety of cheap international phone cards for sale. Rates to the States run as low as .04 a minute for parts of Europe and Mexico, and even calls from as far as the Asian steppes rarely run more than 0.35 a minute. Another solution is “international callback.” When you register with an international callback company, you get a phone number to dial from anywhere in the world. The computer on the other end doesn’t answer the phone (so you pay no local phone charges), but immediately calls you back and gives you an open dial tone. Most international calls done that way are charged at pennies a minute. Calling the U.S. from Beirut on GlobalTel (www.globaltel.com), for instance, runs about 0.15 a minute and one from Paris would come to roughly .07. Before you sign on the dotted line, keep in mind that many countries have banned international callback due to concerns that the service is not licensed or regulated—which is to say, it cuts into telecom profits.
The lowest of low-tech is of course snail mail. The post office doesn’t mess with forwarding mail overseas, so you’ll need to turn to more privatized entities—i.e. the mail forwarder. The private mailbox service at your local shopping mall might offer overseas forwarding. Otherwise, you can try Access U.S.A. (www.myus.com) or U.S. Global Mail (www.usglobalmail.com). Whichever method you choose, you will receive a U.S. street mailing address, which you can give to the post office so all your mail can be forwarded there. You can also use it as your “permanent” U.S. address. All mail is then forwarded to your overseas address. Depending on what level of service and speed you prefer, rates run from $35-$50 per kilogram of mail. Most mail forwarding companies have repackaging services so you can have all of your packages sent at once to save money.
Name Withheld by Request
San Miguel de Allende, Mexico
Gringos who move here get a Texas mailing service address. This is so that you can buy things online etc., and the mail is forwarded from Texas. There are many services that do this. Mine charges 17% of the value of whatever I purchase online, and one dollar per pound. I pick up my mail and packages. They will deliver if requested. This Texas address is on my credit cards and bank accounts now. This is how it’s done here.
Vina Rathbone
Buenos Aires, Argentina
Thank God for Skype and online banking. Skype keeps me connected to my friends and family for free, and my online banking helps me manage my U.S. bank account while I am here. I also purchased a Blackberry while I was here, only for the Blackberry chat function, which allows me to text for free with friends internationally.
Marshall Creamer
Hong Kong
The Internet is the number one tool for helping people living abroad. I can manage my finances back in the U.S. with online banking, I can call my parents using Skype and other similar services, I can translate Chinese websites using Google...I’m pretty sure I talk to my parents more living in Hong Kong than when I was in Chicago...I think making a big move like this really helped to motivate them to get a little more tech-savvy, my parents are talking about getting smartphones and Skype on their cell phones so we can chat.
Also, Facebook allows me to keep up with what’s going on with my friends, and I’m able to share pictures and what’s going on with me to my friends and family.
Bob Hand
Rio Grande do Sul, Brazil
The Internet has been available in every city, large or small, which I visited in Brazil. I stay in touch with people in the USA via e-mail and Skype. I have high-speed service here and use Skype regularly with both audio and video. I purchase items via the Internet, both from the USA and Brazil. In my work, I communicate via e-mail with companies in China. I posted my résumé on a local website and that was how I obtained my consulting work. So the Internet is a key factor in successful living in Brazil.
Even if you’re hell-bent on renouncing your citizenship and escaping the clutches of the U.S. Internal Revenue Service, paying taxes (or at least filing returns) is going to be a reality for the next couple of years, if not the rest of your life. You can choose to do their tax returns yourself. Those with adjusted gross incomes less than $58,000 annually can also e-file for free using ‘freefile’ on the IRS’ (www.irs.gov) website. Those with higher incomes can use commercial software, but be sure to verify that they can be used with foreign addresses, since not all of them can. But as it is Stateside, many choose to use a professional accountant or tax preparer whose knowledge of the system and all available deductions are often worth more than the nominal fees they charge for their services. Your former accountant may arrange with you to do your taxes even after you’ve left the country, but be aware that a fellow expat tax professional is likely to have more experience with your kind of return. Obviously, referrals are the best way to choose one. You can also find them advertised on expat bulletin boards, and often the U.S. embassy or consulate abroad provides a list of local tax professionals on their website.
Mike Schiop, CPA MST, CPA Abroad LLC
London, U.K.
Americans move abroad for various reasons; some are entrepreneurs, some are artists, some are teachers, some are students and some retired. They are rich, poor and everything in between. And regardless of how they feel about the United States, most of them are not ready to renounce their citizenship.
For all those people, the overwhelming majority of Americans abroad actually, your tax situation, at least as far as the IRS is concerned, is pretty straightforward—well, as straightforward as tax-related matters go, anyway. And of course there is also the question of your tax liability to the country where you currently live, but that obviously varies considerably, depending on the country, and for that, you’ll have to seek competent tax assistance locally.
