This has been posted on the Internets more times than my phone number on bathroom stall walls across the world. But, like in both cases, why not post again, hoping for more action?
If you are a US citizen, living outside the US, then all your income may not be taxed. Yes, if you live as an expat, then at tax filing time, you can file the “Foreign Income Exclusion” form, number 2555.
But, there’s a catch. (Isn’t there always a catch?) The catch is, you must really be living outside the United States for 90% or more of the time (that works to be 330 days or more). It doesn’t mean just calling your expat home your “Primary residence.” It doesn’t mean come home again for “just” the summer months. Nope, for your income to be excluded from tax, you must stay clear of the US for 330 days or more.
This is on my mind because someone just wrote to me asking the same questions. She asked how (or if) they can visit the United States and how it affects their taxes. I answered her, but then I thought others may be wondering the same thing. So, here is my reply:
Yes, about spending 35 days in the US, it’s true, unfortunately. If
someone spends 35 days in the US, they are then ineligible for foreign
income exclusion. It’s part of the physical presence test and I agree
I think the actual IRS text reads that you must be outside the US for
330 days, but it’s the same. It’s more important to understand that
those 35 days are cumulative and not consecutive. Also, understand
that the 35 days is over *any* span of 12 months, not just calendar
So, as a detailed example, someone fails the physical presence test if
their vacations were:
- July 2011 – 5 days
- December 2011 – 20 days
- May 2012 – 10 days
- June 2012 – 5 days
—–that’s 40 days within 12 months, failing the test. My wife and I
have been super careful in counting our days spent over the past 6-7
years outside the US. We never go over 33 (including the entry/exit
days in travel). One flight delay could cost us thousands, as you
Of course, I have to add that I am not a financial expert. All the above comes from years of experience as an expat, but not as a financial planner, tax attorney or some other professionally licensed money guru.
Hope this can help at least someone else out there.
Lastly, here’s a flowchart graphic I stole from the IRS. At least it’s less confusing than the 7000 pages of tax code.
That Istanbul is a city of visual and cultural delights comes as news to no one. Every year, the largest city in Turkey brings thousands of visitors flocking to its Byzantine churches and triumphant mosques.
Still more come for the night-life, from ultra-hip cocktail clubs to traditional taverns serving raki. Many enjoy the lifestyle so much they decide to stay. But whether yours is a fleeting visit or the love affair of a lifetime, all that sight-seeing and revelry is hungry work. Those hoping to feast like sultans the morning after a big night will not be disappointed by the selection of breakfast menus here.
If you’re after a traditional Turkish breakfast, you’ll be literally spoiled for choice if you go for the numerous buffet options. Set prices that won’t break the budget often come with stunning surroundings, thanks to places like Hidiv Kasri, both restaurant and landmark, situated on the Asian side of the Bosphorus. A towering Ottoman relic and previous home to Egyptian Governors of old, the breakfast spreads here run to around sixty items, including a mixture of fresh fruits, olives, cheeses, eggs and pastries. Similar feasts can be had at Malta Koshu in Yildiz Park.
Sundays often find classic Turkish restaurants serving special brunches and one such establishment is Laledan, within the Ciragan Palace. This is top-notch fare, with hot and cold dishes of the restaurant’s speciality fish and sushi served, along with sweeter options. It won’t be the cheapest of meals but the service and riverside views are worth a one-off visit, if nothing else.
Those who like their eggs will be in for a treat at Lades 2, a breakfast joint with a traditional feel in Beyoglu. You can eat the first meal of the day whenever you like here and scrambled dishes like menemen are accompanied by sucuuk or pastirma as you would expect, but the standards are high and the egg is very much the star of the show.
Some days you can’t beat a hankering for home food, and it’s one these days you should head towards Molly’s Cafe near the Galata Tower. Maple syrup on pancakes, Tabasco sauce on your morning burritos; the selection of North American classics is done to perfection here and without emptying your wallet either. If you’re finding the general lack of bacon in the city distressing, pop down to the Kirinit diner and enjoy your rashers outdoors in the picturesque Nisantasi neighbourhood.
Anyone lingering in the Turkish metropolis for more than a day will come to realise that, in addition to its visual and cultural splendour, it’s a city of edible delights as well. From breaking fast in an elegant former palace to enjoying Findilki Park or Pierre Loti Hill with a simit in your hand, once you’ve eaten your first breakfast in Istanbul, it will be a difficult culinary experience to top.
Did you catch the news that since last Saturday, it’s now illegal to unlock your phone? You probably did.
But did you hear how big the penalties are? For first-time offenders, we’re talking half a million dollars and up to 5 years of jail time! Yeah, that’s a serious f***-ing penalty for a new law.
If you’re a techno-phobe, left wondering what “unlocking” even means, here’s the skinny: A “locked” phone can only be used with one service provider, like AT&T. When unlocked, you can use the same expensive phone with Sprint, Verizon, etc. The common argument is “But I paid big money for that phone…why couldn’t I use it with any provider I want?” The industry answer is typically “You only thought it was your phone…ours and (you) will always be ours.”
