08 May How Working Abroad Can reduce your taxable income by $100,800!
Many doctors have volunteered in foreign countries during medical school, residency, and even while in practice. It’s a great opportunity to see the world and provide much needed expertise to many people in need. Some of us end up working abroad for many years before moving back home, simply because the opportunity arises.
One financial perk of earning income abroad is that it can significantly reduce your tax burden. Firstly, you are unlikely to incur state taxes if you are living abroad. For many of us, this translates into at least a 5-6% reduction in tax burden. Moreover, thanks to the Foreign Earned Income Exclusion rule, your first $100,800 in income (based on 2015 rules) is federally tax exempt! For single doctors earning $300,000 gross income, this can potentially translate to a marginal tax rate reduction from 33% to 28%! What is more important is that a doctor earning $300,000 abroad will likely save approximately $33,333 in taxes compared to a doctor with the same income working within the United States!
What options do you have to work abroad?
As far as large hospital entities go, I’ve seen options to work abroad through Johns Hopkins in Saudi Arabia, Cornell University in Qatar, and Cleveland Clinic in Abu Dhabi. Since these hospital systems are based in the United States, their counterparts abroad (which are typically operated by a foreign entity anyway) allow doctors who have trained in western Europe or the United States to practice without having to recertify.
There are other smaller foreign corporations and hospital systems (mostly in English-speaking countries) that also allow U.S.-trained doctors to work abroad. Keep a look out in your specialty’s job bulletin.
Will working abroad work for me?
Obviously you have to assess whether or not working abroad will fit your life goals and your family’s needs. If you were single and adventurous, it would be a no-brainer—you can work abroad, learn about new cultures, and even save some taxes in the process. Many of these cities offer international schools if you have kids, and access to entertainment much like what you would find in the U.S.
Have you considered working abroad? What was your situation that led you to decide to make your decision?
(Photo courtesy of Flickr)