Remember FEIE Can Keep You Tax-Free

FEIE is a vital acronym for the US expatriate or Perpetual Traveler!  For 2013, the Foreign Earned Income Exclusion is up to US$97,600.  That's right, no US income tax on your first $97,600 of earned income if you reside outside the US.

It does not matter if the earnings come from your US employer or a company abroad.  If you live outside the US for at least 330 days per year, or have legal residency in a foreign country (e.g. an expat residing in a foreign country on an employment visa), a lot of your earnings are protected from the clutches of the IRS.

If you are lucky enough to live in a country without income taxes, or you are a PT residing here-a-bit, there-a-bit, outside taxation obligations, you can be free of onerous income taxes entirely.  If you reside where your foreign income is taxed, what you pay there may be credited to what you owe IRS if your income goes over the exclusion maximum.

FEIE only applies to earned income!  So interest, dividends, rental income, and other forms of unearned income remain subject to US taxes.

No exemption from filing!  Do be careful to file all your proper tax and other financial forms on time if you are a US citizen, legal permanent resident, or other "US person" subject to IRS reporting requirements.  IRS is quietly - but as deadly as a krait in the bamboo - going after expats.  Hey, the US is broke, so Taxman is as greedy as ever, just more desperate for your dollars (yen, rupees, Euros, and everything else).

Tax-time is always stress-time.  But FEIE can seriously reduce your pain.

May your road rise to meet you!
Ann

US Expats & PTs Exempt from Obamacare

Amid the discussions of "Obummercare," as so many commonly refer to this disastrous legislation, one fact rarely comes out.  Yes, some people are exempt from those requirements to buy and maintain pricy healthcare coverage: e.g. prisoners, illegal aliens, and members of Native American tribes. 

But take a good look at one more exemption: Americans who remain outside the US for a year!  US citizens who meet qualifications for the Foreign Earned Income Exclusion (FEIE) are also exempt from the insurance provisions of the Affordable Healthcare Act. 

What do you need to do to qualify for the health insurance exemption?  Do you have to actually claim FEIE on your US income tax return?  You only have to be qualified to take FEIE; you don't actually have to do it.  

If you are legally resident for a full tax year in another country, you are exempt from maintaining the US insurance. Likewise for Perpetual Travelers (or PTs): if you remain outside the US - physically present in another country or countries - for at least 330 days a year, you are exempt from this insurance requirement. 

Considering healthcare coverage in some countries costs less per year than a US policy costs per month, this is good news for expats, PTs, and long-haul travelers.  Considering healthcare costs in a number of countries is 20% or so of US costs, medical care abroad without health insurance (e.g. if insurance is not available) is cheaper than the copay under most US health insurance policies.

Healthcare and health insurance have all been rising dramatically since passage of the very-unaffordable "Affordable Healthcare Act."  Escape this tax and get better healthcare for less simply by living and/or traveling abroad.

Have fun long-haul traveling, and. . .

May your road rise to meet you!
Ann

How Low Can You Go?

I’ve been a wallet-watcher most of my life.  Before I pull out the old wallet, it had better be something I really want and am willing to pay the price.  Most of the time, I’m not willing to part with the dough.

Traveling with a travel hot-pot to boil water for coffee or ramen noodles has been standard operating procedure for ages.  I hate waiting for room service more than I hate instant coffee!  (I always carry my favorite teas anyway.)  I also refuse to see anybody until I’ve had my coffee, and resume some state resembling human-ness.  If anybody has a source for a dual-voltage travel pot, please, pretty-pretty-please, POST it here!  The old one bit the dust – mourn, mourn.

Eat local?  Of course.  Find “cheap Chinese” – hawker stalls and little take-out places?  Yum-yum!  Swedish meatballs at IKEA?  They’re actually very good, and totally superb for the price.

There are oodles of ways to economize while traveling.  If you’re a business traveler on expense account, you probably have a limit per diem, or per meal, or per-something.  If it’s your business, you are absolutely on a budget or bust your biz.  There's hardly a Road Warrioress anywhere who does not need to watch some pennies, pence, rupiah, and yen somewhere.

So grazing some other travel blogs, I came across Nomadic Matt, a Perpetual Traveler – backpack variety – who lives & travels off income from his travel website and blog.  He survived 5 days in pricy Stockholm on US$100.  Of course, it can be done.  If you impose on the kindness of friends for an extended period.  If you do your work out of an internet café for as long as you can nurse a lemonade.  If you walk everywhere.  If you miss the best a city has to offer – the real reasons for exploring abroad.  Even Nomadic Matt admits it was a bummer.

