"#$% &'( )*+&$#, $- .

+/( 01* 21/(,& 3/(#,(0,

How To Live Tax Free Overseas
From The Editors at Live and Invest Overseas



How To Live Tax Free Overseas
By The Editors of Live and Invest Overseas
Published by Live and Invest Overseas
Publisher: Kathleen Peddicord

CopyrlghL 2013 Llve and lnvesL Cverseas lnc.,
Calle Las Acaclas, Casa # 36, nuevo Campo Alegre ( Marbella), anama
anama, 8epubllc of anama
All rlghLs reserved. no parL of Lhls reporL may be reproduced by any means wlLhouL Lhe
express wrlLLen consenL of Lhe publlsher. 1he lnformaLlon conLalned hereln ls obLalned
from sources belleved Lo be rellable, buL lLs accuracy cannoL be guaranLeed.
www.llveandlnvesLoverseas.com



"#$ %# &'() %*+ ,-)) .()-/)*/ 0


!!!"#$%&'()*(%&+,-%&.+&'+"/01



1he unlLed SLaLes of Amerlca has developed a more compllcaLed Lax-reporLlng, -flllng, and -
paymenL sysLem Lhan any oLher ln Lhe world, cerLalnly when lL comes Lo personal lncome Laxes.
1he u.S. sysLem feaLures Lax deducLlons, exempLlons, a few loopholes sLlll remalnlng, and dozens
of flllng forms LhaL Lhe poor Lax-paylng Amerlcan may or may noL be requlred Lo lnclude wlLh hls
return each year, depending on the activities hes engaged in during the 12 months prior
lnvesLmenL, real esLaLe ownershlp, farmlng, self-employmenL...
Cn Lop of all LhaL, Lhe unlLed SLaLes Laxes lLs clLlzens on Lhelr worldwlde lncome no maLLer where
Lhey are llvlng. Meanlng LhaL Lhls super-compllcaLed, super-convoluLed, and forever-changlng Lax-
reporLlng and -flllng sysLem follows you no maLLer where ln Lhe world you wander. When a 8rlL or
a German moves out of his home country, he doesnt have to pay taxes in that country until or
unless he moves back. More important, he doesnt even have to file a tax return or any document
of any klnd ln LhaL counLry unLll or unless he moves back. Amerlcans, whlle Lhey do geL some
excluslons, credlLs, and deducLlons on Lhelr lncome for Lax purposes lf Lhey llve ouLslde Lhe unlLed
SLaLes, sLlll have Lo flle a pleLhora of forms even lf, afLer all has been reporLed and calculaLed, Lhey
dont owe any taxes.
But its n#1 */ 2*3 */ 4#5 6'781 18'9:
Many Amerlcans prepare Lhelr own Lax reLurns when llvlng ln Lhe unlLed SLaLes, buL Lhe addlLlonal
forms and requlremenLs lnvolved wlLh a non-residents return mean LhaL almosL every Amerlcan
llvlng ouLslde Lhe counLry hlres a Lax accounLanL or Lax aLLorney Lo prepare hls reLurns for hlm (or
her).
The truth is, though, that it isnt as complicated as it can appear, at least not in most cases. You
[usL have Lo know Lhe relevanL rules and whlch forms Lo use for whaL purpose. lf your reLurn ls
sLralghLforward, you should be able Lo prepare lL yourself uslng a program llke 1urbo1ax. A slmple
reLurn would be one for someone who ls llvlng and worklng overseas and needs Lo flle for Lhe
lorelgn Larned lncome Lxcluslon (referred Lo ln Lax-planning circles as the FEIE or the exclusion).
%8) 6#/1 '6;#-1*91 1##< in the U.S. expats tax toolbox
lf you quallfy, Lhe allows you Lo exclude up Lo uS$97,600 (uS$193,200 for a marrled couple
wlLh boLh spouses resldlng overseas) of forelgn-earned lncome from u.S. Lax.
ln 2013 forelgn-earned lncome from u.S. federal lncome Lax. 1he amounL ls lndexed each year for
inflation (U.S. government inflationnot anyones real inflation calculaLlon).
All u.S. clLlzens and resldenLs who earn more Lhan uS$9,730 (slngle) or uS$19,300 (marrled flllng a
[olnL reLurn) ln a year musL flle a u.S. personal lncome Lax reLurn no maLLer where you reslde.
"#$ %# &'() %*+ ,-)) .()-/)*/ =


