The Association of Americans Resident Overseas (AARO) estimates that 5.5 million Americans live abroad. Some may make a permanent move, while others seek a new adventure before heading home again.

 

Whichever you’re choosing, as an affluent person, what you do in just one year matters. Here are 10 smart money moves for a year outside the US.

1. Tax Residency Rules

The first thing you should do is determine how a year abroad could affect your tax residency in both the US and your destination country. Do note that spending 12 months overseas doesn’t automatically end your US tax obligations. Plus, your foreign residency can depend on:

  • Local day-count rules
  • Domicile
  • Employment

 

A trusted global e-file provider such as Expatfile can help keep your international filing requirements organized.

2. State Domicile Choices

Before you leave, review where you’re legally domiciled and whether you can preserve state ties by maintaining:

  • A home
  • Driver’s license
  • Voter registration
  • Business interests

 

This is a good time to consider establishing domicile in a state with a more favorable tax structure. Make this decision before the move instead of after tax questions arise for a smoother transition.

3. International Banking

A year abroad will most likely involve multiple currencies, as well as local bank accounts, credit cards, and investment accounts. Not only that, you’ll probably have to make regular transfers between countries.

 

You should decide how much cash to hold locally and when to convert dollars into another currency. Keeping detailed transaction records can simplify tax reporting later.

4. FBAR and FATCA Thresholds

When you have overseas accounts, you’re obligated by the US to report them, even if they generate little or no taxable income. For example, there’s the Report of Foreign Bank and Financial Accounts (FBAR), which requires you to report qualifying foreign financial accounts when there’s a combined value that exceeds $10,000 at any point during the calendar year. There’s also FACTA, which has different thresholds. 

 

Make sure to check your balances throughout the year instead of checking them only at tax time.

5. Equity Comp and Payroll

If you have any of the following, then you should review arrangements before relocating:

  • Stock options
  • Restricted stock units
  • Deferred compensation
  • Bonuses
  • Employer-sponsored benefits

 

It can be beneficial to ask your employer whether working internationally is allowed. On that note, also ask if payroll, withholding, benefits, or social insurance arrangements need to be changed.

6. Global Health and Evacuation

When you’re overseas for a year, you’ll need something more than regular travel insurance. You should investigate:

  • International health coverage
  • Emergency medical treatment
  • Evacuation
  • Repatriation
  • Pre-existing coverage terms
  • Access to appropriate hospitals

 

Make sure to check whether your policy is valid when moving between multiple countries, too. Pay particular attention to coverage limits and exclusions since a standard US health plan may not provide comprehensive overseas protection.

7. Visas and Income Proofs

A tourist visa isn’t automatically appropriate if you want to live abroad for a year, especially if you’re earning money. If you need a visa, then applications may require:

  • Proof of income
  • Savings
  • Employment
  • Insurance
  • Accommodation

 

If you work remotely, then specifically confirm whether remote employment is allowed under your chosen visa.

8. Leases, Deposits, and Clauses

Before signing any contracts, you should examine these things:

  • Currency provisions
  • Renewal terms
  • Maintenance responsibilities
  • Early termination penalties
  • Deposit return conditions
  • Clauses covering extended absences

 

For your protection, you should keep photographic records of the property’s condition and receipts for deposits and payments. These can help prevent disputes later.

 

If you’re in a higher-value rental, consider having a local attorney or property professional review the agreement.

9. Mobile and Data Security

International living can involve unfamiliar networks, SIM systems, banking authentication requirements, and cybersecurity risks. This makes it a good idea to arrange an international phone plan or local eSIM before you leave.

 

You should use strong passwords on your devices, and ensure that there’s current software, multifactor authentication, and encrypted backups. Avoid making sensitive financial transactions over unsecured public Wi-Fi, too.

10. Timing of Gifts and Major Buys

If you’re considering any of the following, then you should review the timing before changing countries or tax residencies:

 

Depending on when you make these moves, they can affect reporting, valuation, financing, currency exposure, and tax treatment. It may be worth getting professional advice before signing or transferring funds, as this can help you avoid expensive surprises.

Make Smart Money Moves Before You Move

Moving can be exciting, especially if it’s a short year abroad with new experiences. However, it’s best to get your finances in order first, as this can help you have a smoother transition and fewer surprises that detract from your time away.

 

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