[ HTJ Podcast ] Tax Free living for Americans overseas
If you need #InternationalTax advice?
We are here...
Here are 4 ways we can help you -
1. We offer HOLISTIC strategies to help you live that international life. Tax + MIGRATION options.
2. We help you MODEL the tax impact of moving to a new jurisdiction
3. CONTACT us for tax optimization consults over Zoom
4. High Net Worth? We can QUOTE for doing your "US - International" tax returns
Next question. Is it true that if I'm living and working outside of the US, I make less than a hundred grand, I'm not taxed. I mean, US citizen. Sorry, that's a good question. It really depends. Now, what I think that's a popular misconception. That's a popular misconception, but a misunderstanding. So, I'll take you back to the source that comes from Section 911 of the US tax code. And that speaks about something called a foreign earned income exclusion. And my emphasis was deliberate on earned because if it is that if you're making a hundred grand or less, but that is earned income and you may be able to enjoy the foreign earned income exclusion, which to be honest is the best tax break available to US exposed person, US citizens, and green card holders who reside and work outside of the US, but it must be earned income. So, it does not include interest. It doesn't include dividends. It doesn't include basically unearned income. So, yes it's very, very specific. So, to be honest, really someone needs to sit with you and understand what the nature of your income is. Is the hundred grand that you're earning, is that like interest, is that dividends or is that earned income? So, you perform a service or you're selling a product, you're engaged in some sort of business activity for which you're getting that in return. So, if it is earned income, then you may be able to trigger the foreign income exclusion. And as the name suggests you would exclude that income from US taxes. There are two ways of qualifying for that foreign earned income exclusion earned income. So, the first is the one that everyone gets. So it's quantitative and objective. So, that is a physical presence test. So, once you stay out of the US, you're not in US space for more than 30 days in any calendar year, typically you will qualify for the foreign earned income exclusion under the physical presence test. The other one is subjective and qualitative, and that's the bonafide resident's test. So, that's more or less like a test of intent. Like where's your center of life, where's your heart. And if your true home is in another jurisdiction, so your family's there, you own, or you rent the property there, you have a job there, you pay bills there, you belong to social clubs. You know, whatever the case may be, that is genuinely where your life is right now. Then you may be able to enjoy that even if you cross 30 days in the US. So, for example, you are trapped because of a lack of flights or whatever, you still may be able to enjoy it because of that bonafide resident's test. But however, you qualify either physical or bonafide residents, once you do your first well, it actually moves higher with inflation. So, I think for last year it was like 107-6 or something like that. So, it goes up each year with inflation, but that income will be sheltered from US taxes. So yes, speak to your tax advisor, but you still need to report it. So, even though no taxes are payable, you still need to file a US tax return. The filing threshold for return is pretty low. And then from married, filing separately, $5 to be made more than $5 outside of the US. Again, no taxes may be due, but you may still have to file a return. Hope that helps.
Please subscribe, like, share and comment below. Our books and upcoming events are available at HTJ.tax. Email us at firstname.lastname@example.org to engage us to advice on international tax or business matters.
#HTJpodcast #internationaltax #taxplanning #financialplanning #taxes #compliance #AdaptOrDie #internationalbusiness #offshore #expats #investors #offshore #liveyourbestlife #flagtheory #InternationalEntrepreneur #entrepreneur