The Tax Benefits of Living Abroad
The United States is one of the few countries that tries to chase you for tax dollars no matter where you live in the world. If you live in a foreign country, work in that foreign country, and pay taxes in that foreign country – the IRS will still come and try to take money from you. I was recently in a bank to help my girlfriend open a new account and they have an entire set of forms you have to fill out if you are American.
Even living and working here, your money isn't safe from the US government. If you are from pretty much any other nation in the world you won't have any problems. For most countries, the second you leave your income will double simply by escaping the oppressive taxes.
If you set up your business correctly in a state that does not have a business income tax, such as Florida or Nevada, you can start to make your tax burden disappear. Most of your expenses should be business expenses anyway. I spend a lot more money on growing my business than I do on my lifestyle these days. The first eighty-thousand dollars you make as an individual in a foreign country is non-taxable.
Basically, keep all your money in business accounts and transfer less than $6500 a month into your personal accounts and you can actually protect your income from the government. Now this is only based on current tax laws. You should know that Obama has been specifically attacking Americans living abroad for the past eight years and keeps adding in new tax burdens.
Now you might think that you have an obligation as an American to pay your full share of taxes and that's an interesting perspective. As long as you know that America is one of hte ONLY countries in the world that tries to spread that idea. Living abroad I have almost zero contact with public services from the US. My only recent experience was when I needed a new social security card. My old one is in a safety deposit box but Paypal demanded a scan of mine or they would freeze my account.
Rather than fly back to the States for a five-minute chore I decided to get in contact with the embassy. I had to ship my passport and drivers license to them as two proofs of my identity. They then ignored my request and shipped my two most important documents back via one of the only couriers in the entire country that don't deliver to my island. I received a message a few days later from the courier inviting me to enjoy a three hour ferry ride to pick up my passport, followed by a three hour ferry ride back.
Should I spend six hours on a boat because my embassy is too lazy to use any other courier. I offered to pay the additional delivery charge. I receive packages and pay on delivery from several other couriers all the time.
I was able to convince the first courier to pay one of the other companies to bring the package to my house. It ended up costing me ten bucks and an extra four days without both my passport and my drivers license. But that was only because I got lucky and was able to bribe the delivery person from the first company.
Would you send a package to someone and have it waiting in an office three hours from their house? Of course not.
Then I needed the actual social security card. They offered to send it by regular mail to my address here. Now I live in a country with a VERY unreliable postal system and I asked the embassy staffer if she was joking. Why would you send a document like a social security card via an unsecured system? The odds of my card making it to me via regular post would be about fifty percent. I'm not interested in a fifty percent chance of losing my identity.
When I suggested that they send the document to me by FedEx so that it could arrive in less than four weeks, the lady was actually offended. She stated that, “The federal government does NOT send anything by Federal Express.” Apparently they only like to use private couriers that don't actually deliver to where I live.
I was forced to have them send the card to my family's house back in the United States, rather than take the risk of actually sending the card to me. My father was able to successfully scan the card after just two attempts and my paypal account is again running smoothly.
That was my only encounter with any US government service in the past three years. Do you really think that experience is worth forty percent of my income or more? Of course not. The next time I talk to them will be when I renew my passport in another five years.
If I were kidnapped, would the government send Navy Seals to rescue me? Of course not. I would be lucky to get a two-minute mention on CNN. The US government provides me with neither services nor protection. I've run into troubles in the past and the embassy ignored my calls. You are on your own in this life and that's fine with me.
Living abroad you can make your tax burden disappear in a moment. You can still spend thirty days in the states if you need to and your taxes will be safe.
I have a friend who owes the IRS a HUGE amount of money. He has a savings account with tens of thousands of dollars in it that is all earmarked for the federal government. I explained to him that if he simply moved to another country all that money would become his. That's the magic of leaving the country.
Even with the United States' draconian tax laws you can make your tax burden nearly disappear just by moving. The only reason he is clinging to his current location is because his girlfriend “likes it there.” He should tell her that they could have twice as much money and she would never have to work again if they moved. Something tells me that she would find that prospect pretty interesting.
If you have a bookkeeper or an accountant in your life, you should ask them about the benefits of moving to a foreign country. If you set up the proper business structure you will get to keep more of your own money.
At my last real “job” I signed a contract for $36,000 a year. I was so excited to finally be making real money. My first monthly check arrived for $2,200. After taxes I was ACTUALLY making $26,400. So about a third of my income was eaten by the federal government each month.
For many people, you don't need to replace your income. You can replace half of it, move abroad, and then have the exact same amount of spending money. It's important to pay attention to every aspect of your financial situation.
At the end of the day, your finances are your personal responsibility.
Do you think living abroad is a good move for your tax burden? Are you still stuck in your home country? Share your thoughts in the comments below.