The general ‘American abroad’ tax situation
As far as the IRS is concerned, Americans abroad are under certain obligations, such as filing a tax return reporting their worldwide income every year. This is not too much different than what you would do if you still lived in the U.S. If your income exceeds your Federal standard deduction and exemption amounts for the year, you must file a tax return.
In addition, April 15 is the tax deadline, no matter where you live. While the paper filing (or e-filing) deadline of June isth is true for those whose tax home is outside of the U.S., the tax payment deadline is still April isth, after which you incur interest and penalties for any tax owed. But if you’re not going to owe any tax, then June isth is fine.
If you cannot file your tax return by April isth, or by June isth, respectively, you can apply for an extension by filling out Form 4868, in which case, you’ll have till October 15th. You must file this form and pay any tax that you owe by April 15th. For those who live abroad, you can check the box ‘out of the country’ on the form itself and if you owe no tax, you can file it by June 15th.
Even if you owe no tax for whatever reason(s), you still must file a return!
Some taxpayers living abroad cannot reasonably file their tax return by October 15th—for example, high-net-worth individuals who have interests in partnerships and need to receive schedules K-1. As the partnerships have an extended deadline to September 15th, the taxpayers may not have enough time to gather all of their documents before October 15th. Thus an additional two-month extension can be applied for by writing to the IRS to extend their filing deadline until December 15th. Again, please note that these extension deadlines apply to the filing of your tax return, not paying the tax that you owe, which is due by April 15th. When the tax return is filed, it is advisable to have a statement attached that reads “Extension of Time to File Tax Return Pursuant to Treasury Regulation 1.6081-5(a)”, which notifies the IRS that you are a taxpayer living abroad.
For those who own a foreign business either wholly, or via an interest in a foreign corporation or partnership, they must report them on certain Information Forms, such as 8858, 5471, or 8865.
Americans living abroad may file their tax returns by claiming the Foreign Earned Income Exclusion, Foreign Tax Credits for taxes paid in the foreign jurisdiction, or a combination of both.
The Foreign Income Exclusion excludes $91,500 of income earned abroad and it remains in effect for that year and all later years until you revoke it. If your income is below that number and you file under this claim, you will pay no tax. In addition to the Foreign Earned Income Exclusion, you can exclude or deduct a portion of your housing costs, if they are more than the U.S. Government allowance of $14,640 per year, but less than the yearly limit for the location in which you incurred them. The standard limit of housing expenses is $27,450 for 2010, but depending on your location, it may be greater. If you live in Berlin, your limit is $56,300 instead of the $27,450, so you can exclude a greater amount of housing costs if you qualify.
The Foreign Tax Credit can be advantageous to high income-earners abroad, since it credits you for the amount of tax you pay to a foreign jurisdiction against your overall tax bill in the U.S. So, in a “plain vanilla” example (a situation that does not include any kind of reductions in your foreign tax paid, because this can also happen for various reasons), if your tax obligation to the IRS comes to $11,500 but you’ve already paid the equivalent of $9,500 in local income tax, then your payment to the IRS would only be $11,500 minus $9,500, or $2,000. If the foreign tax rate is higher than in the U.S., you build foreign tax credits. As a CPA familiar with the U.K. and Romanian tax systems, I see both sides of the coin.
U.K. example: John lives in the U.K., earns 200,000 GBP from his employment, and has no other sources of income. He pays a graduated U.K. tax of 20% and 40% on income up to 150,000 GBP, then 50% on the rest. Clearly he pays more U.K. tax than the highest U.S. tax rate of 35%, but he can only claim credit for tax that he owes to Uncle Sam. The rest of the tax paid becomes a credit that he can either carry back or carry forward, depending on his circumstance.
Romania example: Dorothy lives in Romania and earns the equivalent of $150,000, but only pays 16% tax on her salary. Her best choice would be to exclude $91,000 worth of income, then calculate the tax owed on the remaining amount after taking into account the Foreign Tax paid in Romania.
If you choose the Foreign Earned Income Exclusion one year and only the Foreign Tax Credits in the next year, you will not be able to claim the Foreign Earned income exclusion for the next five years, as it is deemed revoked. Careful planning is imperative to get through the myriad rules and regulations, especially if your income exceeds $100k. As mentioned above, tax planning is very important, as you want to maximize your foreign tax credits and improve your tax position. It is not easy, and it may be a good idea to consult a tax advisor who is familiar with international tax.
OK, let’s talk about your assets.
Americans who have foreign bank accounts, which exceed $10,000 in the aggregate, must report them on Form TDF 90–22.1, Report of Foreign Bank and Financial Accounts (FBAR). The FBAR form must be received by the Treasury by June 30th, and this deadline cannot be extended. The FBAR seems simple, but extended regulations have added additional filing requirements, so read the instructions carefully.
