BootsnAll Travel Community

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Originally posted by WhereForArt:
Oh gosh, I'm so far away from being an expat that I hate to narrow it down - but if I HAD to, it would be something like an English-language used bookstore in either Turkey or Italy (my 2 favorite countries).

Yeah, that might prove difficult. If you can find an Italian to assist you, you can incorporate in Italy for about $5k. Once incorporated for three years or more, the corporation can begin sponsoring residency visas for foreign employees (such as yourself.)

If you like Italians, you might also consider living in Argentina. There it is relatively easy to obtain residency for the purpose of business. Takes about $100 to obtain their version of an EIN, or corporate social security number. With it, you can rent, procure licenses, buy property, etc.

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The term is sarcastic and does not seem to be used in the context of permanent immigrant communities, poor or otherwise, such as the slums of Paris.

The word "ghetto" was simply a Venetian term for walled-off Jewish communities. Over the last few centuries it came to mean isolated communities in general. Only recently has it been adapted to refer to low-income, ethnically-homogeneous areas. Please take notes, as there will be a quiz Friday.

quote:

Originally posted by WhereForArt:
I'm curious about the possibility of an expat (especially an American) opening a business. I ran into an English woman in Turkey recently who owns a small secondhand bookshop. This would be a wonderful job - living in a foreign country and selling books! However, I was wondering if there were a lot of restrictions in place about owning a business.

I think you will find that 9 times out of 10, when you see a foreigner in a small local owner-operated business, that person is married to a local.

I concur with Sofphie9...maybe even more. You might want to consider going in on a biz with a native although you'd likely not have a controlling interest.

coop: thank you for the etymological titbit. as with whit, it doesn't count if your average immigration official doesn't

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I think you will find that 9 times out of 10, when you see a foreigner in a small local owner-operated business, that person is married to a local.

Yeah, I was afraid of that - I wonder if the Italians or Turks are as strict about marriages of convenience as the US is.

And Tammy, I've heard about the Empress Zoe and actually checked into staying there, but they were already booked up.

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Originally posted by WhereForArt:Yeah, I was afraid of that - I wonder if the Italians or Turks are as strict about marriages of convenience as the US is.

I don't know about the sanctity of the Turkish marriage license, but the Italians could care less about keeping an American out of the country. So feel free to wrangle yourself an Italian partner.

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originally posted by Stoo:thank you for the etymological titbit. as with whit, it doesn't count if your average immigration official doesn't Razz

Ah, but I was prepared for that, so I tested it out on an immigration official before posting. After two tries he got it.

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I don't know about the sanctity of the Turkish marriage license, but the Italians could care less about keeping an American out of the country. So feel free to wrangle yourself an Italian partner.

Actually, what was I thinking! The hell with the marriage of convenience - Turkish and Italian men are hot!

quote:

Originally posted by WhereForArt:
Actually, what was I thinking! The hell with the marriage of convenience - Turkish and Italian men are hot!

Lol. Well there you go. I can assure you with absolute certainty that you will havo no trouble finding a Turk or an Italian interested in marrying an American gal.

*bump*



Without going all the way back and finding the post in this thread that mentioned it....

Stoo, you were saying that the first 80K of income earned while living in another country is not subject to US Federal Income taxes, and also referred to some IRS codey deal (2555?). I assume that DOES NOT apply to money earned from US-Based clients and deposited into US-Based banks from business you just happened to conduct while living in the other country? You're referring to the money you earn locally at your expat site of choice, in your case Zurich, yes?

Gah. So money questions...

WARNING! WARNING! The entire next few pages of this thread deal specifically and ONLY with income tax issues related to U.S. expats, the Foreign Earned Income Exemption, various U.S. State Income Tax issues, and other logistical garbage related to generating/accounting for income while living abroad. It's very informative if you need to know that kind of information. But if not, skip to page 6 of the thread and scroll down to return other less-taxing issues that have to do with becoming an Expat.

NTFT, it doesn't matter if the income is derived from U.S.-based clients or if it's kept in U.S.-based banks. As long as you are working as a sole proprietor residing in a foreign country, you're good to go.

However, if you are a salaried employee of a U.S. corporation (even an S corp that you run yourself) then everything you make through that corporation, regardless of the source of the funds, is taxable. Even your first $80k.

So, if your consulting business is currently set up as an S or C corporation, then you'll need to dissolve it and work as a sole proprietor once you make the big move. (You can get around this, of course, by having the corporation pay you as a contractor rather than as an employee, but why bother. It just makes things more difficult come April.)

We don't do our own taxes, it's just too much trouble. For $100 somebody else does a great job and I sign the form.

