I've been doing this in India for the past 10 years. At this point I've basically set up my burningman camp on an organic farm on the edge of Bangalore. I run a code school where people learn web development online and encourage other techies to stop by and work on their projects for awhile. Cost of living including food and internet is about $100. Americans get great visas to India. Check us out http://jaaga.in
Bootstrapping overseas as an American
41–50 of 59 posts
Re: Bootstrapping overseas as an American
#42Earlier quoted context omitted.
On that IRS page it says: "For this purpose, foreign earned income is income you receive for services you perform in a foreign country during a period your tax home is in a foreign country and during which you meet either the bona fide residence test or the physical presence test." It sounds like one must also be tax resident in the foreign country for this to work?
Yah, you have to be paying taxes to someone else to take the FEI deduction. Unless you are in a low tax country like Switzerland, Hong Kong, or Singapore, it's just a shortcut in doing your taxes, you don't actually save money since you can always deduct your foreign income taxes if you don't take it.
Kind of an aside, but it's sometimes not even worth doing the shortcut, again unless you're in a very low-tax country. I am eligible for the foreign earned income exclusion but purposely don't take it, and instead take the foreign tax credit, because excluded income is not eligible for IRA contributions [1]. It's entirely excluded, so doesn't count as earned income, and since you can't contribute more to an IRA than you have in earned income for the year, if you end up excluding all your income you have no basis for a contribution. But the foreign tax credit doesn't cause the same problem, because it's just a credit against tax owed, not an exclusion of income.
[1] http://www.irs.gov/Individuals/International-Taxpayers/Indiv...
Re: Bootstrapping overseas as an American
#43I'm an overseas developer myself, currently sitting on a point break in Morocco enjoying perfect wifi, powering it all with solar panels. I'm pretty sure that the 100,000 IRS deduction is only for income earned from a foreign source. So, if you are like me and have your income coming from Apple app store sales, then you still need to pay your taxes, without a deduction. Basically, the big problem with working out of…
The IRS needs to stop taxing US citizens abroad. It is draconian and taxation without representation. Even if you don't own any taxes you need to declare all assets over 10k and file a return. The US is the only country (other than Eritrea) that does this taxing of people who don't earn in the US.
Isn't part of the reason the US exists because certain people no longer wanted to pay taxes to the king of England?
Many are giving up citizenship because of this but now the price to do that has risen 400% to over $2000 just for processing not including any back taxes you may need to pay.
Re: Bootstrapping overseas as an American
#44What do people do for health insurance in this situation? Or is it a don't get sick or hurt kind of deal?
The 3-month-tourist-visa case is pretty tricky. You can buy travel health insurance pretty reasonably, but most policies limit the length of a covered trip to 1 month at a time, and specify that it cannot be for work or study. If on the other hand you have official residence in another country, you can either buy local insurance there, or be covered under their national system (if they have one). But if you're somewhere for 3 months as a tourist (or "tourist") and have no local ID/registration, getting insurance that will cover that scenario is not easy. It's possible some travel insurance doesn't have the 1-month-per-trip limit, but all the ones I've seen do.
Re: Bootstrapping overseas as an American
#45What do people do for health insurance in this situation? Or is it a don't get sick or hurt kind of deal?
Its mainly a "expect to pay a few grand" kind of deal.
I had 2 spine surgeries and LASIK done this year. Maybe 300k rupees or about $4000. I could have gone cheaper, but at that price I just figured "why risk it"?
Re: Bootstrapping overseas as an American
#46That was an odd piece. I'll start with the provably wrong statement: "Even in Europe, where you wouldn’t be able to get a self-employment working visa (if such a thing existed) with less than six months effort and a good lawyer" It took me about 2 months to get a self-employment residency permit for Sweden. While I looked around for lawyers to help, I couldn't find any, and ended up writing it myself. It seems very f…
The overseas bit of this seems more about hipster posing; having a slightly more exotic story to tell. I don't think the cost arguments for relocating to a developing country make any sense. You can live in third tier cities in America or Europe very cheaply. It's only major cities that are expensive. I think in a lot of folks' heads saying "I live by a beach in Thailand" is for some weird reason more cool than sayin…
That makes a lot of sense! That would explain my confusion about "most remote" comment, since it's hard to find a thatch-roofed bar on a really remote beach. Interpreted as poser one-upping, I now read it as "not where all the other tourists go." Well, except the Swedish women.
FWIW, I spent a couple of weeks living by a beach in Florida in the panhandle. Not much going on there. Would rather live in a city.
If you want to live in a first tier city, the cost arguments do make some sense. I enjoyed Cape Town a lot. It had plenty of night life, activities, stores and other attractions, and even for a tourist month-stay apartment in the Fresnaye neighborhood, between the mountains and the sea, and with cleaning every other day, it was about under 1/2 of what I paid in the US.
I didn't like (when I was first in Sweden) the feeling of being illiterate. I imagine for Thailand, outside of doing tourist things where they cater for foreign money, that it would be similar.
Re: Bootstrapping overseas as an American
#47Earlier quoted context omitted.
Here's the relevant section explaining that yes, income from a US company is just groovy for use with the Foreign Earned Income deduction: http://www.irs.gov/Individuals/International-Taxpayers/Forei... Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for performing personal services in a…
Interesting! I stand corrected. Next thing I don't understand with that document is what is "earned" income. Are app store sales "earned?" I'd say so... constantly having to update the software -- I'm earning it.
Your profits resulting from sales on the App Store (less such expenses as are reasonable and necessary to achieve that income) are, unquestionably, earned income resulting from your personal contribution to a business.
http://www.irs.gov/Individuals/What-is-Earned-Income
Most forms of "unearned income" are where you're getting compensated primarily for capital rather than labor. For example, if you were to sell the business, the proceeds from the sale would ordinarily not be earned income. (There are sticky wickets around that question, which you'd want to ask a competent professional adviser about. Any adviser who tells you App Store income is unearned just lost their status as a competent adviser.)
Re: Bootstrapping overseas as an American
#48I do this. I actually live in a large, ocean view condo in Panama City. I rent half of it on AirBnB which covers all my fixed expenses other than my mortgage. I work remotely for a Swiss company and I legally pay no taxes. I don't have a degree, and I've only been working since I was 26. I'll be worth half a million before I'm 33, partly because my condo has risen in value. I married a beautiful local girl who probably wouldn't have given me the time of day in my native Canada. Here I'm taller, handsomer, and richer without having changed at all, just because the local men lower the bar for competition. The city is full of things to do, and it's more modern and interesting in some ways than many Canadian cities. Good beaches are 1-2 hours by car, so sadly I don't code on the beach (when I go, coding is the furthest thing from my mind.)
Re: Bootstrapping overseas as an American
#49"Here, you’re in luck. The IRS, being awesome, actually encourages you to piss off to parts unknown with its Foreign Earned Income Exclusion."
How is this the IRS being awesome? This is the U.S. being one of only two countries who tax its citizens on foreign income.
Re: Bootstrapping overseas as an American
#50Anyone doing this in Hong Kong? The GF is considering a move to HK with work and I'm trying to sort out how I'd scrape by if I wanted to tag along...
I just got back from a trip to HK. While I'm sure it's do-able, be forewarned that HK is just as expensive as any other major financial center. Don't expect prices to be cheap just because it's Asia.
I know people who are living in Shenzhen (a subway ride away) and commuting to HK - the whole "visa-run" being the morning commute