When living and working in the US, it’s easy to determine what regulations apply to employees and how one should pay taxes. But the situation looks different when one decides to relocate abroad.
Remote workers employed by US companies and located abroad should pay attention to the legislation of the foreign country they are residing in. They need to follow the specific guidelines for their duration of time as that will determine their residency and taxation options.
Many American remote workers bounce between different countries, which often requires no visa when staying short term. That’s because tourists aren’t involved in the local economy. They don’t need to contribute to the tax system of the country. However, you shouldn’t forget to consider all possible issues with taxation and immigration when living abroad.
Working remotely for a US company from abroad: things to keep in mind
In many countries, US citizens, as well as those of other nations, are able to work remotely and still be counted as tourists as long as their stay is shorter than 90 days or 180 days depending on the country.
Countries that allow this can be found across the globe and on all continents, e.g. Colombia, Mexico, Portugal, Germany, Spain, Serbia, etc.
As long as you don’t overstay the visa-free period, you don’t need a visa or residence permit. Online work can also be done trouble-free as it’s still not in the scope of the local market under which tourists aren’t tax residents.
The only prerequisite you must secure when working for a US company abroad is the consent of your employer. Not all companies are open to letting their employees travel the world and live abroad unless you were hired as a foreign contractor from the beginning.
Hence the only problem in working for a US company from abroad might lay in the company itself and not you being overseas. Some firms simply don’t want to risk breaking rules of any foreign jurisdictions by having a remote worker abroad.
If you are looking for a remote job that supports the traveler lifestyle, apply with us at Support Adventure. We currently have many employees and contractors working in Central America, Asia, South Africa and Europe.
Laws about remote work from abroad
Before you move abroad or take on a work opportunity for an American company, you need to consider whether you are allowed to be in a foreign country while working that job online.
Most countries will require you to have a valid visa and work permit to stay there for more than 90 or 180 days.
In some countries, if your visa is expiring, you can leave the country and return the very same day to extend your stay. For example, if you’re in Costa Rica and your 90-day tourist visa is about to expire, you can simply cross the border to Nicaragua and return the same day. That way you can stay for another 90 days. It’s 100% legal with authorities knowing and allowing this to occur.
However, these tricks won’t work in most of Europe, and definitely not in the EU countries. There, you can only stay for up to 90 days within 180 days as a tourist. To stay longer, one must apply for a residence permit.
Whether you are a freelancer or have a full-time salary, every government understands the concept of remote work, especially in this modern age.
Working as an independent contractor for a US company
One of the best ways to work for a US company while living abroad is to become an independent contractor. This makes you responsible for your own tax payments and tax compliance.
Being self-employed means that you have to be registered as a business or sole proprietor in the country of residence or the US. A US company can also hire you as a consultant.
But we understand that being an independent contractor isn’t the best solution for everyone. For example, employees might want to keep their benefits and have a secure retirement. That’s almost impossible with the status of a contractor.
Visa and work permit for remote workers
While digital nomad visas have become incredibly popular, you will need to seriously plan obtaining residency if you intend to stay in one country for a long time.
When traveling and working abroad, you need to know how long you can stay in a particular country and under which legislation. Furthermore, one must understand visa and work permit regulations for various regions and countries.
Make sure to look up each country’s visa situation before making any serious decision.
Many countries allow tourists to stay for up to 90 days in a 180 days window. After that, one should leave the country or apply for a resident permit. Sometimes, a residence permit application can only be made in your home country/country of residency.
If you need to apply for a residence permit, your US employer must sponsor your visa. Also, the company has to have an official representative in the country where you are applying for the permit. Without a work permit, a foreigner doesn’t have the right to work in another country.
But keep in mind that you may be able to apply for a resident permit if you’re self-employed or a freelancer.
Also read living in Mexico as a US citizen.
European Schengen visa
Many US citizens choose Europe as a preferable place to work remotely. The weather, diversity, culture, history and travel opportunities are just incredible in this part of the world.
The EU includes 27 member states. Tourists can visit 22 of them by just having one Schengen visa. In many cases, you don’t even need to have any visa at all.
You may stay for up to 90 days within a 180 day period in this area, after which you must leave the Schengen countries. Moreover, an EU member state doesn’t necessarily mean that the country is a part of the Schengen area.
