2015 Foreign Earned Income Exclusion

earn income

earn incomeFEIE, Or How To Earn More Than US$200K Tax-Free In 2015

March 26, 2015
Panama City, Panama

Dear Offshore Living Letter Reader,

The most important tool in the U.S. expat’s tax toolbox is the foreign-earned income exclusion (referred to in tax-planning circles as the FEIE or “the exclusion”).

If you qualify, it allows you to exclude up to US$100,800 in 2015 foreign-earned income from U.S. federal income tax.

All U.S. citizens and residents who earn more than US$10,150 (single) or US$20,300 (married, filing a joint return) in a year must file a U.S. personal income tax return no matter where you reside.

You must file, but that does not mean you must pay tax. One of the many benefits for an American living or retiring abroad is that, once you’re a foreign resident, you’re eligible to take advantage of the FEIE.

The exclusion applies to foreign-earned income only—that is, wages or self-employment income (independent contractor earnings, for example) you receive for services you perform while living outside the United States. Wages can come from a U.S. corporation or a foreign corporation, including an offshore corporation, and it does not matter if you are also a shareholder or owner of that foreign corporation.

Note, though, that earned income does not include interest, dividends, or other investment or passive income.

The key is to qualify. Bottom line, you qualify for the exclusion in one of two ways:

1. The 330 Day Test. To qualify for the FEIE using the 330 Day Test, you must be in another country (just being outside the United States doesn’t work if you’re in international waters, for example) for 330 days out of any 365-day period. It does not matter if the 330 days are over two calendar years (between Nov. 1, 2014, and Oct. 31, 2015, for example), and you can Continue…

Agriculture And Productive Land Are The Biggest Current Property Investment Opportunity

agriculture

agricultureThe Biggest Investment Opportunity Of Our Age

March 23, 2015
Panama City, Panama

Dear Offshore Living Letter Reader,

An important focus at last week’s Global Property Summit in Panama was agriculture. As we discussed with the help of agricultural and other relevant industry experts, an investment in productive land is the biggest opportunity of our age.

The global population will surpass 9 billion by 2050. The percentage of undernourished people around the world has dropped from 18% to 11% over the past two decades (suggesting more food consumption per capita). Meantime, available arable land is decreasing due to increasing housing needs.

These and other factors, such as global warming, rising sea levels, and potable water shortages, lead anyone paying attention to the conclusion that investing in food production is a good idea.

The challenge is to identify attractive options in this sector for the individual investor.

During our “World’s Best Investment Class—Why Agro-Buys Should Be Part Of Every Portfolio” panel discussion last week, our experts agreed on the priority fundamental to remember when vetting opportunities—namely: You’ll get the best returns from specialty products. Commodity products such as soy, corn, apples, and grapes all have ready markets, but they also have global market prices. Specialty products, on the other hand, can garner premiums in the marketplace.

A specialty product could be a specific kind of varietal (such as the one being grown at the mango plantation in Panama we looked at during last week’s event), or it could be an organic version of a commodity product (say, apples). In fact, our experts last week identified organic produce as Continue…