What is an expat? (2024)

FAQs

What is an expat? ›

What Is an Expatriate? An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons.

What Is an Expatriate? An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons.

Expatriation is the process of relinquishing U.S. status. It includes both U.S. Citizens and Green Card Holders (aka Legal Permanent Residents) who meet the definition of a Long-Term Resident (LTR). The baseline perspective is that formal expatriation rules apply to US Citizens and Lawful Permanent Residents.

An expat or expatriate is simply defined as a person who lives outside their native country. Similarly, an immigrant is a person who comes to live permanently in a foreign country. Only one distinction is made here – immigrants intend to stay in their new country indefinitely. Whether expats do or do not is unclear.

1. Do expats pay taxes? Yes, you file a U.S. tax return if you're a U.S. citizen and make over the general income threshold — regardless if you live abroad or Stateside.

The word comes from the Latin terms ex ('out of') and patria ('country, fatherland')”. Defined that way, you should expect that any person going to work outside of his or her country for a period of time would be an expat, regardless of his skin colour or country.

Generally, we cannot pay Retirement, Survivors, and Disability Insurance benefits to noncitizens after their sixth calendar month outside the United States. However, you might qualify for an exception, which could allow you to receive benefits without visiting the United States.

No Longer Can One Lose U.S. Citizenship By Living in Another Country. At this time, no penalties exist if a naturalized U.S. citizen simply goes to live in another country. This is a distinct benefit of U.S. citizenship, since green card holders can have their status taken away for "abandoning" their U.S. residence.

Some American expats who work abroad may also need to pay US social security and Medicare taxes on their earned income, especially if they are self-employed or work for a US-based employer. For the 2022 tax year, the rate for expat employees is 7.65%. For self-employed expats, however, the total is double, at 15.3%.

As an American citizen, you're required to file a US tax return even if you're living abroad. And if you already owe income tax to a foreign government, you could end up paying twice on the same income. Here's what you need to know about US double taxation—and how to avoid it.

Where do the most expats live? ›

The expatriation tax provisions (prior to the AJCA amendments) apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their U.S. residency for tax purposes, if one of the principal purposes of the action is the avoidance of U.S. taxes.

The main reason that people move abroad is employment. Perhaps you've been seconded to an overseas branch of your company, or perhaps you're a remote worker who is no longer tied down to any particular time zone. Or perhaps you've just decided to take a chance abroad.

Key Takeaways. Most expats are able to receive US Social Security payments while living abroad (if otherwise eligible). Social Security payments are considered taxable income and must be reported on a US income tax return. Totalization Agreements can help expats avoid double taxation and reduce their US tax burden.

Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period including some part of the year at issue.

The only option to avoid submitting a US tax return and paying US taxes abroad under current US tax legislation is to renounce your US citizenship. If US citizens fail to file US taxes while living abroad, they may incur fines, interest charges, or possibly legal repercussions.

Which country has the most expats? Percentage-wise, expatriate statistics show that the United Arab Emirates has by far the highest percentage of expats. In fact, 88.13% of its entire population is made up of expatriates (8,716,332).

In 2018, it estimated about 4.8 million U.S. citizens abroad, of whom about 2.9 million were of voting age. FVAP's estimates also fluctuate significantly, for example it had estimated about 5.5 million in 2016.

To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.

Do you lose your retirement if you move to another country? ›

If you are planning to retire or live abroad, you may be concerned about whether you'll still be able to collect your Social Security retirement, disability, or survivor benefits. In most cases, the answer is yes.

The Social Security disability five-year rule allows people to skip a required waiting period for receiving disability benefits if they had previously received disability benefits, stopped collecting those benefits and then became unable to work again within five years.

You may wonder why U.S. citizens pay taxes on income earned abroad. U.S. taxes are based on citizenship, not country of residence. That means it doesn't matter where you call home, if you're considered a U.S. citizen, you have a tax obligation.

Does the United States allow dual citizenship? Yes, the U.S. allows dual citizenship by default. The government does not require naturalized U.S. citizens to give up their citizenship in their country of origin.

An applicant applying for naturalization under INA 316, which requires 5 years of continuous residence, must then wait at least 4 years and 1 day after returning to the United States (whenever 364 days or less of the absence remains within the statutory period), to have the requisite continuous residence to apply for ...

Do I still need to file a U.S. tax return? Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits.

The minimum income threshold for US expats is the same for Americans in the States. If you're single, you'll need to file a US tax return in 2023 if you made 12.950 US dollars or more in 2022. If you are married to a non-US citizen, you'll probably want to file as married-filing-separately.

Overseas Mail Forwarding Services

The most convenient way to maintain a functional U.S. address while living abroad is to use a virtual mailbox service that you can activate online. This service scans, holds, and offers mail forwarding services for a few dollars per month.

If you're an expat and you qualify for a Foreign Earned Income Exclusion from your U.S. taxes, you can exclude up to $108,700 or even more if you incurred housing costs in 2021. (Exclusion is adjusted annually for inflation). For your 2022 tax filing, the maximum exclusion is $112,000 of foreign earned income.

Americans who receive financial gifts from foreign loved ones won't have to pay taxes on the transfer. However, if you yourself sent funds to an American while abroad, you might. Recipients of foreign inheritances typically don't have a tax liability in the United States.

