Remote working overseas for a US company can be a blessing for a non-US citizen–you’ll be location-independent and can live a wanderlustful lifestyle. That is truly the American dream, which is more achievable than ever in today’s digital world. Here’s how:
Non-US citizens living overseas can absolutely work for a US company. This is legal for US employers, and you might be surprised to learn that they benefit greatly from hiring foreign workers, as that helps them save on taxes. Furthermore, employees abroad also have the advantage of avoiding withholding taxes from their salaries, including Social Security and Medicare.
Sounds intriguing? Then keep reading as we’ll answer all your questions regarding working for a US company overseas.
Can you work for a US company while living overseas as a non-US citizen?
Yes, absolutely. In fact, many non-US citizens do. Working for a US company and living overseas isn’t only advantageous for you as the employee, but for the company as well. This is because they benefit from not having to incur US payroll taxes on your behalf.
If you currently work for a US employer, you can also try making an arrangement with them to work remotely. As long as you are in good standing with your boss and you’re not required to show up to the office all the time, it’s worth a try. This has worked out for many people whose employers allowed them to work from different locations all around the world.
Visas and work permits for overseas workers for US companies
If you plan on staying in a country where you aren’t a resident or a citizen, you need to plan to obtain a visa and a work permit. Many countries will allow you to stay for up to three months, but for longer stays, you’ll need to apply for a visa or a residence permit in most cases.
In some countries, you may be able to stay long term by simply exiting and re-entering the country after your 90 days are up. Your duration of days in the country will then reset upon re-entry. This is referred to as a “visa run” or “border run,” and it’s 100% legal in countries where authorities allow it.
You should also consider some countries that offer digital nomad visas, which are applicable for remote workers.
Just remember though that your best bet is to stay in a country for only three months as you most likely shouldn’t need a visa for that duration of stay. And if you really enjoy that country, you can return and then jump through the necessary hoops for a long term visa.
Can US companies hire overseas workers?
According to the US Labor Department (USLD), it is an acceptable practice to hire a foreigner or a US citizen who is living abroad.
The USLB, along with the IRS and SBA say it’s legal for a US company (or any US employer) to hire foreigners living outside of the US as remote or telecommute workers.
Moreover, US employers can save time and money by not paying taxes towards Social Security, Medicare or having to file W-2 or 1099 IRS forms. That’s a savings of 7.65% of all wages paid by US employers.
The IRS even provides Form W-8BEN so that foreigners living outside of the US can become exempt from all US taxes as independent contractors. Furthermore, hiring contractors brings many additional benefits to companies such as:
- the possibility to easily employ foreign or short-term workers
- savings on labor costs
- ease of contractor relationships
- limited responsibility
Consequently, hiring foreign workers for a remote job isn’t only possible, but it’s also a highly beneficial option that is supported by legislative officials.
Working overseas for a US company as an independent contractor
If your goal is to work overseas for a US company while achieving professional autonomy, you should consider self-employment or freelancing. Also, there’s the option of working towards starting a business of your own! You can register yourself as a self-employed individual in the US, as well as various European countries.
This allows you to find work as a contractor for a US company and other countries.
We at Support Adventure actually understand this all too well as we connect US IT companies with contractors worldwide. Feel free to apply for a help desk position with us here!
What are independent contractors?
Independent contractors are professionals offering their services to clients, usually companies. They are either self-employed or own a small business that others can hire for a fixed period of time or on a per-project basis.
In the US, the IRS defines someone as a contractor if “the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”
Paying taxes as a contractor is easy too. Independent contractors are responsible for their own taxes, depending on where they live and register themselves.
All of this is good for US companies as they don’t have to worry about how and where to do payroll taxes.
If you’re a US citizen, you are subject to the tax rules of the country regardless of your location. Therefore, US contractors are tax liable for their worldwide income in the US.
The hiring company should continue to issue a Form 1099-NEC if contractors earn more than $600 within a year, the same as it would to its US-based contractors.