Here’s his story, not a pretty one:  http://www.nomadicmatt.com/travel-blogs/the-myth-travel-is-expensive-how-5-days-in-stockholm-cost-me-100-dollars/

Skip the appetizer, but not the entrée.  Skip the liquor, and sample the local brew.  Yes, you can slash travel costs.  But why bother traveling if you are going to miss the best a place can offer?  You could have stayed home and seen it on TV!  It’s the experience which matters more than the money.

Got any budget-friendly tips you use?  Share – share – share!  We all care about our budgets, but still want to get our work done, see the real sights, and live a fruitful Road Warrioress life.

May your road rise to meet you!

Ann

Road-Warrioress Life Not for Wimps

I was talking recently with an acquaintance about her 20-something daughter, a young woman who needs minders.  We’ll call her Mel: Phi Beta Kappa, jobhunting MBA grad, deemed exceptionally “bright” and “promising.”  Except she cannot make her way through Grand Central Terminal even when Mom puts her on the right Metro North train to Manhattan.

Granted, GCT is a bit of a zoo, but signs are clearly posted everywhere.  But to someone who mastered the maze of Moscow underground armed only with a map printed in Cyrillic, knowing not a symbol of it, it’s inexplicable that a brilliant woman cannot make it a mere 25 miles from home to get to a job interview on time!

Mel will never survive if she has to travel for a job.  She cannot drive herself to a doctor’s office in the small exurban town where she grew up without getting lost.

What does it take to wander the world on your own?  A good sense of direction certainly helps!  Spatial Intelligence, the ability to orient oneself in space, to read a map, is an underrated skill.  But it has proven vital countless times and places.  I've never met a Perpetual Traveler who could remain on-the-road without this skill - without it, they give up and go home.

What other attributes make a difference between disaster and survival, even enjoyment, of long-haul travel?  Independence, self-reliance, curiosity, a sense of adventure: these I regard highly.  Flexibility and adaptability help you surmount cultural differences and difficulties, and a sometimes weird array of challenges.

Fearlessness is irrelevant, even counterproductive.  Fear is a useful signal of danger, and alertness, even wariness, can protect you from various dangers.  Courage – the ability to go out and “get it done” despite fear – matters.

The Road Warrioress life is too challenging for the hopelessly helpless Mels in this world.  There’s no room for wimps on the road. 

What traits do you find essential to success as a Road Warrioress?  Share, share!

May your road rise to meet you!

Ann

I'm a Busy Girl - for You!

Well, I think I mentioned (probably ages ago - alas!) that I was planning to prepare a Special Report for Road Warrioresses, Perpetual Travelers, and solo women travelers on "Packing for the Long Haul."  It is underway at last!  And I have a publisher awaiting final copy.
A few posts from the blog are included - often expanded.  Lots of new material, though.  The back of the book will include handy charts or tables so you can prepare a packing list for each of your trips, update it on the road, if necessary, and keep track of what you need and what you have.

It will first be published as a Kindle Edition e-book available from Amazon.com.  The nice thing about Kindle books is that they can be downloaded to so many gadgets and gizmos.  Kindle books are not just for Kindle readers - there's Kindle for PC, as well as apps for tablets, iPads, and whosits and whatsits.  Amazon's website includes complete details on usable devices, as well as free downloads of the various apps. 

Once you buy a Kindle book from amazon, you can access your purchase on all of your various electronic equipment.  So you can read materials on your laptop or notebook one day, and on a Kindle or tablet at the beach the next.  You can look up something in hurry on your iPad, iPod, or whatever.  I've become rather fond of Kindle!

I assume the publisher will get an edition up on Barnes & Noble's Nook, although they plan to release on Amazon first.

As soon as this is done and available online, I'll let you know!  We're working out some way to reward this blog's readers with some sort of win-a-freebie, discount, or something.  So watch for details.  They'll be posted as soon as available.

Here are details available so far:
Author:  Ann Teller (that's me!  LOL!)
Title:  Packing for the Long Haul:  A TravelTellers™ Quick Guide for Road Warrioresses
Publisher:  AngeLines Publishing^®
ISBN: to be assigned
Price: to be determined
Release Date: to be announced

Hang around for more info!  I think you'll all like this and find it useful, so I'm looking forward to sharing more tips, tricks, ideas I gathered while riding the rails through China, continent-crossing on the Trans-Siberian Railroad, business trips, and what-have-you.

May your road rise to meet you!

Best regards, Ann

Nifty Tricks with Fabric Softener Sheets

Packing for a week, month, or more?  Sooner or later, the Road Warrior-ess, Perpetual Traveler, backpacker, business traveler has to do laundry.  Wash-outs in the bathroom sink work about twice, but simply don't do a proper job of it.  But whether you will hit the laundry facilities or not. . .

