Friday, October 29, 2010

Tortola, Ho! Part 3: Income & Expenses

Immigration is definitely on my mind right now, as I continue to wait for my lab results so I can complete my medical certificate. I thought I'd write a little bit more about the process both HB and I underwent in deciding to move and actually moving to the BVIs.

After weeks of research, in late April, HB drove to Fort Lauderdale, and boarded a plane for St. Thomas. The time for his in-person interview had arrived, a three-night trip to Road Town to meet the Owner. The details of the trip are hazy for me, as I wasn't there, but I know that during his time in the BVIs in April, HB spent lots of time at the company's location, was taken to Virgin Gorda for a day trip, and shown Tortola nightlife. The trip concluded with a request by the Owner for HB to consult with me, and then present the Owner with his desired compensation.

There were many things we considered in preparing the compensation package that HB proposed to the Owner. We started by trying to get an idea of what our bills would be. We already had some fixed costs, such as my student loans, and our credit card payments, that weren't going to change no matter where we lived, but in addition, we looked at what our cost of living would be on Tortola. We anticipated that an apartment comparable to what we had in Florida would at least twice as much in Road Town, and we also estimated that our monthly grocery bill would increase by about 20% (definitely underestimated this one).

Perhaps most importantly, we looked at income taxes. Using the IRS website (, we researched whether and to what extent the income we earned while working in the BVIs would be taxed by the US. Conveniently, we discovered that as long as we were truly living out of the United States, we could choose to exclude income from non-US sources from US income tax. That is to say, we would not have to pay taxes on our earnings while living in the BVI. This is known as the Foreign Earned Income Exclusion, and you can find more information on it by clicking the link above. If you are considering working outside the US, I highly recommend you read up on the Foreign Earned Income Exclusion. It is a complex provision, and you may want to consult a CPA or tax attorney before you move.

On the other hand, although we found that we did not have to pay US income taxes, we learned that there would still be deductions from HB's salary. First, he would be responsible for contributing 4% of his earnings to Social Security, the BVI's socialized medicine program. HB's work permit enables him to enroll in Social Security, and so the 4% contribution deducted from his check doesn't seem like a huge deal, considering it entitles HB to healthcare. Additionally, there is an income tax of 8% on all earnings over $10,000 in a calendar year.

The information about tax treatment was so important to us because it meant that HB would be bringing home a much larger percentage of his pay in the BVI than he was in the US. It made the increased cost of living in the BVI more attainable for us, because HB would have more dollars in his pocket from each paycheck.

Ultimately, after compiling all the data about our fixed costs, cost of living, and tax treatment, in early May, HB sent the Owner a two-option proposal. With rent running so high in the BVI, HB requested in the first option that the Owner provide housing and car in addition to salary. Understanding, though, that the Owner may be unable or unwilling to provide housing, the second option eliminated the housing proviso in favor of a higher salary.

The Owner responded a few days later, accepting whichever option HB deemed more suitable, and offering HB employment with his company. On May 12th, the process of getting HB and the dogs permitted for immigration began in earnest.

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