🐧 Four expensive mistakes made by expats

👋 Hey expats, this is Dexter. Welcome to a new edition of Money Abroad, my weekly newsletter. Each week, I dive below the surface to bring you fresh tips on building wealth while living abroad. Send me your questions and in return, I’ll do my best to offer actionable, no-BS tips.

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Thanks for your support and insightful chats - keep on sharing this newsletter with your expat friends. Now let's get to the main attraction:

Today, we’re going to talk about the dark underbelly of expat money.

Blunders that range anywhere from costing you headaches and weeks of your time to potentially losing hundreds of thousands of dollars. You heard me right. Brace yourself for cringe stories up ahead.

Let’s roll!

💣 Four Expensive Mistakes Made by Expats

All numbers below are in USD

1. Getting caught working without a work visa

Cost: Up to $15k + up to 2 years prison (Singapore)

🎥 No work permit penalty. Last year, a Briton freelancer producer in Singapore got caught working for Thomson Reuters SG without a valid work pass and was fined $6,500 SGD. For each count of working in Singapore without a work pass, the penalty is up to $20k (or ~$15k USD) and jail for up to two years.

🏝️ Remote work applies. Let’s be real: Remote work typically breaks local employment laws unless if the worker has a work permit. However, unless if you’re broadcasting publicly about how you’re working remotely in country X, it’s hard for anyone to tell.

How to avoid this mistake:

• Get a work permit if you’re working for a local employer: Pretty simple. Just do it.
• Keep low-key regarding remote work: Avoid police busting through your door like they did with these Chang Mai digital nomads.

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2. Not filing your tax & compliance reports

Cost: $10k to $50k+

🏦 Missed filing penalties. Recently, an American expat friend let me in on a secret: she didn’t file her US taxes for over 3 years while living abroad. Yikes. She kept delaying due to feeling overwhelmed by their complexity, so it was an honest mistake.

She also didn’t report dozens of foreign bank accounts and assets, which risks various penalties ranging anywhere from $10k to $50k, or even the greater of $124,588 or 50% of the total balance. In serious cases, the IRS can even revoke passports.

Fortunately, there was a happy ending. She found a tax advisor, joined the IRS tax amnesty program (yes expats can apply!), and managed to pay minimal penalties.

💁Tax prep fees. A couple years ago, I personally invested in a Singapore REIT without realizing my decision triggered an obscure US compliance requirement. My accountant charged me $190 to file the required report. Small fees add up.

How to avoid this mistake:

• Pay for a tax professional. ROI pays off, since they help you find savings.
• Plan your big upcoming tax decisions. Particularly if you intend to buy or sell your company stock options, other securities, real estate, and/or start a business.
• File your taxes & compliance reports even if late. Use tax amnesty programs.

3. Getting your bank accounts frozen

Cost: Roundtrip flight + months of processing time

😨 Admin nightmare. Last week, an Australian expat friend based in Singapore told me he had gotten funds stuck at different banks in the UK & Hong Kong without any explanation. Talk about traumatic. He suspects the issues were related to large transaction sizes and crypto, but wasn’t 100% certain.

To get his funds back, he had to endure an admin nightmare: complete heaps of paperwork, wait up to 6 months processing time, and even fly to the country where he opened his account to withdraw the funds.

His experience isn’t atypical: HSBC asked this Briton living in Asia for 10 years to physically visit the bank branch he opened his account to unfreeze his account.

How to avoid this mistake:

• Avoid the reasons why banks freeze accounts like Complying with global / US policies, visa expiring or changing, no local residential address on file,  “suspicious transaction” red flags
• Spread your assets across multiple bank accounts: Don’t keep 100% of your assets in just one bank account please
• Use an expat-friendly bank: DBS in Singapore, Schwab in US, Wise banking
• Keep a local address handy, eg virtual address or trusted family/friend’s residential address

4. Getting locked out of services using a local address & phone number

Cost: Weeks of delay and headaches

💳 Inaccessible PIN and debit / credit cards. Banks and credit card companies use a local mailing or residence address for shipping PIN codes, passwords, and replacement debit / credit cards.

They may even close your account if they discover you no longer have a local residence address, eg like Wells Fargo did to this expat.

☑️ Unable to confirm payments & reset password. Credit card companies, investment services, SaaS apps, and even the postal service use your local phone number for updating account details, reseting passwords, confirming payments, and sending delivery / travel notifications.

It’s super easy to forget these details. Just two weeks ago, I was updating my SG bank account details while overseas. My OTP got sent to my Singapore number, which didn’t have a roaming plan, so I couldn’t proceed. 🤦‍♂️

How to avoid this mistake:

1. Get a virtual mailbox service or use a trusted friend or family member’s local address
2. Buy a virtual phone number or use a friend’s phone number
3. Reset passwords before you're overseas. Don't wait until you're already on roaming

Thanks to Jay Demetillo and Lily Wu for reviewing an earlier draft of this post and sharing great feedback.

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