Do you dream of working from Bali or maybe the Swiss Alps? Remote working is nothing new, of course, but over the past year millions more people and businesses have embraced the remote working experience.
With the lifting of restrictions on international travel, the number of people seeking to work remotely from overseas is expected to skyrocket, fueled by the proliferation of remote working and a thirst for adventure.
Remote working is just as appealing to business owners, freelancers and entrepreneurs as it is to employees. As a business owner, if you and your team are already working remotely and are not tied to your current location, you may want to consider starting your business while traveling the world.
The systems, platforms and tools required to work remotely are the same whether you and your team are based in the same city or scattered around the world. are already configured for remote work.
There are new sites and apps you’ll want to familiarize yourself with as well, such as Nomad List, which connects like-minded international digital nomads so they can share information, exchange advice, and network.
If you’re not tied to your current location, there are a few advantages to working remotely from abroad. It is possible to travel and explore without having to take a career break. And some people also see remote working abroad as a chance to save money on taxes while investing and growing a business.
In fact, with careful planning, it may be possible to pay zero taxes while building your business faster and simultaneously exploring exotic and distant lands.
HOW TO MINIMIZE TAX ABROAD
The US tax system is unusual in that it taxes all US citizens and green card holders on their global income, regardless of where they live or roam the world. This means that American business owners (as well as employees) working remotely from overseas still have to file their taxes in the United States.
If you are moving to a country abroad, rather than traveling from one country to another, you may also have to pay foreign taxes.
The easiest way to avoid paying foreign income taxes while starting your business overseas is to travel from country to country rather than spending too much time in one country. Alternatively, if you would prefer to be based in the same location, try choosing a country with low or no income tax. Either way, it’s important to research the rules and tax rates of the countries you plan to visit in advance.
How you lower your US income tax bill while running your business remotely from overseas depends on the details of your situation.
For example, if your income is either salary or self-employment income, and you meet certain conditions, you can claim the exclusion of income earned abroad, which allows you to exclude the first d ” About $ 107,600 (the 2020 figure – $ 108,700 in 2021) of your income tax income in the United States.
For most international teleworkers, to be eligible, you must spend at least 330 full days in a 365-day period (which doesn’t have to be a calendar year) outside of the United States.
However, the exclusion of income earned abroad cannot be applied to unearned income such as dividends.
Another way to claim the U.S. foreign tax credit is to move to another country and pay foreign income tax there. The foreign tax credit gives you US tax credits for the same value as the foreign taxes you paid on any income, including dividends.
There are other credits and exclusions available only to Americans living and working abroad, some of which may be more (or additional) of benefit to your personal situation.
A WORLD OF OPPORTUNITIES
Keep in mind that you may need to restructure your business before you take off if you want to ensure that your business and personal compensation is set up to take full advantage of it. Planning your travel schedule and how you receive your income, combined with requesting the exclusion of income earned overseas, can provide a rare opportunity to dramatically reduce or even eliminate your tax bill. on income, which can help you grow your business by giving you more money to invest in marketing, new hires, or a new product or service.
In addition, the opportunity to network internationally often brings new opportunities that you had not considered before. New partnerships, collaborations, and businesses are happening all the time through chance encounters with other digital nomads from around the world.
The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice regarding your specific situation.