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Things to consider before launching a career abroad
A passport sits atop a newspaper hiring ad representing looking abroad for work.
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Bob Moon: When President Obama unveiled his $447 billion jobs package of stimulus spending and tax cuts this week, much of his focus was on making American workers competitive with the rest of the world.
Barack Obama: We now live in a world where technology has made it possible for companies to take their business anywhere. If we want them to start here and stay here and hire here, we have to be able to out-build and out-educate and out-innovate every other country on earth.
If we're buying Kias and Hyundais, Mr. Obama said, we need to be selling Fords and Chevys and Chryslers to the rest of the world.
Obama: I want to see more products sold around the world stamped with the three proud words: "Made in America." That's what we need to get done.
Of course, one of our biggest exports in recent years has been jobs. And now, it seems, more American workers are even exporting themselves. As Marketplace's Adriene Hill reports, that's not as easy as it may sound.
Adriene Hill: Consider this story a flow chart/quiz kind of thing to see if you should look for your next job abroad. Ready? Let's begin. Please pull out a sheet of paper and a pencil. The first question: What field do you work in? Take a moment to write your answer down.
Got it? If you wrote...
Stacie Berdan: Energy, health care, pharmaceuticals, engineering, infrastructure, telecommunications, education, academia...
You're in luck. Stacie Berdan is the author of the forthcoming book "Go Global: Launching an International Career Here or Abroad."
Berdan: There is tremendous opportunity in some of these other markets for high growth that need well-educated people with experience to actually live and work to grow another part of the economy in another part of the world.
Which leads us to question two: Where do you want to move? Now be careful with this one.
Melanie Holmes: In many countries, particularly countries Americans would gravitate towards, unemployment is high there as well.
Melanie Holmes is a VP at Manpower International. She says in many parts of Europe, the unemployment situation is as bad or worse than it is here.
Holmes: Americans might be jumping out of the frying pan and into a fire by trying to find work overseas.
But if you wrote down China, India, Brazil, Singapore, the United Arab Emirates -- Hahzah! You could be well on your way to becoming an employed expat! Countries with fast-growing economies are anxious for smart Americans.
Now question three: Are you patient?
Gregory Hubbs: It's several months of work.
Gregory Hubbs is the editor-in-chief of TransitionsAbroad.com. He says getting an international job and getting all the paper work figured out...
Hubbs: It's not something that can be done in a couple of weeks, no.
You need to find a country and a company that needs your skill sets and jump the bureaucratic hurdles.
Hubbs: A vast number of countries require extensive work permits and visa documentation, which can prove challenging and time consuming, so you have to be patient but determined.
One ex-pat I talked to in Brazil said it took him a year to get a visa.
But this quiz isn't meant to scare anyone out of looking for a job abroad; it's plenty doable.
Melinda Finley: I'm Melinda Finley, and I'm an ultrasound technician.
Steve Finley: OK, and I'm Steve Finley. I'm a business analyst.
Melinda and Steve used to live in northeastern Vermont. They left because Steve couldn't find work.
Melinda: We tried several times. He couldn't get a job, so we started exploring different cities that would work for us and ended up in Calgary honestly.
Yes, Canada counts as abroad. They say the move to Canada has paid off. Melinda likes her job, she gets good career training, works on new equipment. Steve's got good, steady work too.
Melinda: We probably won't come back, we don't think. At least it's not in our current plans right now. We might need to move somewhere slightly warmer in Canada because Calgary is a bit freezing in the winter, but we don't think we'll ever come back to the States. We don't have a good reason to, really.
And their advice for those considering the career jump abroad: Do the research, hire experts to help you stay on the right side of the law, and embrace your new home.
Write that down.
I'm Adriene Hill for Marketplace Money.
I lived in Japan about 10 years, happy to be back in USA. Main benefit is the perspective from different points of view, and appreciation of different communication and management styles, though it can be frustrating as h*ll so be prepared. Helps here in Silicon Valley.
Taxation certainly is a pain, especially the double-paperwork. Double-taxation can be reduced by forms 1116 and 2555. Need to find a good accountant such as a US CPA living in the country where you reside.
