A common question when we tell people that we do tax returns for expats is “what is an expat?“. And that is a question we will answer for you in this post.
Definition of “Expat”
Expat is short for the word “expatriate“. An expatriate is simply a person who lives in a different country than the one in which they were born. Lots of expats have the ultimate goal of returning to their home country, but others stay abroad for several decades, or even the rest of their lives.
For example, if you are an American citizen living in Bangkok, you are considered an American expat.
How do You Become an Expat?
There are really four ways in which you can become an expat.
Studying abroad for a semester or two is a great way for young people to become expats. Most study-abroad students do not earn income during their travels and studies, but remeber that you will still have to fill out your regular tax forms back in America.
Military and other government workers overseas (like diplomats) are considered expats.
Working for a company like HSBC overseas makes you an expat. Full time employees generally earn the most money out of the four types of expats, so you definitely need to keep your income taxes in mind. Every country has its own laws, but Uncle Sam doesn’t care; he just wants a piece of your paycheck pie.
Think of nomads as people who have no fixed address. They just wander from place, from country to country, almost like resident tourists. Some nomads earn income on their journey, others don’t.
Now you know what an expat is. Remember that whether you travel or not, you are responsible for your own taxes. Penalties can be severe so do not just ignore them and hope they go away. If you have any questions, bookmark this blog for future reference or simply contact us.