As more individuals adopt remote work arrangements, the prospect of living abroad becomes increasingly attractive. With its warm climate, stunning landscapes, and lower cost of living, Bali has become a popular destination for expats, especially from the U.S. However, the financial implications of such a move can be complex.
Here’s what you need to know.
Comparing the Costs of Living
After enduring the initial $1,600 and approximately 20-hour long flight, the first thing you’ll want to consider is housing. Bali offers a range of accommodations to suit different budgets:
- Guesthouses start at around $450 per month.
- Apartments can be rented from about $635 per month.
- Villas, if you prefer a more luxurious living arrangement, start at around $800 per month.
Aside from housing, the cost of everyday expenses, such as food and transportation, is significantly lower in Bali compared to the U.S. Data suggests that these costs are about 73% lower in Bali, which can lead to substantial savings over time.
Understanding Your Tax Obligations
Despite the lower cost of living, U.S. citizens residing in Bali are still required to pay U.S. taxes. To mitigate potential double taxation, it’s essential to familiarize yourself with the foreign earned income exclusion and the foreign tax credit, both of which could significantly reduce your U.S. tax liability.
In addition to U.S. taxes, if you qualify as an Indonesian tax resident, you will be subject to Indonesian tax rates, which range from 5-35%. As a comparison, a person earning $100,000 in the U.S. would pay approximately 22% in taxes, versus a potentially higher rate of 30% in Bali.
Navigating the Banking and Visa System
Should you wish to open a bank account abroad, be aware that you will have to file an FBAR, or Report of Foreign Bank and Financial Accounts, with the U.S. Department of Treasury.
To legally reside in Bali, you’ll also need a visa. A Visa on Arrival costs $35 and is valid for 30 days, extendable to 60 days. Alternatively, a B211A Visit Visa, intended for remote workers, lasts 60 days and is extendable twice, for a total of 180 days. Please note that these visas do not permit employment within Bali, so you’ll need to maintain a remote job or business for income.
Housing Considerations
For those considering investing in real estate, foreigners are only allowed to lease property in Bali, with prices ranging from $100,000 to $300,000 and above. This inability to own land outright can be a significant consideration for long-term expats.
The Bottom Line
Although the overall cost of living in Bali is cheaper than in the U.S., it’s crucial to consider other factors, such as tax obligations and housing limitations. Furthermore, your ability to live comfortably in Bali will heavily rely on your remote job or business income.
Before making the move, potential expats should thoroughly research and plan for these financial implications. As always, consult a financial advisor and review any sources of information you rely on for accuracy and up-to-date advice.
Don’t Wait! Plan your next trip to Bali with our comprehensive list of budget friendly flights, car rentals and much more ✈️
References
- Bali Property Direct. (n.d.). Choose Property Types Bali. Retrieved from https://balipropertydirect.com/choose-property-types-bali/
- Expedia. (n.d.). Bali Guest Houses. Retrieved from https://www.expedia.com/Bali-Guest-Houses.d602651-aaGuestHouses.Travel-Guide-Accommodation
- Numbeo. (n.d.). Cost of Living in Bali. Retrieved from https://www.numbeo.com/cost-of-living/in/Bali
- MyLifeElsewhere. (n.d.). Cost of Living Comparison Between Indonesia and United States. Retrieved from https://www.mylifeelsewhere.com/cost-of-living/indonesia/united-states
- IRS. (n.d.). U.S. Citizens and Resident Aliens Abroad. Retrieved from https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad
- FinCEN. (n.d.). Report of Foreign Bank and Financial Accounts (FBAR). Retrieved from https://www.fincen.gov/report-foreign-bank-and-financial-accounts
- Greenback Tax Services. (n.d.). Expat Taxes for Indonesia. Retrieved from https://www.greenbacktaxservices.com/country-guide/expat-taxes-for-indonesia/
