Many people stranded overseas due to the pandemic had no intention of staying away from home as long as they did. Among all the complications of this situation, figuring out what to do about your taxes is one of the most stressful. If you’re feeling confused, the information below should help you out:
1. Find a tax accountant
If you failed to make any tax preparations before you left because you didn’t think you’d be overseas so long, you’re not alone. Many stranded travelers have been left wondering, “do I need to find a tax accountant near me? Or do I have to find one back home?”
The answer depends on where you’ll be filing your taxes, and it also varies slightly depending on your home country. In general, if you’ve been working online and earning an income from your country of origin, that’s where you’ll need to pay tax. So, you’ll want to look for an accountant back home.
If you’ve been working overseas, you may need to file taxes in your current country of residence. In some cases – most notably the US – you’ll also need to file taxes back home. However, due to tax treaties and tax code provisions, it’s rare for anyone to have to pay tax twice.
2. Understand your tax residency
In some countries, staying for a certain amount of time can legally make you a tax resident. It’s important to understand the legislation of the country you’re in, including any amendments that may have been made to account for the COVID crisis. For example, the UK made changes to its Statutory Residence Test (SRT) to account for people stranded by the pandemic.
3. Be even more diligent with record-keeping
Tax rules are complicated enough as it is, but with the pandemic, border closures, quarantine, and other factors affecting people on a global scale, the complexity has grown exponentially. Governments all over the world are scrambling to come up with reasonable exemptions and concessions to create a fair and reasonable response to the crisis. This makes record-keeping more important than ever.
Experts are recommending that people who were stuck overseas for any portion of the pandemic keep careful records of their movements, any border closures or flight cancellations that affected them, medical appointments, prescriptions, and any other potentially pertinent information.
4. You may have to report more than just your income
If you have any bank accounts, pension funds, or investment accounts registered overseas, you may have to lodge a Foreign Bank Account Report (FBAR). The penalty for not filing an FBAR is hefty, so if you have overseas bank accounts, be sure to give this information to your accountant who should be able to help you with your obligations.
5. Filing your taxes in time may entitle you to stimulus checks
Though some countries – most notably, Australia – provided no stimulus checks to citizens stranded overseas, nations like Canada and the US provided financial support, regardless of whether their citizens were at home or abroad. Keeping up with your tax obligations can qualify you to receive any future stimulus checks provided by these nations, so if you’re a citizen of either, this is an added incentive to ensure you file your taxes by the due date.
There are many reasons why people have gotten stuck overseas during the pandemic. If you count yourself among these stranded folk, taxation is just one of many complications you’re facing. Hopefully, the tax tips above will help you iron out some of the confusion.
Alex is fascinated with “understanding” people. It’s actually what drives everything he does. He believes in a thoughtful exploration of how you shape your thoughts, experience of the world.