Avoiding Taxes as a Traveling Affiliate
Well I hope some people see this blog post. Its a question but there aren't any good categories for me to ask it under. But anyways...
After getting completely obliterated with taxes from 2017 and paying a ridiculous amount already this year in estimated taxes, I'm looking to do some traveling next in 2019 so that in 2020 I can hopefully avoid paying taxes on most of my income.
I've been looking into the Foreign Earned Income Exclusion that allows US citizens to be excluded from paying taxes up to a certain amount if they live outside of the country for over 330 days.
Of course traveling all over would be expensive but the amount I would save in taxes would make it worth it, along with the fact that traveling would be something I've wanted to do for so long.
So my question is whether or not anyone here has any experience with this? I know there are a lot of affiliates that travel constantly for this purpose so if anyone here at WA has any insight or tips about this all help is appreciated.
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You dont have to live outside of the country to have tax breaks. I was taught by the best and get this...if you buy a property or assets in a country outside the US then that's a none income tax relief.
Did you try TurboTax self employed to make sure you are claiming every expense possible? If not, I would highly recommend it.
I went to several different tax professionals and ended up doing it on my own through Credit Karma's tax service, which is pretty much the same thing.
I am not a tax professional.
But if you haven't already, Kyle, get an LLC.
With an LLC you can write off expenses and take a loss which continues to bring down yuor taxable income.
If you are just a sole proprietor, than you can only count expense down to 0.
That is a little confusing because it is, lol.
But if you havent already, start an llc, costs about $100 to get started. they can do it all over at legalzoom.
You can write off work related expenses. I'd start a travel section on one of your pages. Or start a new travel blog. Then you can at least claim the airfare for traveling and hotels as a work related expense.
You really should put 20 to 30% of your pay in an investment account (as long as it's a bull market like it has been). Not an IRA or 401k. You'll pick up a sizable amount of interest.
Since this would just be holding your tax payment (or at least a heft chuck of it) it'll be in the investment for less than a year. You'll have to pay taxes on any returns you have when you withdraw the money, but if the market goes south and you loos money you can write off how ever much you lose on your taxes.
Anyway you look at it. You'll need to pay taxes out of pocket.
Ya. I've looked into this but the Foreign Earned Income Exclusion is something that is of more interest to me. But since I am already ineligible this year I might do what you are talking about.
Next year in 2019 I'm doing things differently.
Not only is travel an expense....your cell phone bill AND internet Bill's are all business related.
The Foreign Earned Income Exclusion is there because usually when you’re abroad for that long, you would be paying taxes in the country you’re living in, so this credit avoids double taxation for you but your US taxes will still has to be filed while abroad.
I’ve only used this credit for my husband and I while we lived in Canada and we were employed. I’m not even sure if this credit applies to self employment.
I am finding that this online business doesn’t have a lot of expenses you can really deduct, because there is so little we need for it.
Once you write off that laptop one time (it allowed me to do it all at once in my 2017 taxes cuz there was some exception that allowed it), you won’t have much to write off after that like WA membership, maybe some other tools you use but with the kind of income you are raking in, your biggest expense is going to be your taxes. Did you use the home office expense? At least that’s something you can deduct every year although we all know we don’t need a “designated office” to do our work in our home. We don’t need to drive for our business so nothing for car expense.
Sorry I don’t know anyone who lives abroad just to avoid taxes.
Your taxes just seems higher (well it is higher cuz self employment) but it’s something to get used to. It seems like a bigger impact as well because you’re not used to having all that money and realize you need to set aside some for taxes while this was taken care for you when you were employed.
Have you asked some of the other super affiliates who lives in the States how they handle it?
Ya I wrote off my home office for the 2017 year but still got killed with the taxes. I just wasn't expecting to fork over 1/3 of the money I make.
No I haven't asked any of the superaffiliates yet but I will have to.
I'm thinking about going to a 3rd world country with good internet in 2019 to avoid this. I've been reading about other "digital nomads" who just travel about and make use of this exception.
Thanks for the comment.
I'm in Indonesia, just moved here first on a social visa, but my wife is Indonesian so that's why im here and I will be applying for a KITAS which allows for a much longer stay. I don't know about the tax issues you are dealing with because im still not making any money from my sites but hopefully soon.
If you find out more info on this I would also like to know, so please keep us updated Kyle.
Sorry I couldn't answer your question, but I will say its nice to live somewhere else. Lol! Its a nice change.
Best wishes kyle.
Aaron.G
Ya I will update this post if I find out anything worthwhile. What is Indonesia like for an American? Just curious.
If you would like to know check it out www.worktonotwork.com/lets-go-to-indonesia!
It's great I think, but my wife is from there so I might be a little bias. Lol. But really its beautiful!!
All the best Kyle
Aaron. G
Hey Little Mama... Do you know that you can rent out your own home to your company for up to 13 days per year? You can literally write-off your rent or mortgage payment by renting your home one day per month for business meetings!!So, if your home costs $1000/mo... Rent it to your company for $1000 for your monthly board meeting!
Good to know, but as an online marketer, it's hard to pull that off as I'm not meeting anyone in person. :) The most interaction I have is on the phone.
I do just put aside my money for taxes, and be done with it.
It would be your company's "board of directors" even if it's you as Pres/ CEO and spouse as VP/ CFO...meeting... Not meeting clients.
Little Mama... I don't know how your business is set up, I was just saying "The Officers of your company" get together for a monthly meeting... If you are the only one, theoretically you are all the officers of your company, and if you have a monthly planning session/ "meeting" with yourself, as I understand it, qualifies. Now, If you wish to check your situation specifically with a tax attorney or CPA... they ought to know the specifics and ensure that you can (or can't) legally do it. I would NEVER suggest to lie or cheat on your taxes, but some things are slightly open to interpretation... Get professional advice, and go with your gut.
Sounds great Rebecca, I will look into that since it's a great way to reduce my taxes. :)
Thanks for bringing this to my attention.
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You're sure you've found all of your legal write-offs...? One thing that folks don't know is that you can "rent out" your home one day per month for a board meeting of your company officers... This can equal writing off your entire monthly mortgage payment or rent payment! So, if your home costs $1000 per month, and you rent it to your company one day per month at $1000 that is apparently legal. (I am not a lawyer, but was a Tax pro at H&R block for 6 years.) You are allowed up to 13 of these meeting days.