Latest / bit of a Rambler / 021 Stop Paying Taxes

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021 Stop Paying Taxes · bit of a Rambler

• 1 00:00:00,000 --> 00:00:05,160 Hello, my name is Kai and I am a bit of a rambler. 2 00:00:05,160 --> 00:00:08,880 I like to travel, learn and tell stories. 3 00:00:08,880 --> 00:00:14,440 Today I want to talk about something that has saved me tens of thousands of dollars since 4 00:00:14,440 --> 00:00:15,840 I started traveling. 5 00:00:15,840 --> 00:00:21,560 It's called the FEIE, the foreign earned income exclusion. 6 00:00:21,560 --> 00:00:24,200 It is part of the US tax code. 7 00:00:24,200 --> 00:00:30,280 It is legal and it means you don't have to pay tax on your earned income up to a certain 8 00:00:30,280 --> 00:00:31,280 amount. 9 00:00:31,280 --> 00:00:40,840 Now, unfortunately for Americans, their tax laws are predicated on citizenship rather than 10 00:00:40,840 --> 00:00:46,920 residency or being in the country for the most part or anything else. 11 00:00:46,920 --> 00:00:53,980 If you are a US citizen, you will always file your taxes and almost always pay taxes 12 00:00:53,980 --> 00:00:55,860 on your earned income. 13 00:00:55,860 --> 00:01:01,940 Regardless of whether or not you are using any of the services that the US provides. 14 00:01:01,940 --> 00:01:05,500 So, why should you know about this? 15 00:01:05,500 --> 00:01:12,340 Because one of the very few situations in which you are not paying taxes is if you are 16 00:01:12,340 --> 00:01:15,460 traveling for an extended period. 17 00:01:15,460 --> 00:01:23,140 If you leave the US for more than 330 days in one year, then you can apply and automatically 18 00:01:23,140 --> 00:01:28,220 receive the foreign earned income exclusion credit. 19 00:01:28,220 --> 00:01:36,660 Which means that up to 125,000, I believe it's 126.5,000 this year, it's an adjusting number. 20 00:01:36,660 --> 00:01:42,780 But 125,000 roughly dollars of your earned income from the tax year you are outside of the 21 00:01:42,780 --> 00:01:48,980 US for 330 days or more are exempt from tax. 22 00:01:48,980 --> 00:01:54,940 Now the first year, I think I did pay full taxes because I just didn't know about it and 23 00:01:54,940 --> 00:01:57,700 nobody around me knew about it. 24 00:01:57,700 --> 00:02:06,180 Some of the teachers I knew in China were simply not paying taxes, which is illegal. 25 00:02:06,180 --> 00:02:10,580 And others had just never heard of this foreign earned income exclusion. 26 00:02:10,580 --> 00:02:14,540 So they just paid regular taxes to the US. 27 00:02:14,540 --> 00:02:20,260 And though they had not been in the country for five years or in some cases 15 years, I 28 00:02:20,260 --> 00:02:25,620 came across this tax code and I was like, "whoa, wait what?" 29 00:02:25,620 --> 00:02:29,300 And it's called the physical presence test. 30 00:02:29,300 --> 00:02:34,420 If you're not in the US for more than 330 days out of the year, you don't pay taxes on 31 00:02:34,420 --> 00:02:38,220 your first 125,000 dollars of earned income. 32 00:02:38,220 --> 00:02:44,500 The income you get directly from your job, not dividends or royalties or stuff like that. 33 00:02:44,500 --> 00:02:50,500 Which you would still pay tax on because that is unearned income or self-employment. 34 00:02:50,500 --> 00:02:57,020 So any company you work for and you get paid from that earned income is counted under this 35 00:02:57,020 --> 00:02:58,340 exclusion. 36 00:02:58,340 --> 00:03:05,340 But if you are self-employed, the self-employed income will not count under the FEIE. 37 00:03:05,340 --> 00:03:08,300 So you would still have to pay taxes on self-employed income. 38 00:03:08,300 --> 00:03:14,220 But if you're working for a school, English teaching school or any other company while you're 39 00:03:14,220 --> 00:03:17,260 abroad, that's all excluded. 