When most people think about working remotely, they imagine having the flexibility to work from anywhere in the world. And while that can be a reality for some remote jobs, there are a few things you need to consider if the company you’re hoping to work for is located outside of the United States.
If you’re thinking of working remotely for a company located outside the US, there are some things you need to know first. For example, what kind of visa do you need? And how will your pay and taxes be handled? This post will answer all those questions and more. So, if you’re curious about the process, keep reading.
First things first: do you need a visa?
Depending on where the company you’re planning to work for is located, it’s possible that you might not need a visa. That being said, there are a few cases when you definitely need one. There are a few countries that have visa agreements with the United States. They are visa-free countries for US passport holders.
If your selected country isn’t on this list, it’s always a good idea to check with the specific country or company you’re hoping to work for. You can also go through the State Department’s visa wizard to determine if you need a visa and what kind of visa you need to work outside the US.
How will your pay be handled?
There are two ways for companies outside the US to handle your pay. They can either issue you a 1099-MISC form or set up an account with a payroll agency.
The first option is what most companies will opt for. If they do, the company will file the 1099-MISC form on their end so that you don’t have to deal with it. You can then use that form to file your own taxes correctly.
The second option is for companies looking to save some time and want to make sure you’re being paid correctly according to US tax law. Payroll agencies make it easier on both parties because they handle the filing of the 1099-MISC forms on your end (and they also charge a fee).
Will you pay local or US taxes?
If you choose to go with option 1, the company will file the 1099-MISC for you, which means you don’t have to do anything more than collect your income and report it at tax time. But what if you’re planning to work for a company that will use the second option, filing through a payroll agency?
Well, in that case, you have two options. You can either pay local income tax on your earnings or file everything correctly at the end of the year, or you can omit your foreign earned income by not reporting it. But keep in mind that if you do omit your foreign earned income, and the IRS finds out, you’re going to have a hefty fine.
The truth is, working for a US company from outside the country can be complicated. It requires careful planning by both parties involved. The best thing you can do is talk to an accountant as soon as possible so they can help you figure out the best option for your situation. You can also use a reputable income tax calculator Ontario to help you determine the tax margins and requirements.
How will your expenses be handled?
Of course, when working outside the US, you’re going to incur some extra expenses that wouldn’t usually occur if you were in the country. This includes things like housing and transportation.
For example, if you’re working for a company that is only willing to pay for your travel expenses on an as-needed basis, you’ll need to set up a monthly savings plan so that you can cover those expenses on your own.
You might also be expected to pay local income taxes and a payroll tax for the country you’re working in. If this is the case, make sure they deduct any taxes owed from your net payment.
How will your work be monitored?
When you’re working remotely, it can be difficult to monitor how well you’re doing on a day-to-day basis. But don’t worry – there are ways around this.
The easiest way is by asking the company for frequent updates to make sure they are satisfied with your work. You can also ask for a routine performance review to ensure you’re staying on track.
If your company requires it, try setting up an online work monitoring system that allows them access to your screen at any time. This way, they can keep an eye on how things are progressing without invading your privacy.
What will your employer cater for?
As you can see, working for a company outside the US is complicated. That’s why it’s always best to work with an agency or payroll service that has experience setting up ex-pat contracts in your country.
This way, the tax ramifications are handled by someone who knows what they’re doing and not yourself (and your employer). It is always better when the matters are professionally handled; you protect yourself from avoidable problems and issues.
Do you have any child-care responsibilities?
So, you’re working for a company in another country (let’s say Canada), which means that you’re probably going to have child-care responsibilities. This can be complicated when it comes to your US taxes because your US employer is not obligated to provide child-care support. But if you do incur expenses related to child-care, make sure you save all receipts and file them correctly with your taxes.
What are permanent establishments?
To even begin getting your head around the tax situation, you need to understand what a permanent establishment is. In short, this means that for tax purposes, there’s no difference between working remotely and working from an office in another country. As a result, your earnings are considered taxable.
Let’s say you’re a US citizen working for a company based in the UK, and you’re spending half your time at an office in the UK and the other half at home. If this is the case, it’s best to be awarded two contracts so that there’s no ambiguity about where you work.
Working remotely for a company outside the US can be quite complicated. However, if you clearly understand your options and all requirements, it’s not that difficult. Keep in mind that working remotely has positives and negatives, especially when you’re residing within the same country.
To reduce any problems with your arrangement, be sure to understand the tax laws in your location, and for any questions, you might have, consult a professional.