!!!"#$%&'()*(%&+,-%&.+&'+"/01


?ou musL flle, buL LhaL does noL mean you musL pay Lax. Cne of Lhe many beneflLs for an Amerlcan
living or retiring abroad is that, once youre a foreign resident, youre eligible to take advantage of
Lhe lLlL.
1he excluslon applles Lo forelgn-earned lncome onlyLhaL ls, wages or self-employmenL lncome
(lndependenL conLracLor earnlngs, for example) you recelve for servlces you perform whlle llvlng
ouLslde Lhe unlLed SLaLes. Wages can come from a u.S. corporaLlon or a forelgn corporaLlon,
lncludlng an offshore corporaLlon, and lL does noL maLLer lf you are also a shareholder or owner of
LhaL forelgn corporaLlon.
noLe, Lhough, LhaL earned lncome does noL lnclude lnLeresL, dlvldends, or oLher lnvesLmenL or
passlve lncome.
%8) :)4 '/ 1# >5*<'?4
8oLLom llne, you quallfy for Lhe excluslon ln one of Lwo ways:
1. %8) @@A B*4 %)/1. 1o quallfy for Lhe lLlL uslng Lhe 330 uay 1esL, you musL be ln anoLher counLry
(just being outside the U.S. doesnt work if youre in international waters, for example) for 330
days ouL of any 363-day perlod. lL does noL maLLer lf Lhe 330 days are over Lwo calendar years
(beLween nov. 1, 2012, and CcL. 31, 2013, for example), and you can avall of a speclal exLenslon Lo
flle your Lax reLurn Lo glve you Llme Lo meeL Lhls requlremenL.
2. %8) C#9* ,'3) D)/'3)9E4 %)/1. ln Lhls case, you achleve forelgn resldency by movlng Lo anoLher
country and making it your home. You can intend to return to the States in the future, but you
must move to the foreign country for an indefinite or extended period of time that must
lnclude one full calendar year.
1he 330 uay 1esL ls facL-based, whlle Lhe 8esldency 1esL hlnges on your lnLenLlons and ls Lherefore
more dlfflculL Lo use and Lo prove.
1he 8ona llde 8esldency 1esL ls one of Lhe mosL mlsundersLood and mlsused secLlons of Lhe u.S.
Lax code. ?ou are a bona-flde resldenL of anoLher counLry lf you move Lhere and make lL your
home. 1o quallfy under Lhls rule, you have Lo be a legal resldenL of anoLher counLry. Sounds slmple
enough, buL legal resldency ls only Lhe sLarL. ?ou also have Lo show LhaL you are Lruly a resldenL of
the country. Proof could include owning or renting a home in the country, having a local drivers
license, having kids enrolled in school there, and/or owning a car. You dont have to show all or
any of these examples, but youll need Lo prove somehow LhaL you, ln facL, llve ln Lhe counLry.
An example of havlng legal resldency and noL quallfylng as a 8ona llde 8esldenL would be Lhe
8ellze Cuallfled 8eLlred ersons (C8) program. under LhaL program, you can geL legal resldency
ln 8ellze. As a C8, you are requlred Lo spend only a monLh a year ln Lhe counLry Lo malnLaln LhaL
residency status. That sounds greatuntil you think it through a little. Because obtaining QRP
residency and continuing to live in the United States isnt going to quallfy you for Lhe u.S. Lax
excluslons.
"#$ %# &'() %*+ ,-)) .()-/)*/ @