For example, Ireland is a part of the EU but isn’t a part of the Schengen travel agreement. Hence, you can travel to non-Schengen countries for another 90 days and come back to a Schengen country afterward.
That way, you can stay in Europe all year round by considering going to the UK, Ireland or Eastern Europe in the meantime.
Paying taxes while working remotely for a US company
If you are based in the US regularly throughout the year and you are just leaving for some time, your employer will continue to pay payroll taxes in the US. Similarly, you will continue to pay your income taxes in the US.
Therefore, if you work remotely abroad for a US company as an employee, your social security and medicare taxes will still be deducted from your salary.
However, if you are a freelancer or you plan to be outside of the US for more than 330 days of the year, you can save money on taxes by escaping some of them.
Most countries will allow foreign remote workers to stay and work remotely for up to 183 days in a year without becoming tax liable. After that period, a person becomes a tax resident in that country on their worldwide income. US citizens however will be responsible for paying taxes in the US in any case.
Generally, the income from employment is taxed in the country where the taxpayer is a resident. Hence, you first need to establish a residency somewhere to start paying taxes.
Taxes for US citizens
The American IRS generally requires US citizens and green card holders to file an income tax return even if they live and work abroad.
This applies if their annual income exceeds $10,000 per year as an employee or $400 as someone who is self-employed or a freelancer. 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 their self-employment is registered and/or in their country of residence. US citizens remain to be taxed for their worldwide income in the US.
Save on taxes as a US citizen
If you’re an American citizen living abroad for over one year, you might be able to save some money on your US taxes. This can be done with the IRS’ Foreign Earned Income Exclusion policy.
If you spend 330 days out of a 365 day period outside of the US and are earning income from outside the US as well, you may be exempt from paying federal income taxes up to a certain amount.
However, this might not apply if you work as an employee for an American company. It more so applies if you are an independent contractor, freelancer or run your own business.
Will you pay taxes in the US?
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 pay taxes in the US because the US company doesn’t perform payroll for them in the US.
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.
Limitations when working for a US company from abroad
Remote work for a foreign company while living abroad also has its disadvantages, for example:
- You won’t have access to the local health care system or the state pension fund
- You aren’t entitled to sick pay or other additional benefits
- You will get paid in the US, which is different from the local currency. It might result in exchange rate costs and potential fluctuations from month to month.
- The local authorities won’t appreciate you not paying into the social security system, which might result in:
- Penalties and fines
- Authorities demanding payment of past due contributions
Can you live overseas and work for a US company?
You can work remotely for the US and live on another side of the world, but you still need to pay attention to local tax and residence regulations.
For instance, if you are working for a US company but living permanently in a European country, you are theoretically working there. Therefore, your local residency must also allow you to work in that country, which means obtaining a work permit.
You can read more about this topic in this article: Working a US job remotely from Europe: All you need to know.
Can a US citizen work for a US company while living abroad?
As a US citizen, you can work for a US company and live abroad so long as you comply with local visa regulations. An American citizen will continue to pay taxes in the US as usual.
For US citizens, as long as you are in good standing with your employer, remote work from abroad should be possible. Nonetheless, you should ensure a good and secure internet connection while working online.
As someone working for a US company or looking for a job, you should also consider where to pay taxes by the end of the month. Your taxation can depend on many factors such as nationality, location, residence, employment agreement, etc.
Working remotely for a US company in another country without a visa
So you are working abroad for a US company but don’t have a visa? While working remotely abroad, you always need to keep in mind visa regulations for the country you are staying in.
As a general rule, one will need to have a visa when staying in one country for an extended time, usually 90 days. Different types of visas are issued for different reasons—like tourism, education, familial ties, employment or self-employment abroad.
The duration of each visa depends on its purpose, with an average length of one year.
US employees can work remotely from abroad on a simple tourist visa when planning their stay abroad as well.
Plus, there are dozens of digital nomad visas available. Even Caribbean countries like Antigua and Barbuda have implemented such programs for location-independent professionals. Read more about digital nomad visas in 2022.
How to get a remote job and work from anywhere in the world?
If you want to work remotely from anywhere in the world but don’t have a suitable job, apply for one with us! We hire talented people from around the world to allow them to work from anywhere. We mostly have positions open for help desk IT support, and admin roles. So don’t wait and apply for a remote job with us here!