As the other poster says you continue to pay income tax in your home country and you're also forbidden from working for any Barbados company since they don't want people taking local jobs.
However this may have tax consequences in your home country. I'm from the UK and if you spend more than 180(?) days abroad in a tax year you become non-resident which has some implications. You'll need to consult an accountant I guess.
I got my visa and I'm hopefully heading out towards the end of September, it should be fun.
> I'm from the UK and if you spend more than 180(?) days abroad in a tax year you become non-resident which has some implications
This isn’t quite accurate. There are other tests that come into play, including whether you own a house in the UK, and how long you spent outside the UK for the rest of the year (and the preceding years).
Basically if you live in the UK, then spend 180 days (or even a whole year) outside the UK but then immediately return HMRC is not going to consider you a non-resident for that period.
It is worth paying for tax advice before you leave because the rules are complicated and there are other factors aside from just not being in the country.
I knew someone who, through their employer, got tax advice from one of the big name accounting firms that turned out to be completely wrong - leaving them liable for tax both in the UK and in the country they had travelled to. It all got sorted out in the end but took a long time and was he was rather unhappy with the whole thing, as you can probably imagine.
Yeah it's also worth doing your research and seeing if it matches what the advisor is telling you
"you owe/doesn't owe this because A, B, C" is the answer you should be looking for, they might give general advice but they might not know 100% about some specific situations
Note: I'm not saying "you can deal with this by yourself", I'm saying "double checking is a good idea"
I had this situation where an employee insisted on tax advice from the company's lawyer. The law firm represents who is paying, same for liability. In the end we sponsored an expensive email basically saying as such.
If you permanently emigrate and then work for a foreign company, why would you pay tax in the UK?
Rules for temporary emigration are more complex, but if you get a job in Germany and move there, returning to the Uk occasionally to see friends and family (say 3 or 4 weeks a year) clearly you don’t need to pay tax in the Uk. Will still have to repay your student loans though - declare your income and pay the bill (which is 9% above an income that varies depending on the country you have loved to)
But there is no real reason for UK to actively track residents and tell them "you know what, we discovered that you should pay your money to another country, not us". What is more reasonable is that the third country would symay "hey buddy maybe you should be paying your taxes here not in UK" but in this case Barbados said they wouldn't
Yep, most people get this rule the wrong way around. The 183 day rule is a sufficient (but not necessary) condition to be considered tax resident in most countries. It does not automatically make you non resident in your home country and if you don't actively communicate to your home country that you moved abroad it all comes down to the existing double taxation agreement between the two countries.
It's also dependent on how long you spend in the UK (not just out) and other things. If you spend half the year abroad, but then come back for 90 days (in a home you own or rent), you're resident again. HMRC have a flowchart you can follow:
Luckily since the tax year ends in February (?) it should be possible to take almost the full year by having it split into 2 half years over the tax year ends without having to change any tax stuff, I don't think the non-resident implications are too bad. I'm just going to sort out the accountancy stuff when I'm out there, but even if it's expensive it's worth it for the experience.
It doesn’t mention being only for US citizens, it appears in principle citizens of any country are eligible. (In practice, I imagine some countries’ citizens will find it easier to get approved than others, due to differences in national security risk, likelihood of submitting refugee claims, etc.)
If you're not a US citizen, you won't have to pay income at all due to tax residency rules. only the US is brazen enough to charge non-resident citizens income tax
"Hey, we're doing the same things as Hungary, Myanmar, and Eritrea" is not usually a good argument for anything.
Anyway, the Hungary part surprised me since I'm a Hungarian citizen living abroad and have never been bothered about tax. The Wikipedia table says residents of countries with tax treaties are exempt, and that should be pretty much all of them? The PDF link from Wikipedia is broken, which is normal for how the Hungarian government operates.
Since the US has an exemption for foreign income, this seems like making overmuch of a technicality. It reminds me of the histrionics over the US not being officially metric by people from the UK.
Well that's rich, coming from people who can't even stick with one system and have a weird mix of imperial, metric, and various archaic units - which is IMHO worse than just being on imperial.
That description applies to both the US and UK, perhaps others, and it's hard to be unaware when you're connected to a global computer network. Just google "site:uk mpg".
