TMBA 312: Let's Talk Tax

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One of the major issues that location independent entrepreneurs, who spend time outside their home country, grapple with is tax. Let’s be honest: we’re all looking for ways to pay less of that! Phil Hodgen is a leading lawyer in this field, advising his clients on the relative advantages of foreign earned income exclusion, acquiring overseas residency or even, in some cases, expatriation. In this week’s show we bring you advice that could save you thousands of dollars. And yes, we’re talking dollars. This guidance is mostly applicable to U.S. citizens but Phil also talks about general principles that other nationalities will find useful too.

Transcript

Listen to this week’s show and learn:

  • How to break down tax liability in terms of “Never, Less and Later”. (2:38)
  • The primary benefits of proving “bonafide residency”. (5:01)
  • How telling the truth in your financials can help you make even more money. (18:40)
  • The case of the “Accidental American”. (23:05)
  • The advantages and disadvantages to keeping your U.S. passport. (31:42)

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Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST.

Cheers,

Dan & Ian

Published on 11.26.15
  • Harry Shah

    Dan, where are you these days? I have been inspired by your podcast, and my family are now traveling (taking a long term break) in SE Asia. We are in Chiang Mai right now, and heading to Chiang Rai, Luang Prabang, Hanoi and Siem Reap…Can we intercept you in any of these places over the next 2 months?

  • http://www.tropicalmba.com/ Dan Andrews

    ah cool sounds like an adventure! :) in the cold cold cold winter for those months

  • Harry Shah

    You haven’t answered. Where are you, brother?

  • http://www.tropicalmba.com/ Dan Andrews

    nyc

  • http://bradonomics.com/ Brad West

    I’d be interested to hear from the community how they keep their books. I’d assume most freelancers and smaller companies would use some type of cloud based software and input their data themselves. So;

    What are you using?

  • http://www.adventurous-soul.com/ Shayna

    Excel. My accounting is ridiculously simple, thanks to my streamlined structure.

    I use thebirdy.com to report my business expenses via email every day. At the end of the month, I grab the final amount of expenses from thebirdy, total the revenues from Stripe, PayPal, and a couple other smaller sources, and put each number in the “expense” and “income” columns in Excel.

    From the profit, I then separate out an amount for taxes, an amount for myself, and an amount to reinvest. The whole thing takes 30 min a month, max.

  • tonyspencer

    Has anyone tried Bench.co? I’ve been using a local bookkeeper for many years now and tempted to try to switch as there is increasing friction with my current setup (have to meet in person, she likes paper files, she leans on me for far too much help, her calendar stays booked…)

  • Sean Mullins

    Would love to hear more from/about people not US citizens, seeing as that’s a bit of a special case (don’t know any other country that taxes non resident citizens)

  • http://www.tropicalmba.com/ Dan Andrews

    I went through their on boarding but didn’t end up a client (they don’t support overseas companies) but they seemed sooooo pro… have a friend who uses them and he raves.

  • http://www.tropicalmba.com/ Dan Andrews

    yeah totally appreciate that it’s an outsized issue for a minority, would be cool to do one catering to businesses taxation for non-us citizens

  • http://www.tropicalmba.com/ Dan Andrews

    xero and love it

  • http://www.tropicalmba.com/ Dan Andrews

    +1 for simplifying your business has many downstream effects

  • Ryan Nagy

    For U.S. citizens living full time outside the U.S.A. (Like I do), the FEIC cannot be easier. The first time I took it, I was convinced I was doing something wrong and that I was going to get screwed later. But when I finally talked to an account, he told me that all was I ok. I am in Mexico year round – meeting the physical presence test – and I shield about 100K from income tax. It is AMAZING. I still pay the self-employment tax (we all do)…but hey…that is money I will likely get back via social security, medicare etc….

  • Ryan Nagy

    And here is something even cooler! Do you or someone that you love have student loans? Get in the IBR or Income-Based-Repayment plan. THEN, move abroad and qualify for the FEIC (Foreign Earned Income Credit). THEN, after taking the 100K deduction, you will likely have a VERY low adjusted gross income. Mine is often $0.00 (yes, zero). Thus, I do not have student loan payments, though I am technically listed as “in repayment.” OK. I rarely talk about that publicly, but there it is.

  • Kowloon Bay (Landlord)

    I am not US citizen, and live in Hong Kong now. Thanks to its simple tax structure, I only pay little tax here (advised by my accountant). The investment incomes like sale of stocks and properties are not taxed.

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