40 00:03:17,260 --> 00:03:24,460 But if you just have a job like teaching English in a foreign country for example, you can 41 00:03:24,460 --> 00:03:27,260 be in that foreign country for 11 months out of the year. 42 00:03:27,260 --> 00:03:30,620 So go to Japan, teach English for 11 months. 43 00:03:30,620 --> 00:03:37,220 You can take a month off each year, go back and visit your family in the US and then 44 00:03:37,220 --> 00:03:47,340 when you pay taxes, it's one extra form called the FEIE or form 2555. 45 00:03:47,340 --> 00:03:51,780 So you fill out the 2555, which is a couple pages. 46 00:03:51,780 --> 00:04:00,420 You basically fill out the dates that you are not in the US where you were and then you 47 00:04:00,420 --> 00:04:01,660 claim the FEIE. 48 00:04:01,660 --> 00:04:04,380 That's basically it. 49 00:04:04,380 --> 00:04:11,140 You know, if they audit you, which I've never had, hopefully not jinxing myself, you just 50 00:04:11,140 --> 00:04:14,700 have to show your passport or your plane tickets or whatever that shows you were actually 51 00:04:14,700 --> 00:04:16,300 out of the country. 52 00:04:16,300 --> 00:04:20,700 But being out of the country, that's the only hoop you have to jump through. 53 00:04:20,700 --> 00:04:29,860 There are two ways to apply and receive this tax credit, but the physical presence test 54 00:04:29,860 --> 00:04:31,980 is much easier. 55 00:04:31,980 --> 00:04:38,580 The first question I want to get out of the way is, is this tax evasion, which no, there 56 00:04:38,580 --> 00:04:43,540 is a form for it, the same forms you fill out for your 1099 W2, whatever. 57 00:04:43,540 --> 00:04:47,020 This form is 2555, 2555. 58 00:04:47,020 --> 00:04:50,940 And it's just another form you fill out with your taxes. 59 00:04:50,940 --> 00:04:55,180 There is a difference between tax evasion and avoidance. 60 00:04:55,180 --> 00:04:58,820 Tax evasion is if you just don't pay your taxes. 61 00:04:58,820 --> 00:05:05,180 Like the other teachers I know in China who are just like, well, I'm not in the country, 62 00:05:05,180 --> 00:05:07,140 so I don't have to pay any taxes. 63 00:05:07,140 --> 00:05:09,940 And that is not how US taxes work. 64 00:05:09,940 --> 00:05:13,700 They have a draconian tax system and you always file your taxes. 65 00:05:13,700 --> 00:05:17,860 Even if like me, you are not going to end up paying them because all of your income is 66 00:05:17,860 --> 00:05:21,540 excluded by form 2555. 67 00:05:21,540 --> 00:05:23,940 So that would be evasion. 68 00:05:23,940 --> 00:05:26,380 You just not paying your taxes. 69 00:05:26,380 --> 00:05:32,800 So when like a shell company hides its money in a foreign country with very good privacy 70 00:05:32,800 --> 00:05:37,620 laws so that they don't have to report their income and get a tax, that's tax evasion. 71 00:05:37,620 --> 00:05:46,820 That is an illegal method to not pay taxes or file taxes on income or wealth. 72 00:05:46,820 --> 00:05:49,820 Tax avoidance is a different thing. 73 00:05:49,820 --> 00:05:54,460 Tax avoidance is very simply explained by deductions. 74 00:05:54,460 --> 00:05:59,460 Using regular legal tax deductions is tax avoidance. 75 00:05:59,460 --> 00:06:06,780 You don't have to claim your children as dependents and you don't have to claim medical costs 76 00:06:06,780 --> 00:06:11,500 as like giving you a credit on your taxes. 77 00:06:11,500 --> 00:06:15,900 But if you claim those, you are using the principle of tax avoidance. 78 00:06:15,900 --> 00:06:23,220 You're using a legal avenue provided by the IRS to pay less on your taxes. 79 00:06:23,220 --> 00:06:27,740 You're avoiding paying the maximum amount of taxes. 80 00:06:27,740 --> 00:06:33,940 So these teachers were evading whereas someone who claims a hospital bill and gets a credit 81 00:06:33,940 --> 00:06:39,780 on their taxes is avoiding paying maximum taxes because there's no legal way to just not 82 00:06:39,780 --> 00:06:42,580 pay or file your taxes in the US. 83 00:06:42,580 --> 00:06:49,280 But there is a legal way to claim an exorbitant hospital bill on your taxes so that you have 84 00:06:49,280 --> 00:06:53,140 a little breathing room on your taxes or you pay less taxes. 