What does this mean for Expats like yourself?
When I travel, I take my phone with me. In fact, I’ll be taking my new iPhone 5 with me to Prague when I go in 2 weeks. I did some serious research before buying my iPhone 5. Even got Expat Yourself community members in on the discussion.
When I travel, I take my phone’s SIM card out and replace it with a local SIM. That gives me a local phone number and data plan for temporary use. But when a phone is “locked” – that’s not an option.
Luckily for most of the world’s travellers, this “locked” business really only happens with American cellular phone providers. (Yes, for example in Britain, everyone’s phone can freely be switched over from provider to provider.)
So, before an American travels abroad, he must first pay a small fee ($20-$50) to unlock the phone.
Oh, but not anymore. Now, that fee is gone, and replaced with jail-time.
Isn’t There a Hero In The House (or continent)?
But Wait! — There’s Canada to the rescue! In Canada, there’s much public discussion around a draft bill. The draft was initiated by the Canadian Radio-television and Telecommunications Commission. They made the draft public (imagine that!) and invited any and all feedback (and imagine that!!). Crazily enough, the public like it. Why? Because some of it is exactly opposite of what the US recently passed. Whether causal or coincidence, it looks like Canadian smartphone owners may soon be all the envy of American smartphone users.
Now, am I saying you should move to Canada to enjoy more features on your newest iPhone, Android, or smartphone? Of course not. That’s like suggesting you move from Provo, Utah to Las Vegas, Nevada to access electric fuelling station for your electric car. There are far better reasons to move to Las Vegas…and there are far better reasons to move to Canada.
Maybe you’ve seen them in action on YouTube? The window cleaners of the Burj Khalifa, the world’s tallest man-made structure. The iconic Dubai skyscraper stands more than 2,700 feet tall and its estimated 24,000 windows spread over 206 storeys take around three months to clean using nothing more than good old fashioned soap and water. Incredible. Frightening.
Dubai is a modern city like no other, a metropolis fringed by deserts and the deep blue seas of the Persian Gulf. It’s a magnet for both the tourist and expatriate alike and little wonder. You want to shop in the largest mall in the world? You got it. Or shop 124 floors up in the Burj Khalifa’s At the Top boutique? You got that, too. Want a choice of the best of personal banking from multinationals you already know and trust? And be able to apply for a credit card, loan or open a current account? You’ve got all of that and more.
If you can’t go there in person, YouTube is also the place to see Dubai’s spectacular dancing fountain. The fountain, which literally basks in the shadow of the Burj Khalifa, is one of the most spectacular water displays to be seen anywhere. Covering a distance of more than 300 metres and combining water, light and sound, the fountain sprays 22,000 gallons of water into the air at any one moment. Some 6,600 lights and 25 colour projectors create the variety of heart-stopping patterns for which the fountain has now become so famous.
Looking out across the vast expanse of the city, it’s not surprising visitors find it hard to believe there was only desert sand to be seen a few short decades before. No Burj Khalifa. No modern gleaming steel, concrete and glass structures. No man-made islands. No highways. No businesses or banks. No HSBC credit card or cash machines. No tourists or first class hotels. No homes or people to live in them. Oil changed everything and propelled the United Arab Emirates (UAE) into the modern world. The UAE has never looked back since.
If big banking has made a home in Dubai, then so has international business, encouraged by a government fully aware the country’s vast oil wealth cannot last forever. So diversification has been the watchword for quite a number of years now. And with diversification has come the development of a taxation and regulatory regime which has encouraged thousands of international companies both large and small to set up in the country.
And why wouldn’t they given that there are no direct taxes levied on corporate profits or personal income and full foreign ownership is allowed. Other benefits include low or zero customs duties; 100% repatriation of capital and profits; and no foreign exchange controls, trade quotas or barriers. Visa regulations are relaxed enough to allow expatriate workers to be hired with relative ease.
Add to all of that high quality infrastructure, low levels of crime, a clean environment, excellent weather, and a friendly, tolerant and cosmopolitan population. Is it a wonder then Dubai is such a popular destination for the thousands of expatriates from around the world? Hardly. Click here to see the window cleaners of the Burj Khalifa in action. Only those with a strong stomach should watch!
If you didn’t learn already from past posts, we used to live in Prague. When we moved to Canada (about 2 1/2 years ago), we decided to keep our flat in Prague until a better, “easier” time to sell. And now that time has come. When we left 2-3 years ago, we felt it was better financially (and emotionally) to keep our flat and rent it long-term. By the way, we tried a few months of short-term rentals, but it was too hectic, and we even crossed paths with a scammer or two. After those first few months, we found a young family that proved to be wonderful tenants. They stayed for over 2 years, but now they long to buy their own place, so they’re soon to move out. At last, the Big Decision snuck up on us. Remembering the Decision Guide in “Ship, store or sell” (on the largest scale!), we decided to sell.