"Put simply, all MPG does is tell you approximately how far your vehicle will travel based upon a single UK gallon, which equates to approximately 4.55 litres of fuel"
This particular thing, I'm aware of because there is perennial confusion over comparing mpg given that Imperial gallons are larger than American ones. If people just used L/100km....
Chauvinists go to ridiculous lengths to magnify small differences.
For an Australia, you pay income tax if you're a resident for taxation purposes. For an Australian Citizen to answer that they're not a resident for taxation purposes is complicated and depends in part on the type of Visa you have.
Last I looked, for me, as an Australian citizen, to not have to pay tax would mean getting a permanent Visa in another country and being resident in that country. They specifically excluded time-limited visas, even if you can get them renewed automatically.
It means travelling around the world, even for years at a time, I still need to account for my income and lodge tax returns in Australia. The one upside is getting credit for income taxes paid in another country.
I believe a similar situation also applies to Canadian citizens, as a few former Canadian colleagues in Australia had to go through a whole process of getting their Australian taxation recognised in Canada.
Do you mean if you pay, say, 20% tax in Switzerland as an Australian, never setting foot in Australia for an income year. Then you lodge tax in Australia and the ATO says you only have tax credits for 20% of your income, meanwhile you'd be paying 32% of your income as tax - you would then have to pay ATO the 12% difference out of pocket?
Do you have any links to information regarding Australian citizens being taxed abroad? I know for HECS, etc you're still meant to lodge and pay those amounts, but didn't realise it might be a fair bit worse than that!
It's complicated, but assuming that the ATO thought you were a resident for taxation purposes, then yes you still lodge a tax return in Australia, claim the tax paid in Switzerland as a credit (assuming it's recognised) and pay whatever gap there is.
It's made more difficult because tax years don't align, so it needs to be worked out that way too. Oh, and because Switzerland probably put their tax records in Swiss-Fench/Swiss-German all your documents would need to be formally translated.
I'd start by checking put the ATO site they had a bunch of tests for your residency there.
Other commenters have address your questions, but what I will add is that if you stayed the full 12 months (Or really, 330 days) then you apply for FEIE and won't have to pay federal income tax as a US citizen.
This isn't exactly true. You only get the Foreign Earned Income Exclusion if you actually have foreign earned income. Just can't just live abroad and pretend your income is foreign earned. There IRS defines what is and isn't foreign earned income.
If you move to Barbados and just keep doing the same job you were doing in the US, then it almost certainly isn't foreign earned income.
There is a lot of debate about that, and the best thing is to contact a tax attorney. But a lot of digital nomads in Southeast Asia are working for American clients and getting that income in under the exclusion. I’m not sure if it’s different for full time rather than contracting income.
you spoke fairly authoritatively, then hedged at the end ("almost certainly"). have you read IRS form 2555? that's probably a good place to start, as they spend a fairly large amount of time defining terms.
for all their faults, the IRS has extremely clear definitions and exceptions when it comes to foreign earned income and sequelae. while detailed and nuanced, there aren't really any gray areas that i have found.
That is what the IRS (and most tax offices in the world, such as the British HMRC or the Italian AdE) defines as "foreign source income" since the work is literally being carried out abroad. It also includes capital gains and interests arising abroad of course.
After your foreign earned income exclusion is exhausted, you can deduct your foreign taxes, at least. In low tax but high COL places such as Singapore and HK, you also have the housing deduction to help out.
No, not even close: most expats do not pay social security taxes abroad. If you work for the USA embassy, you pay SS tax, but if you work for Microsoft China, you do not (you do, however, pay Chinese SS of course). In particular, see https://www.hrblock.com/expat-tax-preparation/resource-cente...
> If you are working for a foreign employer who has no requirement to withhold U.S. social security, you have no obligation to remit U.S. social security taxes on your earnings and in fact, are prohibited from making such voluntary contributions to the U.S. Social Security System.
Almost every US company has it setup that you are going to be working for a foreign employer, not a US one.
However this may have tax consequences in your home country. I'm from the UK and if you spend more than 180(?) days abroad in a tax year you become non-resident which has some implications. You'll need to consult an accountant I guess.
I got my visa and I'm hopefully heading out towards the end of September, it should be fun.