85 00:06:53,140 --> 00:07:02,820 So again, evasion is in a legal way to not pay taxes and tax avoidance is using the tax 86 00:07:02,820 --> 00:07:08,900 legal code itself to avoid paying maximum or extra taxes. 87 00:07:08,900 --> 00:07:14,340 You want to pay the minimum taxes legally possible. 88 00:07:14,340 --> 00:07:25,100 From 2555 if you are traveling is crucial and I didn't know a single person who used it 89 00:07:25,100 --> 00:07:30,620 and I knew a fair amount how many. 90 00:07:30,620 --> 00:07:37,780 I'll say at least a dozen just within my schools, Americans who I hired in our schools and 91 00:07:37,780 --> 00:07:41,740 none of them had ever heard of the 2555. 92 00:07:41,740 --> 00:07:47,060 So I made that sure to be part of my welcoming spiel when they came into the school, hey 93 00:07:47,060 --> 00:07:50,980 guess what, if you're out of your fur a whole year you don't have to pay taxes. 94 00:07:50,980 --> 00:07:55,400 Just fill out this one form and like I said it's an extra two pages of work, mostly just 95 00:07:55,400 --> 00:08:01,000 filling out where you've been, what the dates are and then clicking yes I am applying this 96 00:08:01,000 --> 00:08:05,380 physical presence test for the foreigner to come exclusion. 97 00:08:05,380 --> 00:08:14,740 Now is it worth it? Yes, because it takes maybe 15 extra minutes to write down that you 98 00:08:14,740 --> 00:08:18,660 were not in the United States on your taxes. 99 00:08:18,660 --> 00:08:22,060 Probably faster if you've done it in the previous years. 100 00:08:22,060 --> 00:08:25,220 I have to fill out a lot of different because I like traveling frequently so I have to fill 101 00:08:25,220 --> 00:08:28,340 out like the 10 countries I visited that year. 102 00:08:28,340 --> 00:08:36,780 So it takes me 20 minutes to write down my ticket dates and whatever but really less than 103 00:08:36,780 --> 00:08:42,020 half an hour even if you visit a new country every month and then you check a box that says 104 00:08:42,020 --> 00:08:44,780 physical presence test. 105 00:08:44,780 --> 00:08:50,940 As long as you're out for 330 days a year you save all of your earned income taxes. 106 00:08:50,940 --> 00:08:59,820 So if you have a remote job and you made let's say you made $35,000 as a teacher in Korea 107 00:08:59,820 --> 00:09:07,100 if you were out for 11 months of that tax year the $3,000 to $4,000 that you're paying on 108 00:09:07,100 --> 00:09:10,300 your income over the year you save it. 109 00:09:10,300 --> 00:09:13,140 It stays in your bank that is your money. 110 00:09:13,140 --> 00:09:19,260 You don't have to plan ahead for paying the taxes at the end of the year. 111 00:09:19,260 --> 00:09:26,140 You just have that money for yourself and I've been doing that for 15 years. 112 00:09:26,140 --> 00:09:28,340 I don't know a long time now. 113 00:09:28,340 --> 00:09:33,340 So yeah that I mean do the math but it definitely has saved me tens of thousands of dollars 114 00:09:33,340 --> 00:09:36,780 over the years for I'm doing my taxes anyway. 115 00:09:36,780 --> 00:09:42,780 I have to fill out one extra two page form and I save thousands of dollars every year. 116 00:09:42,780 --> 00:09:45,060 It's a no-brainer. 117 00:09:45,060 --> 00:09:46,060 Is it worth it? 118 00:09:46,060 --> 00:09:47,060 Is it worth the trouble? 119 00:09:47,060 --> 00:09:48,060 Is it worth the risk? 120 00:09:48,060 --> 00:09:49,060 No risk. 121 00:09:49,060 --> 00:09:53,340 This is a completely legal and normal IRS tax form. 122 00:09:53,340 --> 00:09:58,580 As long as you're outside of the country for 330 full days out of the year or more you 123 00:09:58,580 --> 00:10:02,580 don't pay taxes on that first $125,000. 124 00:10:02,580 --> 00:10:04,380 It's that simple. 