More people are becoming expats so that they can live out their dream of working and retiring overseas. Starting life somewhere new is an exciting experience and allows you to start afresh and enjoy a new beginning with your family.
However, one difficulty of being an expatriate is taxes. They can get complicated and take more work to get right. In particular, if you are a new expat, you will have a lot to learn. After all, the last thing you want is to get penalized for a mistake. Here are some helpful tips for successful tax planning for expats.
Know Your Home Filing Rules
It is essential you understand the filing rules of the country you are from. For example, if you are from the United States, you will have to file a US tax return even if you are an expat. This is due to rules that state you will be taxed on worldwide income. Another example is if you stay in the UK for more than 183 days a year, you are going to be a resident and have to deal with tax in the UK. Thus, it is essential you know the tax filing rules in the country you are from.
Understand the New Country’s Taxation
In addition, you are going to have to do some research when it comes to the foreign country you have moved to. Every country has their own regulations when it comes to taxes. In other words, you are probably going to be following different rules from the country you are originally from. Therefore, take some time to know how to pay tax as an expat. For instance, this could be based on the number of days you are present in the country. Knowing the rules allows you to minimize your liability and be efficient with your money.
Seek Professional Advice
There is no doubt that expat tax planning is complicated. Sometimes, it can be better to seek advice from a professional for peace of mind. Do not be afraid to consult an expert if you are planning on moving abroad. They are going to be familiar with the processes to ensure you are not penalized in any way. If you are busy planning your move abroad, they can take over all of the difficult financial details.
Think About Your Pension
You might be quite a few years away from retiring. Perhaps you have not even thought about it in great detail. But now is the perfect opportunity to start planning your pension if you are an expat. The reason for this is that it can allow you to save money when it comes to paying tax. It can be an efficient way to prepare for the future, as well as paying less tax in the immediate future. Depending on the country you have moved to, it is also possible to transfer your pension. Again, this is something that a tax expert can help you with.