What is the easiest country to move to from the US? ›

Portugal has a warm climate and a much lower cost of living than the US, which makes it one of the easiest countries to immigrate to from the US. Portugal is well known for its beautiful beaches, rich culture and history, and vibrant cities.

The typical US American working abroad has some interesting characteristics. On average, they are 47.8 years old, which is more than four years older than the average age among working expats (43.1 years globally).

The United States is one of the most beautiful and diverse countries in the world with a population of 332,000,000. The highest concentrations of expats live in New York, Washington D.C.—the nation's capital, and San Francisco in California.

Exemptions from the Exit Tax:

A dual citizen from birth not residing in the U.S. and has not met the substantial presence test for eleven or more of the last 15 calendar years, including the current year of intended expatriation (exempt from the covered expatriate analysis and thus exempt from the exit tax)

How is the exit tax calculated? The American exit tax is calculated by applying a special tax rate to your unrealized capital gains. The tax rate is currently 23.8%.

Being an expatriate has downsides: living away from friends and family is difficult, and it could be harder than you think to settle into a new place at first. Friendships you thought were solid may grow cold and faced with missing out on important life events with your loved ones, you may feel disconcerted.

Independence. A common reason expats move abroad is to get away from the monotony of daily life in their home countries. Moving to another country gives you the opportunity to start anew, even in a different career.

Medicare does not usually cover care that you receive outside the United States. However, it may be beneficial to enroll in Parts A and B if you live abroad on a temporary basis, or travel back to the U.S. frequently. Most people qualify for premium-free Part A, meaning you will pay nothing for coverage.

Which country is most tax friendly for retirees? ›

Expatriation is the process of relinquishing U.S. status. It includes both U.S. Citizens and Green Card Holders (aka Legal Permanent Residents) who meet the definition of a Long-Term Resident (LTR). The baseline perspective is that formal expatriation rules apply to US Citizens and Lawful Permanent Residents.

183 days during the 3-year period that includes the current year and the 2 years immediately preceding the current year. To satisfy the 183-day requirement, count: All of the days you were present in the current year, One-third of the days you were present in the first year before the current year, and.

Regardless of where you live, the IRS can file a lien against your assets regardless if the assets are located in the US or in a foreign country.

If you are a U.S. citizen, you may receive your Social Security payments outside the U.S. as long as you are eligible for them.

Expatriate: someone who lives outside of their native country. Immigrant: someone who comes to live permanently in another country.

How much foreign income can I exclude? If you're an expat and you qualify for a Foreign Earned Income Exclusion from your U.S. taxes, you can exclude up to $108,700 or even more if you incurred housing costs in 2021. (Exclusion is adjusted annually for inflation).

Key Takeaways. The Foreign Earned Income Exclusion (FEIE) is a US tax benefit that allows you to exclude from taxation a certain amount of foreign-earned income over $100,000. The maximum foreign-earned income exclusion for the 2022 tax year is $112,000.

330 Full Days

You can count days you spent abroad for any reason, so long as your tax home is in a foreign country.

What country is the easiest to be an expat? ›

Portugal consistently tops lists of the best places for expats to live, and in fact, the number of Americans living in Portugal rose 45% in 2021, according to government data. For those looking into short-term relocation, Portugal is a great option.

Being an expatriate has downsides: living away from friends and family is difficult, and it could be harder than you think to settle into a new place at first. Friendships you thought were solid may grow cold and faced with missing out on important life events with your loved ones, you may feel disconcerted.

The penalty for not filing your tax return is 5% of the amount of tax shown on the return for each month you have not filed, up to 25% of your tax owing. If you fail to pay, the IRS imposes a ½ percent penalty for each month that the amount remains unpaid, up to 25% of your total tax owing.

If you meet the requirements and willfully fail to file an FBAR you can be fined up to the greater of $124,588 or 50% of the total balance in all your overseas accounts. If you meet the requirements and fail to file FATCA Form 8938 you can be fined from $10,000 up to $50,000 if you don't act timely.

Understanding the 183-Day Rule

Generally, this means that if you spent 183 days or more in the country during a given year, you are considered a tax resident for that year.

Some American expats who work abroad may also need to pay US social security and Medicare taxes on their earned income, especially if they are self-employed or work for a US-based employer. For the 2022 tax year, the rate for expat employees is 7.65%. For self-employed expats, however, the total is double, at 15.3%.

The 30% reimbursem*nt ruling (also known as the 30% facility) is a tax advantage for highly skilled migrants moving to the Netherlands for a specific employment role. When the necessary conditions are met, the employer can grant a tax-free allowance equivalent to 30% of the gross salary subject to Dutch payroll tax.

In general, U.S. social security and Medicare taxes continue to apply to wages for services you perform as an employee outside of the United States if one of the following applies: You are working for an American employer which includes: The U.S. Government or any of its instrumentalities.

Most expats will not pay US taxes thanks to the benefits of Foreign Earned Income Exclusion and Foreign Tax Credit. However, expats must file taxes annually if their gross worldwide income exceeds the annual filing threshold. So even if you do not owe any taxes to the IRS, you still may need to file.