• Funding
  • Investing
  • Lending
  • Insurance
  • Banking
  • Wealth
  • Fintech
  • Venture
  • Crypto
Subscribe
No Result
View All Result
  • Equity Funding
  • Stocks
  • Mutual Funds
  • Credit Cards
  • Loans
  • Insurances
  • Savings
  • Crypto Trading
Home News Feed Advisory

Working remotely from paradise? What it means for your taxes

CNBC NewsbyCNBC News
November 5, 2020

Lorado | E+ | Getty Images

“It’s increasingly a computer-based global work environment,” Minott said. “People can travel from country to country or stay where they like.”

The benefits are plentiful. You get to live in a vacation destination, improve your quality of life and possibly reduce your cost of living.

Just make sure you check in with your accountant before you board the plane.

Know your tax obligations

Virojt Changyencham | Moment | Getty Images

Would-be travelers should first consider their U.S. tax situation and how it will change if they leave the country.

All American citizens are required to file a tax return in the U.S. regardless of where they live and work, no matter how long they have resided abroad.

There is one key decision you’ll need to make when you file your taxes. U.S. taxpayers can either claim a credit for taxes they pay in a foreign country or exclude foreign income from U.S. taxes.

These visa deals won’t go away and I think we will see a spike in demand for overseas travel.

Gene Zaino

founder of MBO Partners

The foreign tax credit mitigates the effect of double taxation from both the U.S. and a foreign country. You’re claiming a credit for foreign taxes levied on your earnings.

Meanwhile, the foreign earned income exclusion allows you to exclude up to $107,600 in earnings from your taxable income in the U.S. for the 2020 tax year.

Generally, you can’t claim both the credit and the exclusion. Deciding which one works best for you will depend on your individual circumstances, including the length of time you’ll be away.

Be aware of the rules

The rules around using the credit or the exclusion are complex, so work closely with a tax professional as you plan your extended trip.

For instance, travelers must meet a set of conditions to qualify for the foreign earned income exclusion, including a “physical presence test.”

You can claim credit for foreign taxes paid, but the requirement that U.S. citizens spend at least 330 days of the tax year outside the country to qualify for the foreign income exclusion is strictly enforced.

If you’re looking for a six-month break from life stateside, you won’t get the considerable tax benefits of a more permanent move.

“It’s all or nothing,” said David McKeegan, who founded Greenback Expat Tax Services in 2009 with his wife Carrie. His family is based in Bali though he is currently on vacation in Costa Rica.

“If you’re gone for 329 days, there’s no change [in your tax status],” said McKeegan.

Foreign account compliance

Here’s another reason you’ll want to speak with your accountant before you go: You may be subject to additional tax reporting.

If you have an interest in or signatory authority over at least one account outside the U.S. and the aggregate value of the foreign accounts exceeded $10,000 at any time in the year – you’re required to file a report of Foreign Bank and Financial Accounts or FBAR, with the Treasury Department’s Financial Crimes Enforcement Network.  

Further, Americans who file an FBAR may also need to submit Form 8938 to the IRS. This is known as a statement of specified foreign assets.

Whether they’re required to submit the form will depend on where they reside and whether their foreign asset holdings meet a set threshold.

Be cognizant of state filing requirements

Getty Images

State tax return filings can also be a sticky situation for Americans who want to work abroad.

High-tax states like New York, California or Virginia may claim that you need to pay income taxes even if the federal government recognizes you as a foreign resident.

Owning a home or even keeping a car registered in a state could trip you up.

“If you have a bank account in the state or even a library card, some states may say you should be taxed,” said McKeegan. 

If you intend to move abroad for an extended period, one option is to establish residence in a low or no-tax state before you go, he said.

Either way, don’t board the plane before you’ve developed a plan.

With the numbers of remote workers and digital nomads rising, the demand for foreign travel will eventually surge, said Gene Zaino, founder of MBO Partners, a platform that matches independent contractors to firms.

“People are tired of being locked up,” he said. “These visa deals won’t go away and I think we will see a spike in demand for overseas travel.”

Source Link

Related Topics

Stocks making the biggest moves midday: Poshmark, JPMorgan, Wells Fargo, Zoom, Spotify & more

Bitcoin

Donald Trump Banned From Twitter in Final Days of Presidency

Prev Next

You May Like

Stocks making the biggest moves midday: Poshmark, JPMorgan, Wells Fargo, Zoom, Spotify & more

Bitcoin

Donald Trump Banned From Twitter in Final Days of Presidency

Investing

Fintech start-up SoFi to go public via SPAC backed by Chamath Palihapitiya

Personal Finance

Mega Millions jackpot is now $490 million while Powerball is $470 million

Financial News

Bitcoin

Players Prefer Cashing Out in Bitcoin Amid Rally, Says Online Poker Giant

CoinDesk
by CoinDesk
Advisory

New Covid relief bill boosts tax breaks for charitable giving in 2021

CNBC News
by CNBC News
Investing

Deciphering what Nelson Peltz is up to with his big moves in the investment management space

CNBC News
by CNBC News
Bitcoin

Zcash Undergoes First Halving as Major Upgrade Drops ‘Founders Fund’

CoinDesk
by CoinDesk
Investing

Huge November gains may make the usual year-end ‘Santa Claus rally’ less likely

CNBC News
by CNBC News
Investing

Asia investors should focus on the region’s ‘robust’ data instead of the U.S. election: Aberdeen

CNBC News
by CNBC News
Personal Finance

45% of Americans don’t know how much tax is withheld from their pay

CNBC News
by CNBC News
Investing

‘Suddenly we have hope’ — Cramer says the big stock pop on the positive vaccine data is justifiable

CNBC News
by CNBC News
Load More

© 2020, FinanceLane

Home | Contact | Terms and Conditions | Disclaimer | Privacy Policy

  • Home
  • News Feed
    • Equity Funding
    • Debt Funding
    • Crowdfunding
    • Real Estate Funding
  • Investing
    • Stocks
    • Bonds
    • Mutual Funds
    • Private Equity
    • Merging & Acquisition
    • Real Estate
  • Lending
    • Personal Loan
    • Business Loan
    • Credit Card
    • Microfinance
    • Peer-to-Peer Lending
  • Insurance
    • Life Insurance
    • Auto Insurance
    • Education Insurance
    • Health Insurance
  • Banking
    • Business Banking
    • Payments Bank
    • Investment Banking
    • Individual Banking
  • Wealth
    • Earning
    • Savings
    • Investments
    • Budgetting
    • Credit Management
    • Tax Planning
    • Retirement
  • Fintech
    • Alternative Financing
    • Payments
    • Asset Management
    • Digital Banks
    • Softwares
  • Venture
    • Startup Ecosystem
    • Merging & Acquisition
    • Equity Investing
    • Franchising
    • Business Offers
  • Fintech
    • Alternative Financing
    • Asset Management
    • Digital Banks
    • Softwares
    • Payments
  • Crypto
    • Crypto Investing
    • Crypto Trading
    • Crypto Coins
    • Bitcoin
    • Blockchain
    • DAPP
  • Subscribe
  • Contact
  • Login

© 2020 FinanceLane - Terms and Conditions | Disclaimer | Privacy Policy

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

← Election Bets Drive Fee Spike at Predictions Platform Polymarket ← Stocks making the biggest moves in the premarket: General Motors, Cigna, Merck, Regeneron & more
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.