The Money with Katie Show A Year of Travel...and $17,000 in Tax Savings?
Apr 24, 2024
CPA Katelynn Minott and Chartered Wealth Manager Alex Ingram discuss the complexities of relocating abroad, including tax implications, retirement accounts, and cultural considerations. Topics covered include Foreign Earned Income Exclusion, visa limitations for digital nomads, and financial strategies for international moves.
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Geo-Arbitrage Has Real Local Costs
- Geo-arbitrage can improve individual quality of life but often raises local prices and displaces residents, creating transnational gentrification.
- Rapid influxes of higher-paid foreigners can spark local backlash, protests, and policy rollbacks.
Claim The Foreign Earned Income Exclusion
- Use the Foreign Earned Income Exclusion (Form 2555) if you live and work abroad to exclude up to about $130k of earned income per taxpayer per year.
- Track your tax home and travel days carefully because you must meet the tax-home test plus either the 330-day physical presence test or the bona fide residence test.
Document Travel To Meet Tests
- Keep precise travel records and use Form 2555 to document travel dates and tax-home details when claiming the exclusion.
- Remember the physical presence test requires 330 days outside the U.S. in any 365-day period and the bona fide residence test requires an uninterrupted calendar year abroad.