I went to the whiteboard in my office and quickly started scribbling To-Do lists around who to contact first, how to prepare the place for market, and how to approach handover. Dealing with utilities, agents, banks and lawyers will all come into play soon enough.
This isn’t a how-to post or even a real informative one. I’m just sharing that this big decision is upon us, and we’re (yet again) tackling totally new ground. If your stomach gets queasy just reading this, you can appreciate the gymnastics my stomach is performing, too.
If you have any consoling or uplifting words, please share them with me. Believe me, I’m needing it.
How to Fix: “Wait! Where Did My Netflix Selection Go??“
Did you recently move overseas and find your Netflix account selection suddenly sucking?
If you keep a Netflix account active after you moved overseas, then you probably notice the content now isn’t what it used to be. This is because you moved. Don’t worry, it doesn’t have to be that way.
Where Your Computer Is, Matters
Before I share how to fix this problem, I’ll educate you why this is a problem. While your computer browses the Internet, publishes blog posts, or watches Netflix movies, the sites you visit are well aware of your whereabouts. Yes, technical details and privacy aside, even though you may be “location independent,” your Internet surfing is very location-specific. (Else, how do the movies know how to find their way back to your computer?)
Browse to CNN and you’ll see location-specific news. Browse to Hulu and, unless you’re in the USA, you’ll find little to watch there.
Most of the time, you don’t see a difference. For sites offering copyright-protected content like film clips, TV shows and Netflix, your location makes all the difference.
Where Your VPN Service Is, Matters More
To see what those people in the US see, those websites must believe your computer is in the US. For that, you need a VPN service.
The way I fixed this was to use a company called CactusVPN.
Good luck, and good browsing.
I get messages from people, asking for help to move or work overseas. I enjoy getting the messages and replying. Often, we e-mail each other several times. Obviously, I give general advice, providing the most detailed, tailored advice for those who hire me. But in the end, most say Thanks and move on.
But what about you? I hate to be skeptical, but maybe most people don’t really act. Fine, it’s human nature to value something you paid for, and not to really value something for free. My advice doesn’t come easily or lightly. It comes from experience, from the “school of hard-knocks.” Your choice whether to absorb it or not.
It made me wish I could share the advice with many others, hoping that one person out there is willing to act. So below I offer several replies I sent. If one resonates with you, Awesome. If not, that’s cool, too.
For my US readers….and us American citizens living abroad
A few months ago, I thought about asking which candidate you hope gets in, who you’re voting for. Or, if you’re like a lot of people, which candidate you’re voting against.
But the real question I should ask is…
What If You’re Wrong?
Here’s a post I found on Facebook (not me):
This guy isn’t making a political statement, but it made me think. There are a few people out there who so despise the “other guy” that they’re willing to leave the country if he wins.
How about you? How strongly do you feel against the other candidate?
My Offer To You: I Get You Working Abroad
If you’re ready to leave the US, and you have strong feelings about the election turnout next week, then I got an offer for you.
If I select you, I will get you working abroad. I will personally consult you on every step of the way, from the day you win, to the day you set foot on foreign land.
Now, a lot of people say they want to get work outside the US. Maybe they haven’t enough money, or have to finish school, or they’re just too unsure about too many things. That’s where I help. I’m here to help you go. You got questions, I got answers.
How to Win?
- Make a comment below. Tell me the candidate you want to win.
- Are you ready to leave the country? If he doesn’t win, tell me you want to travel.
- After your comment, share it with friends. Click the Facebook button or make a tweet.
Make your decision and be proud of it. Stand by it publicly and I Promise You, it Will happen!
How I Select the Winner
The day after the election, I will randomly select one of the eligible comments below. What’s “eligible”? For all the commenters who wanted the losing candidate, then I assume they are still willing to go.
I’ll contact the winner, and we immediately work together to make it happen.
Good Luck — Write Your Comment Below!
In just 2 weeks, all this election bullshit will be over. For god’s sake, I’m so sick of hearing about it, I would rather sleep through the next weeks.
What I can’t stand the most, is how “close” these candidates have been throughout the whole process. Unfortunately, those in charge (whoever they are) will forever only offer you 2 choices. So, it’s truly a decision to choose the lesser of 2 evils.
But, really, why so close? Ever wonder what people actually see in Romney? Do people simply follow their favourite party, no matter what?
Ever wonder…what does the rest of the world think? What about the entire world (for any non-travelers, I mean all those countries outside the USA’s borders)? If the rest of the world voted, Romney could kiss any dream of being elected bye-bye.
Notice just ONE COUNTRY LIKES ROMNEY (ever so slight more) over Obama: Pakistan.
I’m not sure why Pakistan. If anyone out there can explain it to me, I’d love to hear why.