BootsnAll Travel Community

I'm doing a lot of reasearch for my plan in about a year from now and am hoping someone can give me some advice or lead me in the right direction.

I am a US citizen, in a year I will be traveling around and working from where ever I am at the time. For the past 2 years I have owned my own business freelancing graphic/web design successfully with clients all over the US. I can't quit my job to only travel as I will lose all my long term clients/contacts that I've worked so hard to build up over the past 2 years. I've decided to combine the two and work while on the road travelling. I've already managed to do a lot of this in the states (traveling) as long as I have an internet connection, my laptop, and a phone. My question is... If I live abroad and am making money from the states (or other countries not limited to the ones I'm staying in) How does that work for taxes? Would it be the same as if I am living in the US?

Currently I get maybe 2-3 1099's from clients that use me monthly. The rest I keep invoices, check stubs, and reciepts, add it all up and do taxes that way. What would change if I was doing the same thing, expect working in another country? Would have to get a work permit? Technically since I'm not working for anyone specifically the country wouldn't even know I was working!

What about banks overseas? Are there worldwide banks where I can withdraw and deposit money I make locally. A lot about my business is meeting and making contacts and I think new work will definatly come from people I meet or people they talk to (networking).

My plan is to visit an area for 6 months to a year. My first place abroad will start in France (my sister lives there) and I will go all over Europe. Then from there I will go to Australia and move from place to place. Dunno where after that. I suppose on weekends I can find a place to storage my stuff and go to more rural places that wouldn't have the technology I would need to work.

Any help is much appreciated.

If the money is coming from the US, and in effect staying in the US- I would not let anyone but the US know about it.

You are still technically going to be considered a resident of whatever state you last were in- I would just leave it at that to keep things simple.

As for work overseas: Unless you have a Visa to work- no one should know about that money. If you catch my drift.

Hi nomad_jenny,

Disclaimer - I am not an accountant, so I have no idea what I'm saying. And here I go:

I work in a similar way as you. I freelance/consult and work from home. I rely entirely on the internet, and work for clients in different parts of the US, never locally. I think I agree with Clay that any US clients you continue to work with/for and who pay you in the US, would be US income for tax purposes, since it clearly doesn't matter "where" you are when you're doing the work remotely.

As far as any money you make while overseas from overseas clients, I have no idea. Although....If you do make money and serious contacts while traveling, and were you to continue working for those overseas clients after you return to the US (assuming you do), then there is a very good possibility that some of your travel expenses could be deducted.

I would talk to an accountant if I were you.

Good luck,

Travis

A thing to note is that for US citizen worldwide income is taxable. It does not matter where you live or work- if you make money the US government wants it's share. There are treaties with many countries to avoid being taxed twice..

So, any work that you do for someone outside of the US- I would either keep it completely off the books..

Unless we are talking about major amounts of money- in that case just hire an accountant and have them take care of it.

But if the majority of your work is coming from the states.. report that to the IRS at tax time.. and just keep the other stuff off the radar

from the big bad horse's mouth;
http://www.irs.gov/publications/p54/

summary;
http://www.unclefed.com/Tax-Help/irs-tt/faq13-7.html

bathroom reading;
http://www.escapeartist.com/expatriate9/kristof.htm

http://cobrands.public.findlaw.com/taxation/nolo/ency/B2C15AE4-5783-456B-9033F42D94E56150.html

http://www.bdtax.net/text/03taxhlt.htm

banking info;
http://www.offshore.hsbc.com/hsbc/main/bank-accounts

in terms of banking, varies by bank and by country, ask around. you might want to consider having them pay you in cash or see if you can open an account with their bank and branch. if you want to take that money home with you, be careful of commissions. not all multi-national banks are fee-free when converting euros to dollars (or vice versa).

Wow. Great responses. That information is very helpful Blisser!! Thank you very much. Some interesting details just skimming through some of it!!!

I'd probley have to talk to an accountant or call the IRS to check some fine print. Because technically I am working in the country doesn't mean I'm really working there as in for an abroad company (non-US) or a company based abroad for the tax breaks. Also, I prolly would be abroad for at least a year (one of the requirements) but I wouldn't be in ONE Country for that long unless it was australia. Plus, since I'm self employed with no overseas office, the countries would have no idea I was working there, so why should I tell them? Sucks that the US taxes worldwide income tho, I'd have to claim it all then, unless I was paid cash.

I'm thinking that I could claim part of my travel expenses as business expenses... promotion, research, client meetings, potential client meetings etc. Most all my trips around the US I come up with a way to make it a "business trip." But I think a big long business trip lasting over a year would raise some eyebrows unfortunatly...

Nomad Jenny, this is easy!!

I remember asking about all this before I left the States over a year ago, intending to continue my freelance writing while I travelled. And no one had any answers then! As a result, I read every darn applicable IRS pub. myself. As it is, I prefer to keep filing my own tax returns year after year, even in the self-employed world, so I know exactly what's happening to my own money, how to keep most of it for myself, etc.

Anyway, that means I read up on all the same issues that concern you now. And here are the answers.

1) As a US citizen, you automatically owe the US govt. a percentage of every penny YOU earn. So, you'll keep paying taxes on the US and foreign-based income just as you always have...keep up with the estimated tax payments each quarter, etc.

BUT, there's ONE exception to having to pay US taxes on that money.....