Will you pay taxes in the US?
You might think that working for a US company means paying taxes to the US. But that’s not usually the case.
To determine whether you should pay taxes in the US or not, we should look at more details. According to the IRS, the source of the income gained by offering services is determined by the location where the services are performed.
Hence, if you are working overseas for a US company as an independent contractor, the income you receive isn’t considered US-sourced as long as every aspect of the service is performed outside of the US.
Based on that, a contractor doesn’t have to pay taxes in the US. As well, the US company they work for doesn’t have to perform payroll for them either.
Yet, when some of the work by the foreign independent contractor is completed within the US, the following criteria should be met in order to avoid tax liability in the US:
- The contractor was present in the US for less than 90 days in a tax year
- The payment to the contractor is lower than $3,000
- The payment to the contractor is for services performed for an entity or office maintained in a foreign country
If all points are met, a US company doesn’t have to withhold or report taxes in the US.
All in all, you don’t need to pay taxes in the US while working for a US company, unless you are a US citizen.
Do you need a visa to work for a US company remotely?
According to US government officials, US employers can hire foreigners who are living outside of the US. In that case, no immigration visas for the US are required.
For example, an American company can hire a South African developer who is working from home. But since the work being performed is for the US company and not related to any work in South Africa, no visa is needed in that situation.
Thus, neither you nor the US employer have to worry about visas or work permits. Those would only be needed if a worker is living in the United States or performing work on American soil for the duration of a contract.
How long can you work abroad without tax implications?
Generally, foreign employees of US companies working and living abroad aren’t taxed in the US. Foreign contractors working for US companies should pay taxes where they are registered as self-employed. And US citizens remain to be taxed for their worldwide income in the US.
If you are a digital nomad or someone moving from country-to-country, it’s useful to know taxation rules that can affect you. Since you aren’t paying taxes in the US while working remotely, you must do it somewhere else.
The taxation policy for many countries, including the EU, is that you become a tax resident when spending more than 183 days in one country. Hence, you should file a tax return and pay your taxes in a country when only spending over 183 days there. You will be liable for all worldwide income in that case.
If you’re staying in a country for less than 183 days in a year, you would only be taxed on income earned in that country. Therefore, your salary from the US won’t be taxed there. However, remote work can also fall into this category, for you are working where you are physically located.
If you don’t want to pay taxes during these first six months, you need to maintain residency in some other country (or the US for citizens), so that you can continue to pay taxes there. After the initial 183 days, residency won’t matter, and you will pay taxes in that country anyway. This rule doesn’t apply to US citizens though, as they pay taxes to the US regardless.
Double taxation agreements
People working for US companies can benefit from various double taxation laws so that they won’t pay income taxes twice.
Most countries have established taxation treaties with each other, so you for sure won’t pay taxes twice. For example, when working for a US company abroad as a US citizen, you will pay the majority of taxes in the country where you are living. The rest will go to your liabilities in the US if you are an American.
Taxation for remote workers outside of the US
Wages earned by non-residents working for US companies for work performed outside of the US are considered ‘foreign source income,’ which aren’t taxed in the US.
This means that US companies who hire foreigners living outside of the US aren’t required to withhold the employee’s taxes and don’t have to report these wages to the IRS.
Furthermore, foreigners who work for US companies outside of the US won’t be subject to Social Security or Medicare deductions from the IRS.
Benefits for the US companies to hire foreigners overseas
Ultimately, US companies will save time and money by avoiding withholding social security, Medicare and various other taxes from an overseas employee’s salary.
We reiterate that US employers save 7.65% on salaries when hiring someone abroad instead of locally. This is a win-win because the employee can enjoy a more affordable and adventurous lifestyle, while the employer can gain more profits.
Want to work remotely from any country in the world?
This is what we make happen for so many aspiring remote workers–we are the expat outsourcing company after all! At Support Adventure, our employees specialize in IT, providing help desk support from a laptop from anywhere in the world. If that interests you, don’t wait and apply for a remote job with us!