125 00:10:04,380 --> 00:10:10,300 Now what's interesting to go through also are the how the 12 months are defined. 126 00:10:10,300 --> 00:10:14,940 They do have to be a consecutive 12 months but that doesn't necessarily mean it has to 127 00:10:14,940 --> 00:10:17,300 be January to January. 128 00:10:17,300 --> 00:10:25,060 If you pay your taxes in March then it could be March to March, March 7th to March 7th, 129 00:10:25,060 --> 00:10:30,460 March 7th 2018 to March 7th 2018, it doesn't have to be within one calendar year. 130 00:10:30,460 --> 00:10:35,940 You're paying your taxes on the dates that give you the most exclusion. 131 00:10:35,940 --> 00:10:40,460 I will read out the points on the 12 month plan because I know that's counterintuitive 132 00:10:40,460 --> 00:10:46,180 but these are the rules that the IRS provides with this income exclusion. 133 00:10:46,180 --> 00:10:52,140 So here are the four main points that the IRS lists to qualify for having this 12 month 134 00:10:52,140 --> 00:10:55,540 period, 330 days within a 12 month period. 135 00:10:55,540 --> 00:10:59,260 A 12 month period can begin with any day of the month. 136 00:10:59,260 --> 00:11:04,180 It ends the day before the same calendar day, 12 months later. 137 00:11:04,180 --> 00:11:09,860 January 7th 2018 to January 6th 2019. 138 00:11:09,860 --> 00:11:16,100 A 12 month period must be made up of consecutive months so it has to be January to January 139 00:11:16,100 --> 00:11:19,300 or February to February. 140 00:11:19,300 --> 00:11:26,740 Any 12 month period can be used if the 330 days in a foreign country fall within that period. 141 00:11:26,740 --> 00:11:30,100 It does not say any 12 month period from January. 142 00:11:30,100 --> 00:11:36,540 Any 12 month period can be used if the 330 days in a foreign country fall within that period. 143 00:11:36,540 --> 00:11:42,180 You do not have to begin a 12 month period with your first full day in a foreign country 144 00:11:42,180 --> 00:11:45,100 or to end it with the day you leave. 145 00:11:45,100 --> 00:11:50,660 You can choose the 12 month period that gives you the greatest exclusion. 146 00:11:50,660 --> 00:11:56,500 And the fourth rule is in determining whether the 12 month period falls within a longer 147 00:11:56,500 --> 00:12:02,660 stay in the foreign country, 12 month periods can overlap one another. 148 00:12:02,660 --> 00:12:07,540 I invite you to check it out yourself, but I have been following those rules for the past 149 00:12:07,540 --> 00:12:13,340 decade and a half, filing my taxes every year, applying my foreign earned income exclusion, 150 00:12:13,340 --> 00:12:16,100 and not paying any taxes that year. 151 00:12:16,100 --> 00:12:21,820 So I understand this is not intuitive and I didn't get it at first, but the IRS has a very 152 00:12:21,820 --> 00:12:27,900 clear example that it's not just 12 months within one calendar year. 153 00:12:27,900 --> 00:12:31,940 It is the 12 months that grant you the greatest exclusion. 154 00:12:31,940 --> 00:12:36,140 And they offer an example at the bottom of the page that illustrates this. 155 00:12:36,140 --> 00:12:43,780 The official IRS example of a 12 month period includes you live, work, and have a tax 156 00:12:43,780 --> 00:12:51,900 home in New Zealand from January 1st, 2022 through August 31st, 2023. 157 00:12:51,900 --> 00:12:56,900 So if you go back in 2023 in August, four months you've spent in the US. 158 00:12:56,900 --> 00:13:01,940 So you would think, oh my gosh, that calendar year, I can't use my foreign earned income exclusion. 159 00:13:01,940 --> 00:13:11,660 No, the two example 12 months that the, that the IRS provides in that exact situation is 160 00:13:11,660 --> 00:13:17,780 for 2022, you can claim January 1st to December 31st, 2022. 161 00:13:17,780 --> 00:13:28,580 But for 2023, since you return to the US in August, you should choose September 1st, 2022 162 00:13:28,580 --> 00:13:32,020 to August 31st, 2023. 