2) If you meet ALL of the following 3 conditions for any segment of your income, you qualify for what is called a sort of tax rebate/credit. You still claim ALL the money on your tax return at the end of the year, but include the associated forms/line items for the foreign income credit. In the end, you'll be reporting all the income to the IRS, but turn around and get a credit for the same amount, meaning you don't pay any taxes on it.
a) The money is income from a foreign-based company, owned & existed overseas
b) You are residing physically outside the US (might have to be outside for 330 days out of the year to qualify)
c) You are physically conducting the work outside the US

3) In essence, you could end up not paying any taxes at all on the income from foreign sources while you're living & working outside the US, considerably cutting your taxes for the year.....the US need not know that because of the nature of your work, you haven't paid taxes to the foriegn govts. either.

I won't go into more detail because it's not all fresh in my mind, but it's Form 2555 and its instructions you want to study. See if your presence outside the US qualifies your "tax home" to be the same, etc. etc. Also check out pub 54...all about US citizens abroad and the tax requirements. Don't forget to read the same for details on additional tax breaks for paying for accomodations abroad in addition to any residence you may be maintaining in the US, etc. Also, if you're essentially ditching the home in the US and just living abroad for the time, don't forget the deduction for "moving" if you believe you're justified in saying it's for business purposes.

4) Nope, no work permits needed anywhere you go if you stay in the freelance world. That's only for employment and you well know you're out of that evil realm now. So, unless you want a boss again and take up an hourly job waitressing or something, you don't need a work permit. As far as the foreign companies are concerned (or the countries you're in for that matter), you're still a US-based business/company they are working with, doesn't matter if you're hiney happens to be outside the US at the time.

Banking......I can't help you with. I bank with USAA, limited to military families and their dependents, which is designed for customers living all over the world. Don't forget to see if the overseas banks can accept a check and then wire it back to your US bank if that's what you want (to keep using that debit card or something).

Hope this helps! The good news is that you will most likely save on your taxes by being overseas.....I'm still tempted to one day live outside the US and continue to freelance, avoiding US clients, in order to never have to pay US taxes again. ha!!

Wow.

I continue to be blown away by the generosity of people on this forum. Nice info Justine.

Hey, isn't that what we're all here for?? ...the lovable, travel community.

Justine: The tax rebate is for if you have been taxed by the country you are working in, up to a certain percent, if the US has a tax treaty with that country.

In essence it would mean that Jenny would have to file taxes on foreign income twice.

I say- unless it is a large sum of money- keep any foreign income off the books.

Oh and for banking:

http://www.lloydstsb-offshore.com/

A bank based in London, which will open an account to non nationals without all the red tape most banks require.

I plan on opening an account as soon as I can print out the application

I'm all for keeping as much as possible off the books. I already pay SO much in taxes just for going out on my own.

Any other benefits to the London-based banks, such as for even those of us living in the US as far as accepting money in foreign currency and all of that?

Beautiful cat by the way, Clay!

wow... you guys are great.

The main reason I want to open the bank in London- is because the $us dollar keeps dropping. I want my currency in something a bit more stable.

The other reason is, I suspect it could be helpful in establishing residency in the future. I have read most landlords reuire some sort of banking statement to rent you a flat.. and also the convenience of being able to write a check, not needing to wonder if your debit card will be accepted ect ect ect

Just think of it like so:

If you physically work and are paid in more than one state (i.e. you did a job for a company in Massachussetts but usually live and work in New York) you have to file taxes in each state you earn money in. It's the same thing for being overseas. I'll let you know in a couple of months whether or not they tax me (and I hope they don't because I get ripped for taxes now!)

And on the banking -- usually the overseas banks that allow you to have a multi-currency account will have a salary requirement. Doesn't help the freelancer much. Although, I'd recommend checking in to Citibank as they have a heavy worldwide financial presence.

As for opening an account overseas, I can only give you the UK answer: you need a utility bill dated within the last three months prior to the desired opening date with your current mailing address. My bank also asked for proof that the bill had been paid, which meant showing the an official bank statement (I know -- catch 22 if you do not have a bank!) or getting a special letter from your utility co/waiting for the next statement to arrive. This also means you already need a flat, and likely a job to afford a flat, so (vicious circle)... Point? Definitly check the banking regulations in places you plan on settling prior to settling!

Wow Justine - that was an incredible response and answered a lot of the things I've been wondering myself.

I belong to USAA myself and banking is now open to more than just miltary personnel and their families. If anyone wants to check it out, it's www.usaa.com

They're a great bank. They also offer insurance, but you have to be associated with the military somehow (my father was in) to get insurance with them.

I thought you had to be a "member" of USAA for any of their financial services benefits? and the membership requires a connection to the military?

I was just reading up myself while trying to sign up my non-citizen spouse. I have to say, I've always been in love with them and the amazing service and support in a variety of situations (not to mention no-fee services and cheaper rates on everything else), but when dealing with a non-citizen's needs and anything related to overseas, they've impressed me all the more. "Auto insurance and renter's insurance for the non-citizen? No prob! Just give us his driver's license country and number."

It's too bad they can't open up their services to all travellers.

AS for BANKS you should definitely not bank with a US Bank.

Euro banks are very good as their data control laws are very tight - so tight that even the US Govt has trouble getting in.

Personally I use the HSBC - London (where the head office is) as they know how to handle money and provide access to it world wide - usually instantly.

I think you are right about using a US-based bank, but this is a good solution for US citizens. I have had no problem accessing and moving my money anywhere in the world. Very helpful and very easy to get started with them.

I just called USAA - They opened their servicxes up to everyone about 5 years ago, so anyone can bank there. And you can also do your insurance through them, which I didn't know. I have been using one of their renters insurances as travel insurance for many years because of the comprehensive personal property and injury coverage. If anyone's looking into it, I an find out the name of the policy.

interesting... I'll have to look more into banking. I'm not really trying to hide anything so I'm not too worried about that.

I'll lookinto the USAA and the HSBC... however, I won't have an abroad address (or a utility bill- and I don't pay them here) so will I be able to open an account?