Live BETTER For Less in Panama
An Amazing Adventure Is Waiting For You! Leave All Your Worries Behind... Let Us Take Care Of Everything For You! Celebrating Our SIXTH Year of Relocation Tours! Our 6 day 5 night ALL-INCLUSIVE Panama Relocation Tour ™ will introduce you to the inexpensive and wonderful lifestyle available … Get the Details
Hello and Welcome to Panama Relocation Tours I'm Jackie Lange owner of Panama Relocation Tours ™ in Panama. I've lived in 4 countries, visited 26 countries and moved 22 times so I know a lot about relocating.....even relocating overseas. Here's the story about how I accidentally started the … Find Out More
STRESS-FREE ITINERARY WHICH TOTALLY SURPASSED OUR EXPECTATIONS Thanks Panama Relocation Tours for putting together a stress-free itinerary which totally surpassed our expectations. For anyone considering an exploratory trip to Panama, Jackie Lange’s Panama Relocation Tour is a must! The 6 day … Find Out More
Every couple of months I host an AMA (Ask Me Anything) call about moving to and living in Panama.
CLICK HERE TO LISTEN TO the AMA Call on March 17th. This call is 1 hour and 24 minutes long.
You’ve probably been reading International Living magazine for years. You may subscribe to every Panama forum and Facebook group about Panama that you can find. These are great ways to get an overview of what life is like in Panama. But to really discover is Panama is a good fit for you, you must come to Panama to see it for yourself.
Come see Panama up close and personal during an All-Inclusive Panama Relocation Tour. We still have some dates available in 2017 and our 2018 dates are not available too.
We just received this testimonial from Todd Kane who came on the March 2017 tour:
It’s really quite simple, if there is ANY chance you may relocate to Panama, even 5%, this will be the best money you can spend.
This is the second in our series on Offshore Tax requirements for US expats by international tax expert, Diane Kennedy. Read part one HERE.
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One non-negotiable for US citizens is that we are taxed on worldwide income. If you live in the US, make money overseas and bring the money back into the US, it will be subject to US tax. However, if the income is earned overseas, the business is owned by a foreign entity and the income is not brought back to the US, the income will be subject to taxes in the foreign country and not the US.
Let’s look at those items in detail now.
The income must be earned outside the US.
The US federal government and states use something called nexus to determine where income is earned and whether it is subject to federal and state tax. Nexus means connection. If you have connection with the US, you have nexus. And that means you have taxable income for the US.
Some of the things that can trigger US tax nexus include an office in the US, employees in the US, sales to US citizens that are consummated on US soil, live US events and more. The simplest way to keep foreign income separate from the US income is to separate out your customer sales. Use a US business structure for your US sales. And use a foreign company for your foreign sales.
This can be fairly easy to do with your online business. You may use just one website and then separate out the sales depending on where the customer lives when they input their payment method. Or you may have an opening page that redirects based on where they input their country of origin is. As long as you’re separating out the income, you’ve probably passed this first test.
You must use a foreign company that meets US criteria.
Foreign corporations are usually the entities used to defer US taxes because the US owners of foreign partnerships or limited liability companies are subject to tax as pass-through entities. But, having a corporation doesn’t necessarily mean you’re home free. First, if a foreign corporation is considered a controlled foreign corporation (CFC), foreign personal holding company (FPHC), passive foreign investment company (PFIC) or foreign investment company (FIC), there may be a tax on the earnings. If the corporation has income that is connected to the US it may be taxed in the US. And finally, if you have US source income of specific types, even if there is no business involved, it may be subject to US tax.
Of these, the most likely to trip up the online business owner is the CFC. A CFC is a foreign corporation whose total combined ownership in voting power by US shareholders is greater than 50%.
This is an area where you need to make sure you’ve got expert US tax advice. Work with a CPA or tax attorney who understand the tax treaties between the US and preferred country of residence and the rules regarding the foreign entity you’re setting up.
You can’t take the money back to the US.
This is simple. Take it back to the US and it’s taxable. That’s why foreign income is often referred to as tax deferred, not tax-free.
The most common use of foreign corporations, foundations or trusts is for asset protection. Asset protection doesn’t always mean tax savings, though. Make sure you know exactly what you’re getting with your business structures.
It’s your money. Keep more of it. You can find more real-life tax busting strategies by Diane Kennedy, CPA/Tax Strategist at her website http://wwwUSTaxAid.com. Diane and her husband lived outside the US for five years and, to this day, continue to run foreign businesses. When it comes to taxes, the more you know, the less you’ll pay.
With U.S. tax season upon us, many expats are unclear about their obligations to the IRS once they relocate to another country, like Panama. In this series of articles, international tax expert Diane Kennedy, will clear up some of the confusion for you. Afterwards, read part 2 HERE.
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It sounds tempting. Move your business to another country and avoid US taxes. But, is it legal?
Like so many other instances in tax planning, the real answer is “it depends.” You may have heard that US citizens are taxed on worldwide income. Most of the time that is true. The default answer for “Is it subject to US tax?” is usually “yes.” There are two main exceptions that may be applicable for you if you have an online business.
First, if you live outside the US for most of the year, you can exclude a big part of your income. This is known as the foreign earned income exclusion.
Second, if you have income from a business that is owned by a foreign entity and the income is not brought back to the US, you may be able to avoid US taxes on that foreign income.
Let’s start with the foreign earned income exclusion. In order for this to apply you need a couple of things:
You must be a qualified foreign income recipient.
That means one of the following three is true:
You must have foreign earned income.
You can qualify with this either as an employee of a foreign company or by being self-employed.
If you’ve got an online business, it’s pretty easy to qualify for this as long as you are out of the country for the required number of days.
The foreign income exclusion amount for 2017 is $102,100 per person.
Plus, you can get a qualified housing exemption for up to 30% of the foreign income exclusion. The actual amount varies based on where your foreign home is and the number of qualifying days you actually have.
One of the biggest advantages for online business owners is that you can make money anywhere. And if you set up shop in another country, you may slash your taxes at the same time.
There are also some strategies you can use to maximize the deduction if you qualify as a foreign income recipient under the 3rd definition. Using this definition, you select any consecutive 12 month period for the requisite 330 days So, you may have multiple calendar, tax years may be involved. If you have just a few qualifying periods, you may need to pro-rate the amount of the exclusion. Make sure your tax preparer is up to date on the special advantages for the foreign income exclusion. You could save big-time on taxes!
In the next article, we’ll look at how to strategically use the second income tax exclusion, foreign entity exclusion, to pay little to no taxes. Click HERE to read part 2.
It’s your money. Keep more of it. You can find more real-life tax busting strategies by Diane Kennedy, CPA/Tax Strategist at her website http://wwwUSTaxAid.com. Diane and her husband lived outside the US for five years and, to this day, continue to run foreign businesses. When it comes to taxes, the more you know, the less you’ll pay.