Paul Sullivan, in his Wealth Matters column this week, writes about the tax rules in the United States that can trip up Americans living abroad. The rules have become tougher as the United States tries to find secret overseas accounts. And the rules are also affecting more people as more Americans find job opportunities far from home.
The column offered several pieces of advice for American expatriates. One is not to buy a house in the United States with the goal of retiring there many years in the future. As happened to the client of one financial adviser Paul spoke to, by the time the client was ready to retire, he didn’t want to live in the house anymore.
A second point to remember has to do with Social Security contributions. Americans who work abroad for foreign companies rather than companies with American ties may not be required to contribute to Social Security, which can affect the benefits they are eligible for when they retire.
And as one longtime overseas worker pointed out to Paul, he quickly discovered that it was far more costly to live in the United States, and he had to rein in his spending accordingly.
Have you ever worked outside the United States? Please share with us any financial lessons you learned from your experience.
This post has been revised to reflect the following correction:
Correction: April 12, 2013
An earlier version of this post referred imprecisely to the responsibility of Americans working abroad to pay into Social Security. While American employees of foreign companies generally are not required to pay such taxes, American employees of United States companies, or companies affiliated with them, who work abroad generally do pay such taxes. It is not the case that Americans who spend their entire career working abroad cannot contribute to Social Security.
Article source: http://bucks.blogs.nytimes.com/2013/04/05/financial-lessons-for-american-expatriates/?partner=rss&emc=rss