163 00:13:32,020 --> 00:13:39,260 So as long as you have 12 consecutive months outside of the country, you can dip back into 164 00:13:39,260 --> 00:13:46,220 the former year or forward into the next year and use that 12 month consecutive period 165 00:13:46,220 --> 00:13:55,340 with which to apply the foreign earned income exclusion at the risk of droning, which 166 00:13:55,340 --> 00:13:56,900 this is about taxes. 167 00:13:56,900 --> 00:13:58,260 So I get it. 168 00:13:58,260 --> 00:14:02,940 I'm going to give another example because I have done this before for the first few years. 169 00:14:02,940 --> 00:14:08,540 I always try to make sure it was within January to December, you know, one calendar year. 170 00:14:08,540 --> 00:14:12,340 But then I finally read it more closely after the 30 year or something. 171 00:14:12,340 --> 00:14:19,580 And it was good because that year, I didn't leave the US until March, I believe. 172 00:14:19,580 --> 00:14:27,660 And then I stayed in Japan the following year in March. 173 00:14:27,660 --> 00:14:30,980 And that was the year I really read through the foreign earned income exclusion. 174 00:14:30,980 --> 00:14:37,100 And I saw these rules and I was like, oh, well, it's been 12 consecutive months. 175 00:14:37,100 --> 00:14:39,460 Like we can say it was 2018. 176 00:14:39,460 --> 00:14:46,140 I can't remember the exact year, but I thought in this calendar year, I have been in the US 177 00:14:46,140 --> 00:14:49,940 for more than the 35 days allotted. 178 00:14:49,940 --> 00:14:51,540 But that's not the rule. 179 00:14:51,540 --> 00:15:01,240 The rule is that any 12 consecutive months, including that tax year, you can use as your 180 00:15:01,240 --> 00:15:06,820 foreign earned income exclusion presence test of 330 days out of the country. 181 00:15:06,820 --> 00:15:18,580 So from March, 2018 until March, 2019, I was in a foreign country for 330 days out of 182 00:15:18,580 --> 00:15:20,660 that 12 month period. 183 00:15:20,660 --> 00:15:25,680 And I filed my taxes, I filled out the form saying that and I got my exclusion and everything 184 00:15:25,680 --> 00:15:29,820 was normal because those are the actual rules from the IRS. 185 00:15:29,820 --> 00:15:34,240 It's just that's very good to know because you don't have to worry like, oh no, I have to 186 00:15:34,240 --> 00:15:37,620 start traveling in January so I can claim this exclusion. 187 00:15:37,620 --> 00:15:45,420 No, you can claim it from July to July or September to August or whatever it is. 188 00:15:45,420 --> 00:15:48,780 It just has to be a consecutive 12 month period. 189 00:15:48,780 --> 00:15:56,380 And you have to have been outside of the US for 330 days of that 12 month period. 190 00:15:56,380 --> 00:15:58,540 I hope that's clear enough. 191 00:15:58,540 --> 00:16:01,460 If it's not right to me, I'll explain it again. 192 00:16:01,460 --> 00:16:05,860 I've explained it 50 times to people in real life. 193 00:16:05,860 --> 00:16:11,420 And I don't mind explaining to people because it's such a powerful tool with which to save 194 00:16:11,420 --> 00:16:15,220 money that nobody tells you about. 195 00:16:15,220 --> 00:16:19,580 So a few of the very common questions I get, I may have mentioned before, but how much 196 00:16:19,580 --> 00:16:22,660 time does it take, takes 15 minutes to fill out. 197 00:16:22,660 --> 00:16:28,260 Tan, if you only live in one country outside the whole year, can you do it yourself? 198 00:16:28,260 --> 00:16:31,180 Yes, I have done my own taxes my whole life. 199 00:16:31,180 --> 00:16:35,980 If you don't want to do your tax yourself, just make sure to include the 2555 with whoever 200 00:16:35,980 --> 00:16:38,140 you have filed your taxes. 201 00:16:38,140 --> 00:16:41,060 Who can use this income exclusion? 202 00:16:41,060 --> 00:16:46,980 Anyone who stays out of the US for 330 days in a 12 month period. 