!!!"#$%&'()*(%&+,-%&.+&'+"/01


1he perfecL example of a u.S. forelgn resldenL ls a person who moves Lo a forelgn counLry, does
noL lnLend Lo reLurn Lo Lhe SLaLes, flles and pays Laxes ln Lhe new counLry, obLalns a long-Lerm vlsa
LhaL allows hlm Lo work ln LhaL counLry, sells hls u.S. home and buys one ln Lhe forelgn counLry,
and who relocaLes wlLh hls famlly.
Cf course, Lhough, few cases are perfecL.
lor example, a husband mlghL move Lo lrance Lo work Lhere lndeflnlLely, leavlng hls famlly ln
Callfornla. Maybe he reLurns Lo Lhe SLaLes for 40 days per year Lo vlslL and lnLends Lo reLurn agaln
full-Llme as soon as flnanclally posslble.
ln Lhls case, Lhe Amerlcan ln quesLlon has a good chance of belng allowed Lhe excluslon, assumlng
he ls physlcally outside the States for at least one year, but its not guaranteed, and the
deLermlnaLlon by Lhe l8S would depend on many facLs and facLors.
noLe LhaL slmply belng ouL of Lhe SLaLes for a full calendar year does noL make you a resldenL of a
forelgn counLry. lor example, lf you go Lo a forelgn counLry Lo work on a consLrucLlon [ob for a
speclfled perlod of Llme, say 14 monLhs, you ordlnarlly would noL be regarded as a bona-flde
resident of that country, even though youre living and working there for one tax year or longer.
1he lengLh of your sLay and Lhe naLure of your [ob are only some of Lhe facLors Laken lnLo
conslderaLlon.
F84 2#18)- $'18 18) -)/'3)9E4 1)/1G
If the residency test is so complexyou may be wonderingwhy should you use it? The biggest
reason would be lf you wanL Lo be able Lo spend more Lhan 33 days a year ln Lhe unlLed SLaLes.
lurLhermore, once you quallfy as a resldenL of a forelgn counLry, you remaln a resldenL of LhaL
counLry unLll you glve up LhaL resldency. WlLh Lhe 330-day LesL, you musL be ouL of Lhe counLry for
330 days of each 363-day perlod. ln oLher words, Lhe deLermlnaLlon ls made year by year.
1he 8ona llde 8esldenL rule allows you more flexlblllLy regardlng your Lravels and allows you Lo
spend Llme ln Lhe unlLed SLaLes. unllke Lhe uays LesL, Lhe 8ona llde 8esldenL LesL ls Lled Lo
calendar years. 1hls dlsLlncLlon becomes lmporLanL for someone who ls on a one-year Lemporary
assignment from July 1 to June 30, as he wont be able to qualify under this test even if he is, in
facL, a bona-fide legal resident of the country, with the local drivers license, mortgage payments,
and school LulLlons Lo prove lL. 1hls poor Lax-payer would have Lo quallfy under Lhe uays LesL.
WlLh Lhe resldency LesL, you can quallfy for all or only parL of a year. Pere ls an example from Lhe
l8S webslLe:
You were a bona fide resident of Singapore from March 1, 2010, through Sept. 14, 2012. On
SepLember 13, 2012, you reLurned Lo Lhe unlLed SLaLes. Slnce you were a bona flde resldenL of a
forelgn counLry for all of 2011, you were also a bona flde resldenL of a forelgn counLry from March
1, 2010, through the end of 2010 and from January 1, 2012, through September 14, 2012.
"#$ %# &'() %*+ ,-)) .()-/)*/ H


!!!"#$%&'()*(%&+,-%&.+&'+"/01


I/) '1 #- <#/) '1
llnally, undersLand LhaL Lhe forelgn-earned income exclusion is use it or lose lL. If you dont file
your returns year by year, you cant later go back and try to claim the exclusion. Youll be required
Lo pay u.S. Lax on all your worldwlde lncome for any year ln whlch you falled Lo flle.
1he forelgn-earned lncome excluslon applles Lo u.S. Lax only. ?ou can have a local Lax obllgaLlon,
as well, in the country where youre a foreign resident. However, choose a zero-Lax
[urlsdlcLlon such as anama, 8ellze, or uruguay as your place of foreign residenceearn no more
Lhan $97,600 ln foreign income each yearand you could reduce your overall tax bill to nothing.


"#$ %# &'() %*+ ,-)) .()-/)*/ J


!!!"#$%&'()*(%&+,-%&.+&'+"/01




Overseas Retirement Letter
Top 2011 Retire Overseas Options Revealed In Full
Cheapest, safest, friendliest...best weather, best
infrastructure, best health care...most tax-advantaged
and most foreign resident-friendly...
Plus most beautiful, romantic, exotic, historic, and
adventure-filledFind out more here.
Overseas Retirement Circle Membership
Members of our Overseas Retirement Circle are part of
an inner circle working together, with full support from
us and complete access to our extensive Live and
Invest Overseas resources. Find out more here.
44 Things You Must Know Before You
Relocate, Retire, Or Invest Offshore

The nuts-and-bolts support you need to live, retire,
and invest overseas with confidence.
Find more here.
,5-18)- &'() *93 K9()/1 .()-/)*/ D)/#5-E)/
"#$ %# &'() %*+ ,-)) .()-/)*/ L


!!!"#$%&'()*(%&+,-%&.+&'+"/01



Top Health Insurance Options For The
Retiree Abroad
Health insurance is a top priority for anyone
considering a move overseas. Within the pages of this
two-manual kit, learn the difference between local
insurance and international policies. Find more here.

Global Property Investor's Marketwatch
As founder of International Living's Global Real Estate
Investor, Lief led his readers to a number of
remarkably profitable investments in markets from
Croatia to Mexico...from Argentina to the coast of
Spain...from Romania to Honduras... Now he shares
his unique and extensive experience with members of
his Global Property Investor's Marketwatch. Before
you take off for your new life in Paradise overseas,
let us show you...find here more.

Live and Invest Overseas Live Events
The best way to consider the best options for your new life overseas.
Our live events introduce you not only to our key overseas experts
for each country, including local attorneys, insurance providers,
bankers, real estate professionals, tax advisors, residency
consultants, and more, but also to expats and friends whove already
launched new lives in the worlds top havensand who can tell you,
from firsthand experience, of the advantages and the disadvantages,
the pluses and the minuses, the distresses and the delightsand why
theyve never looked back! Go here now to review our entire
calendar of events.