Pack a batch of fabric softener sheets!  These sheets, the kind which work in the clothes dryer, are a multi-purpose item which belong in every suitcase.

Tuck one into each pocket and compartment of your suitcase(s) or bags.  Lay one or two in the base before you add clothing.  As you fold or roll clothing to pack, lay a sheet on at least a few of the garments you’re taking.  A dozen can easily slip into one suitcase or carry-on bag.  You’ll find them very handy.

Fabric softener sheets have several nifty uses:

1.   They keep your suitcase and clothing smelling fresh while traveling.

2.   Use one each time you do laundry on the road.  Save the cost of fabric softener, since laudromats charge a small fortune for one or two sheets.  And save the trouble of finding them on the road.  You don't want to lug a boxful.

3.   Forget your bug repellent?  Or forego it due to TSA regulations?  Take one sheet, rub it on arms, legs, neck, then stuff the sheet in your pocket when you head outdoors.  The scent helps repel mosquitoes, gnats, sand flies and such pesky critters.  No, it’s not as good as bug repellent spray, but it certainly works in a pinch!

4.   Slip some into empty suitcases before you stow them away between trips.  It helps prevent musty odors travel bags develop while closed and stored.

Got any more ideas?  Share them with us!  Meanwhile, don’t forget to pack them before you head out on your next sojourn.

May your road rise to meet you!

Best, Ann

US Expats & PTs May Benefit from Foreign Earned Income Exclusion

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income from all sources.  However, you may qualify to exclude from income up to an amount of your foreign earnings that is now adjusted for inflation ($91,400 for 2009, $91,500 for 2010, $92,900 for 2011, $95,100 for 2012). I n addition, you can exclude or deduct certain foreign housing amounts.

You may also be entitled to exclude from income the value of meals and lodging provided to you by your employer. Refer to Exclusion of Meals and Lodging in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and Publication 15-B, Employer's Tax Guide to Fringe Benefits for more information.

To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. A foreign country usually is any territory under the sovereignty of a government other than that of the United States.  The term "foreign country" does not include U.S. possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or American Samoa.  This applies to the typical expat, living and working abroad for an extended period, with an employment visa or legal residency.

For PTs, you want to fulfill the physical presence test.  You meet the physical presence test if you are physically present in a foreign country or countries for at least 330 full days during a period of 12 consecutive months. The 330 qualifying days do not have to be consecutive. The physical presence test applies to both U.S. citizens and resident aliens.

The physical presence test is based only on how long you stay in a foreign country or countries. This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad.

Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a "tax home" in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.

If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live.  If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work.

As usual, IRS regulations are byzantine.  For more info on the Foreign Earned Income Exclusion and housing exclusion from IRS, see:

http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html. 

It's Tax Time for American Expats & PTs

June 15^th is the IRS income tax filing deadline for Americans!  While the term PT usually stands for Perpetual Traveler or Prior Taxpayer, US citizens, legal permanent residents and other “US persons” (defined by IRS) are Permanent Taxpayers wherever they go.

If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the US on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15.

If you are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing Form 4868 before the automatic 2-month extension date.  However, any tax due payments made after June 15 will be subject to both interest charges and failure to pay penalties.

If you are a U.S. citizen or resident alien (Green Card Holder) and you live in a foreign country, mail your U.S. tax return to:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 73301-0215

Estimated tax payments should be mailed with form 1040-ES to:

Internal Revenue Service

P.O. Box 1300

Charlotte, NC 28201-1300

Taxpayers with an AGI (Adjusted Gross Income) of $57,000 or less can electronically file their tax return for free using freefile.  Taxpayers with an AGI greater than $57,000 can either use free fillable forms or efile via commercial software programs.  A limited number of companies provide software that can accommodate foreign addresses.  

Don't forget you may be subject to the Foreign Earned Income Exclusion!  There is one benefit for Americans living & working abroad.  See TravelTellers' next post.  More to come on US taxes and financial reporting for American expats. and PTs

Here are some links to IRS publications & tax forms:

Publication 54, Tax Guide for U.S. Citizens and Residents Abroad (PDF)

Publication 519, U.S. Tax Guide for Aliens (PDF)

Publication 4588, Basic Tax Guide for Green Card Holders: Understanding Your U.S. Tax Obligations (PDF)

Publication 4732, Federal Tax Information for U.S. Taxpayers Living Abroad (PDF)

For detailed info from the IRS see:

 http://www.irs.gov/businesses/small/international/article/0,,id=97324,00.html