But the Foreign Earned Income Exclusion is a tricky beast. Not all foreign earned income is excludable. My husband and I work for two different American entities in a foreign country. We both get paid direct deposit into US bank accounts.

My income is taxed and taxable, his isn't. Depends on the business. There is something somewhere called and International Tax Treaty. Also Congress gets to decide what is eligible for exclusion and what isn't. And that changes sometimes too.

In all honesty, your best bet is to find a knowledgable tax consultant in the US and pay them to give you the right answer to your particular situation. The particular situation is particularly important.

I respectfully disagree with Coop. Sophie is in that position now (I believe) and I have been. Namely, if you can claim residency* despite your income source, then you are good to go.

EDIT: Like Sophie says, but more accurately, only "salaried income" applies. (I got popped for US$1500 tax due on my Swiss unemployment payouts. Capital gains are also not included. But there are "tax credits", which help and other things. More on this below.)

I personally have worked for 2.5 years for a UK company, without UK residency (according to the Home Office, that is. I had an inter-company, expat visa--non resident, no recourse to public services), being paid into a US account, by a US-based company and qualified for the 2555 exemption. I did not have a home in the US. I did pay non-resident state taxes from where my company paid me from . (NYC) All of this was stated legally, without dodginess, by my US-based tax attorney.

There are three "tests" for qualification for the 2555 Foreign Earned Income Exemption. You can find the gory details, and other pertantint topics, with IRS Publication 54 and there is a specific 2555 instruction document, but my google skills failed me before my attention span ran out. Sorry.

While the 2555 exemption is moderately complex (there is a 2555 and a 2555EZ), the remaining implications and options and stuff. my 2006 return, with worksheets, was 50 pages. And I am not rich...just your average, decently paid, single, renting, carless Boot.

*: residency is a legal status determined by whoever is asking, and not what you (or another non-tax professional) might assuming logically it to mean. It is fuzzy. It is a gray area. Two different authorities may disagree. (E.g.: the IRS can say "you are a forign resident" while at the same time the UK Home Office can say "you are not a resident". Residency is in the eye of the beholder.) You can influence it one way or the other by doing certain things, the two most important being: no address in the US, and a permanent address abroad (with bills). Legal residency in a foreign country is very helpful, but not a requirement.

This area is complex, and there are lots of anecdotal tales of this and that. Many people innocently project their situation onto yours when giving advice. (I can do that too.) Be careful, unless they do this professionally.

If you can't fill out a 1040EZ because your income is too high, and are living overseas, then you can afford to get a tax professional sort this out. Even if you are an accountant, do it. This stuff can get crazy complicated and legalistic.

PM me and I'll forward my tax attorney's details. (Florida-based.)

Pay the money, it is worth it. I had to file two 1040X forms, at a cost of US$1100, after doing it myself. Never again. I'd rather try DIY dentistry.

But, that is not reason not to educate yourself. The terminology is really important. "Resident", "earned income", etc. Get familiar with them. Jane Bruno has written a great, concise, easy to read book on the subject. Drop by Zürich and you can have my copy I actually got her to do my 1040X stuff (because of the complexity).

I think our experiences differ in that I'm coming at it from a small business owner perspective. Both of you are working for third parties, so your experiences will differ from my own. I've been working under the current framework for the last six years or so. Obviously, however, it is best to seek out a tax attorney, as I'm sure Travis will, but it really isn't all that complicated for the self-employed expat living abroad. Travis, I believe, works as an independent consultant. On paper, so do I. So the same rules will apply.

It gets more complicated when you're employed by a foreign company, or a U.S. company for that matter. These companies will define your employment in a multitude of different ways, so most personal experiences will be, as you mention, anecdotal. Sometimes your income will be taxed locally, sometimes by the U.S., and sometimes you'll end up with tax obligations to neither nation or both. Again, it is somewhat simpler when you're self-employed.

Establishing residency in the eyes of the IRS is, as pointed out, the biggest hurdle, but it isn't too difficult to meet what are admittedly ambiguous requirements. And you can still own as much U.S. property (and use as many U.S. addresses) as you like, but you will continue to pay taxes on any income they generate and you must be sure that you're not still listing it as a residence (be it with the county, state, or your insurance company.)

Anyway, it shouldn't be too complicated. Especially if you're the type that already fills out an SE form every year.

quote:

Originally posted by Continental Op:
NTFT, it doesn't matter if the income is derived from U.S.-based clients or if it's kept in U.S.-based banks. As long as you are working as a sole proprietor residing in a foreign country, you're good to go.

Holy crap! Yay!!!

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Originally posted by Sophie9:
But the Foreign Earned Income Exclusion is a tricky beast. Not all foreign earned income is excludable.