As the Executive Director of Americans Citizens Abroad (ACA), the Voice of Americans Overseas (www.americansabroad.org) -- an organization that advocates for the 6.2million Americans living and working overseas, citizenship-based taxation is destroying the ability of Americans to freely pursue jobs overseas. The impact of this short-sighted taxation policy of which the U.S. is the only industrialized nation to uphold, affects the corporate business, the missionary, the aide-worker, the trailing spouse, everyone who carries a U.S. passport.
In the current economy with fierce competition for jobs, many college graduates might want to consider working overseas. Citizenship-based taxation and increased reporting requirements for overseas financial accounts is shutting them out of these opportunities.
Executive Search firms no longer want to place Americans in key positions overseas and American companies no longer want to send their American employees overseas. Why? The cost to cover the double taxation obligation due to citizenship-based taxation. Americans must pay taxes to the jurisdiction where they work and to the U.S. government as well. Tax accord treaties in many cases don’t mitigate this effect, as the U.S. does not see foreign tax collection tools in the same light as U.S. tools.
Citizenship-based taxation and increased overseas financial reporting is the biggest issue facing any American looking to work overseas. For your report to be complete you need to give listeners the compete story on this issue as many Americans who move overseas for jobs only realize the devastating effects of this policy once it’s too late.
ACA has collected over 100 testimonials from Americans living and working overseas who have suffered near financial ruin and are faced with serious career and family choices because of U.S. citizenship based taxation. ACA would welcome speaking to you about this issue on that is critical to get to the attention of Americans living stateside and to Washington. Americans overseas count, they create jobs via the export industry and are a critical tool for the economic turn-around. Their voice should be heard.
While this story had some good points, it missed one of the most important considerations of working overseas- TAXES. The USA is the only county in the world, that will tax you based upon your citizenship, and not your residency. So, you will have the new tax complexity of double taxation, trying to figure out exclusions and foreign tax credits, and completing and filing with a separate office in the Treasury department a complex Financial Bank Account Reporting form (FBAR). The requirements of this yearly filing have to be followed if you don't want to be subject to some serious fines.
The IRS has been using the failure to file FBARS as it's main weapon to impose draconian penalties in it's hunt for "so called" tax cheats who have funds in overseas accounts. You have probably heard stories about people having secret Swiss Accounts and the IRS giving them an ultimatum to Voluntarily Disclose their accounts, or else. The fines they are levying, related to this failure to file a FBAR.
If you live overseas, just doing normal banking, you will probably meet the requirements to file FBARS. Failure to do so, and the IRS just assumes you are hiding something and will go after you and lump you in with those secret Overseas accounts.
Also, coming next year, are new IRS Tax forms that duplicate the FBAR reporting plus require you to report assets acquired overseas. So more complexity.
In addition to this, there is a very nasty piece of legislation, called the Foreign Account Tax Compliance Act (FATCA) that the is trying to make every financial institution in the whole wide world a tax collector for the IRS. This comes into effect in 2013. Banks are still trying to figure out how to meet it's requirements, and are naturally balking. If you live overseas, you may find more and more difficult to do normal banking when the banks don't want you as a client, if you are an American.
Finally, your country of residence is going to tax you based upon your residency there, and (depending on the country) most likely want to tax you for your passive offshore earnings back in the States, like interest, stocks, IRAs, 401Ks, Social Security, Pensions etc., and this will make your taxation situation much more complex trying to figure out another countries tax rules.
So, my point is, in your story, you left out a very important aspect of the downside of getting a job overseas. An Expaat is going to either spend a lot of personal time on taxes for two countries, or they are going to have to pay a lot to a professional to do it for them.
And, let me repeat for emphasis,as an Expat, you are absolutely, positively going to have to pay attention to the FBAR rules, as the IRS is really bearing down hard on this!!!
If you are going overseas, I would considering joining American Citizens Abroad, so you can stay tuned to these important issues. Here is their web site.
http://www.aca.ch/joomla/index.php
Unfortunately, unless you give up your citizenship, America will never give up its dominion over you. You are taxed forever, no matter where you live. Be forewarned!