In recent years the IRS has made efforts to bring taxpayers that have used undisclosed foreign accounts and undisclosed foreign entities to avoid or evade tax into compliance with United States tax laws. The IRS created the Voluntary Disclosure program, whereas taxpayers with undisclosed income from offshore accounts, such as foreign banks, could come forward and get current with their tax affairs.
Renouncing your citizenship.
For those who do want to renounce their citizenship, they must know that they will renounce all of their rights and privileges and the renunciation is irrevocable. There is a legal step, wherein you need to formally renounce your citizenship, and a tax step, wherein you need to comply with the IRS requirements.
You must file a dual status return for the year during which you expatriate, which means that you file a resident return up to the date that you expatriate and a non-resident return for the rest of the year after that date. You also need to file Form 8854 with the IRS and satisfy their tax requirements. The expatriation rules apply (with certain exceptions) if you expatriate after June 16, 2008 and:
1. Your average annual net income tax for the five tax years ending before the date of expatriation is more than $147,000 (if you expatriate in 2011).
2. Your net worth was $2 million or more on the date of your expatriation.
3. You fail to certify on Form 8854 that you have complied with all federal tax obligations for the five tax years preceding the date of your expatriation (Certification Test).
If the above rules are met, you are considered a covered expatriate and will fall under the rules of section 877A, which imposes income tax on the net unrealized gain in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). This applies to most types of property interests you held on the date of your expatriation, with a few exceptions. The net gain from the deemed sales that you otherwise must include in your income is reduced in 2011 by $636,000, but not below zero.
However, just because you do not meet the above income tax liability and net worth threshold, you must still pass the Certification Test in #3.
I personally do not advise my clients to renounce their citizenship. But if this is what you want to do, and your net worth is such that it would make any kind of financial sense to even contemplate it, then it is best to consult a law firm specializing in these matters before to get a precise picture of how it would affect your particular circumstances.
extradition (eks’tr
dish’n)
n. Legal surrender of a fugitive to the jurisdiction of
another state, country, or government for trial.
A note to would-be fugitives: before you get any ideas, be aware that nobody pursues extradition with greater zeal than Uncle Sam. The United States currently has more bilateral extradition treaties than any other nation, over 112 at last count. We negotiated our first in 1794, with, surprisingly enough, our then-enemy, Great Britain. Most recently, Antigua and Barbuda, Barbados, Grenada, India, the Philippines, Sri Lanka, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and Zimbabwe all signed on to America’s “Nowhere to Hide” doctrine. Older treaties are constantly being re-ratified to close any possible loopholes.
For the United States to have one of its citizens (not only citizens, but anyone who’s committed a crime within its borders) delivered back to the bosom of the homeland, numerous conditions must apply, most notably that the crime is severe enough to warrant the hassle (what constitutes “severe” is open to interpretation), that there is clear-cut evidence of guilt, and that the act committed is considered a crime in both countries (Vietnam-era draft dodgers weren’t extradited because Canada had no mandatory conscription, but anyone ducking out of their military service in Iraq or Afghanistan is extraditable because both countries have laws against desertion).
Mexico, Canada, and most European nations will not allow extradition to nations with capital punishment unless they are assured that the death penalty will not subsequently be imposed. Usually, the United States simply agrees not to fry the perps should they be found guilty, and back they go to face life imprisonment in America.
In any case, it’s standard operating procedure in most of the world to require that you present your police record before they’ll issue any kind of residency permit. Not surprisingly, most governments feel they have enough criminals of their own and aren’t eager to import any from the United States, or anywhere else for that matter. And you may have also noticed that if the U.S. wants someone bad enough, they don’t bother themselves with the legal niceties.
Lands Beyond Justice:
Countries with No Extradition Treaties with the U.S.
Afghanistan
Algeria
Andorra
Angola
Armenia
Bahrain
Bangladesh
Bantu Homelands
Benin
Bhutan
Bophuthatswana
Bosnia
Botswana
Brunei
Burkina Faso
Burundi
Cambodia
Cameroon
Cape Verde
Central African Republic
Chad
China (People’s Republic of China)
Ciskei
Comoros
Côte d’lvoire
Djibouti
Equatorial Guinea
Ethiopia
Gabon
Guinea
Guinea-Bissau
lndonesia
lran
Korea (North)
Kosovo
Kuwait
Laos
Lebanon
Libya
Madagascar
Maldives
Mali
Marshall Islands
Mauritania
Federated States of
Micronesia
Moldova
Mongolia
Mozambique
Myanmar
epal
iger
Oman
Qatar
Russian Federation
Samoa
Sao Tomé & Principe
Sãudi Arabia
Senegal
Serbia
Sudan
Syria
Taiwan
Togo
Transkei
Tunisia
Senegal
Uganda
United Arab Emirates
Vanuatu
Vietnam
Yemen
Vanuatu
