Considering Ex-patriation? Read This first!

Hello happy campers Sovereign Dave coming at you with some important news if you’re considering expatriation.

First, let’s define what we mean by expatriation. When we say expatriation in this article we’re talking about Moving and living outside the United States.  We are not talking about renunciation, that’s a different story

Expatriation can be something as simple as just traveling outside the United States for an extended period of time.  There are differences between actually taking up residency overseas versus traveling for extended periods.

If you’re simply looking for tax benefits oh, you may want to consider moving to Puerto Rico and taking advantage of their 4% business tax and 0% on personal income from dividends and flow-through Profits.  but truly being an ex-pat and taking advantage of the tax benefits memes you have to stay outside the United States over 335 days a year.  There are exceptions to that rule as we mentioned by moving to Puerto Rico.

The rules are quite clear.  this of course assumes you want to take advantage of the foreign earned income exclusion. For the tax year 2021, the maximum exclusion is $108,700 per person and $217,400 per couple. The rules for determining FEIE status are…

  • You must have foreign earned income.
  • You must have a tax home in a foreign country.
  • You meet either the bona fide residence test or physical presence test.
  • You make a valid election to exclude foreign earned income.

Of course, we’re assuming one of the main reasons you may want to expatriate is because of taxes.  There are many benefits to living overseas as well. Besides being able to travel and seeing the world quite often living overseas is less expensive than living in the United States. 

There are lots of places to go and lots of places to see but the first step should plainly be determining what the best course of action is specifically for you.  Just because someone else moved to Puerto Rico or Ecuador or Panama or Portugal or wherever doesn’t mean it’s the right place for you.

The best solution is the one that’s right for you.  We can’t stress enough that we’re not legal or financial advisers or a CPA but we do know that no one solution is the right solution for everyone. Your best bet for finding the course of action that will work for you is to talk to the people that can get you the right answers. 

This is Sovereign Dave signing off and we’ll see you on the inside!

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