Financial Planning Support for Americans Working Abroad is Crucial

The financial planning industry is very far behind the globalization of the workforce. The US State Department estimates that there are about nine million US citizens living abroad and about 45 million immigrants in the US, about a third with bachelor's degrees or higher, according to Pew Research. There are millions more middle-class workers residing in a country other than their home. 

This is likely causing wealth to be lost. Tax filing obligations, estate planning, foreign exchange, investment regulatory differences, and more could be costing this cohort a bundle. 20% of Americans don’t claim the Earned Income Tax Credit from their home country.   

And there are definitely compliance problems. Only 3% of Americans abroad file Foreign Bank Account Reports (FBARs) required when a US citizen has $10,000 or more in foreign bank accounts. That seems low, doesn’t it?  Again, that’s just the US rule. How is a US expat to know all the tax rules for the country in which they work and reside? 

There is some help on the horizon with a group called the Global Financial Planning Institute (GFPI) designed to educate, build a community, and advocate for global financial planning.

They have a blog with some good content, for instance, that foreign taxes such as wealth tax, VAT, and foreign property taxes are not determined as a percentage of income and are not eligible for the Foreign Income Credit. The US generally gives you full credit for foreign taxes paid so you aren’t taxed twice, but only for income tax. 

Does your nonprofit have foreign workers or US citizens abroad?  Have you thought about providing them with financial planning support? Consider the GFPI as a starting resource.