First, I want to stress that I am not an accountant, certified tax specialist, nor attorney. So please take this advice as anecdotal and seek professional advice before making any financial or immigration decisions.
Although the US can have some stringent employment laws, especially when it comes to non-US citizens coming and working in the United States, these same rules don’t necessarily apply to US citizens who choose to work for a US company abroad.
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Can I work for a US company remotely while I’m abroad?
Technically you can work for a US company remotely while you are abroad.
I mean, what’s the difference between working from home remotely for a US company and working from a home abroad?
The first issue is whether your company or any company is open to the idea of their workers working remotely.
Whether that’s from home or another country. Also, you have to consider time zone differences.
If your work involves a lot of calls to clients and you’re halfway around the world away, you might be putting in some very odd hours.
This is because you will be expected to, if your job involves a lot of customer contact. The company may require that you are in touch with your customers regularly, on their time, not yours.
Working remotely abroad for a US company, freelance or employee?
If you want to go abroad, yet work remotely for a US company, you need to decide whether you want to work freelance or as an employee for that company.
For many companies, you might not even have a choice. The issue of being an employee or working as a freelancer comes down to the employer and whether or not they want to hire full employees or freelancers on a project to project basis, depending on workloads and budgets.
If a company hires employees of course they will have to contribute to Social Security and Medicare costs as well as any possible benefits like health insurance, Workman’s Compensation Insurance FICA etc.(this is for US based companies).
If a company only hires freelancers or hires a mix, then freelancers are normally responsible for all of those costs.
Therefore, many companies not only save money, but they see the financial benefits right off the bat of hiring freelancers.
Whether that freelancer is abroad or not, that’s more a question of logistics and time zone issues etc. as well as how much day to day person to person interaction is required.
Some companies prefer to have an employee because employees are more accountable and employees provide a company more stability.
Either way, a job is a job and if the right offer comes around that allows you to work remotely abroad, then you need to be able to decide for yourself which status you would prefer and if the job is worth it, if you’re not given the choice.
Can a US citizen working for a US company work remotely in another country without any tax implications in the new country?
I am not a tax specialist, nor will I attempt to field questions regarding tax codes not only in my own country, the United States, but for other countries’ tax laws as well.
You should know that some countries do have residency requirements that may obligate you to pay local taxes.
Some countries say that if you are there longer than 6 months you become an automatic tax resident and you may be liable for tax on your sourced income, whether that source is in the country or from outside it.
There are some very blurry lines in regards to tax implications, if you’re working in another country, especially if you have a long-term visa.
If you’re only there on a tourist visa, it’s a lot easier to skirt the tax implications in that country, than if you were there on a more long-term visa.
Also, in general, even if you are in a country and that technically qualifies you as a tax resident, that doesn’t necessarily mean that you will be liable for local taxes.
Most of the time, these issues only come into play if you are in a country long term, considered a tax resident and want to participate in transactions that require local documents etc.
For example, if you’re buying a car, private property or even a driver’s license, you may be required to declare your residency officially and this can put you on the radar for the local tax authorities and may open you up to tax implications as well.
However, if you’re just in a country short term, on a tourist visa and if you’re only renting, don’t have your name on any legal paperwork like bank accounts etc. in that country, then you can normally get away with avoiding tax issues in that country.
These issues don’t make you free of tax obligations in your home country however, especially if that’s where your income is sourced from.
How can a US citizen living abroad go about working for a US company?
They’re various online job boards for various industries. That’s the first place I would look for any opportunities.
Many opportunities will be listed as employees status and requiring that you are a legal citizen of that country or have some kind of residency which allows you to work.
I‘m mainly referring to the United States. They also may offer remote work possibilities for you as a freelancer.
If you are a US citizen for example, find yourself abroad and would like to work for a US company, simply search the job boards for your specialty. Then apply. It would be similar to applying for a job in person back home.
You would need to provide your social security number, some kind of mailing address etc. for tax issues.
As far as receiving payment for your work. They could simply transfer the money directly into your local US Bank account via a wire transfer. This is similar to how most companies pay their staff in the United States, by direct.
However, if you’re working freelance, you may still need to provide the same information, if they are a US registered company with US bank accounts.
Although, unlike an employee’s status, if you make over $600 a year for that company, they will file a 1099 form with the IRS. You will need to declare this on your income tax.
If you make under $600 from any company, whether that company is in the United States or abroad, you still have to declare it, but you won’t receive a 1099 form from that company.
Don’t think you can get away with not declaring it either. Even though companies don’t issue 1099 forms to freelancers making under $600 for that year, doesn’t mean that they don’t use it on their own tax return filings.
They will use your social security number and record it as an expense. So the IRS will know that you have earned that money anyway.
Is it legal to work remotely from another country?
US citizens can work remotely legally from another country. However, the US is the only country that taxes its citizens on their worldwide income.
So regardless, whether that company’s base in the United States or abroad, you are still liable for US taxes.
However, there are exceptions to how much tax liability you do have and if you spend more than 330 days a year abroad, you may qualify for the foreign earned income tax exclusion.
For more information on this click this link, Foreign Earned Income Exclusion, to see if you can possibly qualify.
Working remotely abroad and US taxes.
As I mentioned above, US citizens are the only citizens that are required to pay taxes on their worldwide income.
However, there are quite a few exceptions and exemptions regarding how much tax you are liable for.
Your best place to start would be to look under the foreign earned income tax exclusion in the link above.
Additionally of course, see a qualified accountant. Particularly one who specializes in tax issues for expats.
Working remotely from another country during Covid.
You may find yourself stuck abroad because of the current Covid situation in the world. I know I have.
However, if you’re used to working abroad, the best advice would be to stay put wherever you are. Hopefully of course if that’s in a country with lower Covid rates.
Even though I’m not one to promote profiting from a crisis situation, this might be a great opportunity for those who are already working remotely to check out the job market online.
Many companies are forced to close their offices and require their workers to work from home.
Many of these companies have also seen that there are perhaps more opportunities to expand their workforce, without having to expand their office space. These companies may also be on the lookout for someone who is experienced working remotely.
In addition, if you hire freelancers, this is a great opportunity to recruit some new talent, since more people will be stuck at home looking for something to do and may have the skills that you’d been wanting for a while.
Now is the time to try to recruit these talented and individuals. At first you might think that the online marketplace and the working remotely sphere of this marketplace will be more competitive, since more people are forced to work from home than ever.
However, if you are already used to working at home remotely or even from abroad, you know that this requires a lot of self discipline in holding yourself accountable every day to complete tasks and have high levels of productivity.
Though many people who have been thrust into this remote working situation have not developed that kind of discipline yet.
Many people need the camaraderie of a workplace or some place to go to in order to switch their mindset from home life to work life etc.
If you already work remotely, you’ve already been able to compartmentalize your work/home life much more efficiently.
Either way, there are more options now than ever before since more and more companies will be forced to reconsider hiring those who want to work remotely.
This will open up many opportunities for those of us who have been wanting to work remotely, but have failed to find the right opportunity.
As someone once famously said, “don’t ever let a good crisis go to waste.”