Oh. Poop. Boo.

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Originally posted by Stoo:
Like Sophie says, but more accurately, only "salaried income" applies.

Hmmmm. I don't work on salary, just contrat/project basis.

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Originally posted by Stoo:
If you can't fill out a 1040EZ because your income is too high, and are living overseas, then you can afford to get a tax professional sort this out. Even if you are an accountant, do it.

Yeah. One more note on the (daunting) "to do" list is a call to the guy who does my taxes. I hope he has some expat clients.

And thanks for the link and all the rest of the info. I *think* I will probably qualify....but still sorting out the Visa and residency issues. Ironically, I think I'm going to need a "retirement visa", so I can establish residence, so I can work from another country for US-clients. But I may not be old enough to qualify for a "retirement visa".



Not complicated at all. Thanks everyone!

EDIT: And now I see the new post from Co-Op above. Based on that info, things are looking up again!

¡Mil Gracias!

quote:

Originally posted by Not the first Travis:
EDIT: And now I see the new post from Co-Op above. Based on that info, things are looking up again!

Travis, your biggest problem in the beginning will be claiming foreign earned income. Your consultation will still be exclusively with U.S clients, so you'll either have to a.) get that B&B up and running so that some of your income is foreign earned, or b.) find some Mexican clients. It isn't too hard, of course, as the IRS doesn't specify how much income must be foreign-earned. They only mandate that some be foreign-earned.

Alternatively, you may begin defining your phone-based/project-based business as a Mexican one rather than an American one. New business cards, emails to clients with your new Mexican address, etc. At that point, all of your income will be "foreign-earned." You'll just be another, hard-working Mexican business being exploited by gringo clients.

After a single year, you'll easily meet all of the other requirements for calling Mexico your "tax home." It will be the base of your business as well as your permanent residence, so you should be in the clear.

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Originally posted by Not the first Travis:
But I may not be old enough to qualify for a "retirement visa".

Really? Coulda fooled me.

Although I doubt I will be an expat anytime soon I find this topic pretty interesting and its reassuring that should I need help on such a topic there is a place to go where the advice makes more sense than an IRS webpage. yay bna!

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Originally posted by Callilucy:
Although I doubt I will be an expat anytime soon I find this topic pretty interesting and its reassuring that should I need help on such a topic there is a place to go where the advice makes more sense than an IRS webpage.

Money, cash, hoes, as the kids say. That's how expats roll.

I don't really know much about this S corp stuff. But can't you just pay yourself a salary? Or maybe reorganize your company so that it works out that way?

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Originally posted by Not the first Travis:
Yeah. One more note on the (daunting) "to do" list is a call to the guy who does my taxes. I hope he has some expat clients.

If he is not well versed, then find someone else. I've been shocked about how little generalists know about this area. Coop, Sophie and I are just individual tales with one moral: get someone who knows there shit!

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And thanks for the link and all the rest of the info. I *think* I will probably qualify....but still sorting out the Visa and residency issues. Ironically, I think I'm going to need a "retirement visa", so I can establish residence, so I can work from another country for US-clients. But I may not be old enough to qualify for a "retirement visa".

That was part of my point: For the 2555, you don't really need a "resident" visa. While I had a non-rez visa in the UK, I did not have to document any of this with the IRS. Nothing. There are anecdotal experiences out there about host country illegal people qualifying.

Best if you discuss this before you leave! E.g.: With the 2555, it is very calandar year oriented. If you spend a 20 months, March 2000 to Sept 2001, as a resident elsewhere, you do not qualify for either 2000 or 2001! But if spend just under 12 months outside the US correctly (Jan 01, 2000 to Dec 02, 2000) you do qualify. Silly, but the rules.

Can we ask what country you are looking at?

Oh, did I mention, seeks professional advice?

quote:

Originally posted by Stoo:
I don't really know much about this S corp stuff. But can't you just pay yourself a salary? Or maybe reorganize your company so that it works out that way?

Nah. As the salaried employee of your own S corp, it is pretty much impossible to meet the foreign tax home qualification. The business, by its very nature, will be U.S. state-based rather than foreign-based. The best you could do is try and pay yourself like a contractor working for your own S Corp on a project-by-project basis. But as you're also a shareholder, those contractual payments can easily look like dividends to the IRS, and thus twice taxable.

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Can we ask what country you are looking at?

I think Travis has mentioned it in other threads, but if not I'll blurt it out anyway: Mexico. And if I'm not mistaken he currently works on consulting projects for right wing conservative militia groups looking for media exposure. Or was it the beef industry? I can't recall. One or the other.