203 00:16:46,980 --> 00:16:51,220 How often can you use the FEI every single year? 204 00:16:51,220 --> 00:16:53,460 What are the limits of the FEI? 205 00:16:53,460 --> 00:16:59,220 So every year, the amount of earned income that you can exclude from paying taxes on is 206 00:16:59,220 --> 00:17:01,020 adjusted by the IRS. 207 00:17:01,020 --> 00:17:04,140 And it basically goes up a couple of thousand every year. 208 00:17:04,140 --> 00:17:10,140 So yeah, this year, it's 126,500, I believe, if I remember. 209 00:17:10,140 --> 00:17:15,380 But it's about that and it'll probably be like 128,000 next year or something like that. 210 00:17:15,380 --> 00:17:21,500 Is there a minimum amount of income that I need in order to use the FEI and exclude that 211 00:17:21,500 --> 00:17:22,500 income? 212 00:17:22,500 --> 00:17:23,500 Nope. 213 00:17:23,500 --> 00:17:28,900 So if you make $15,000 a year, you can exclude that 15,000. 214 00:17:28,900 --> 00:17:32,980 If you make 125,000, you can exclude 125,000. 215 00:17:32,980 --> 00:17:39,620 If you make 250,000, you can still exclude 125,000 and you'll only pay taxes on the 216 00:17:39,620 --> 00:17:40,620 money. 217 00:17:40,620 --> 00:17:47,220 Following 125,000, the other half of your income, you always get to exclude the maximum amount. 218 00:17:47,220 --> 00:17:52,020 In the 12 month period, that you choose that guarantees you the largest exclusion. 219 00:17:52,020 --> 00:17:54,900 Okay, so what's the catch? 220 00:17:54,900 --> 00:17:56,380 There is no catch. 221 00:17:56,380 --> 00:17:58,940 US tax code is ridiculous. 222 00:17:58,940 --> 00:18:03,980 Many other countries, if you're not in the country, then you just write the number of days 223 00:18:03,980 --> 00:18:04,980 you're in the country. 224 00:18:04,980 --> 00:18:07,100 You don't pay taxes like that. 225 00:18:07,100 --> 00:18:12,100 Things are just more bureaucratic in the states and the tax laws are crazier. 226 00:18:12,100 --> 00:18:17,660 So they don't figure out your taxes for you, even though they know them most of the time, 227 00:18:17,660 --> 00:18:22,260 you have to do all the work yourself in the US. 228 00:18:22,260 --> 00:18:28,660 So in this situation, if you're a traveler, I mean, an American traveler, this is the one 229 00:18:28,660 --> 00:18:35,940 thing you should definitely know because if you save $3,000 a year, that's easily half 230 00:18:35,940 --> 00:18:38,380 a year of expenses covered. 231 00:18:38,380 --> 00:18:43,860 If you're a traveler, like, yeah, or if you're, you know, living it up, that's three months 232 00:18:43,860 --> 00:18:46,900 partying every day at $1,000 a month. 233 00:18:46,900 --> 00:18:49,020 That's just free money. 234 00:18:49,020 --> 00:18:50,940 There's no reason to pay the taxes. 235 00:18:50,940 --> 00:18:56,100 You legally do not have to if you're outside of the US for 330 days out of a 12 month period 236 00:18:56,100 --> 00:18:58,340 of your choosing. 237 00:18:58,340 --> 00:19:00,700 So there's no catch. 238 00:19:00,700 --> 00:19:08,260 It's just a legal tax procedure that tax-paying Americans can take advantage of. 239 00:19:08,260 --> 00:19:09,860 Okay, you know what? 240 00:19:09,860 --> 00:19:15,620 Another question I always get is, does it count for four in jobs only or if I have a job 241 00:19:15,620 --> 00:19:21,780 from America and I just happen to be abroad all year, does it still count? 242 00:19:21,780 --> 00:19:22,780 Yes. 243 00:19:22,780 --> 00:19:24,740 It doesn't matter what job you have. 244 00:19:24,740 --> 00:19:26,980 What matters is how many days you're outside of the US. 245 00:19:26,980 --> 00:19:30,660 I know I keep saying that, but it's important to make that happen. 246 00:19:30,660 --> 00:19:31,980 That's very clear. 247 00:19:31,980 --> 00:19:39,620 If you have a completely foreign job, let's say you move to India and teach English like 248 00:19:39,620 --> 00:19:40,980 the whole time on site. 249 00:19:40,980 --> 00:19:43,940 It's a foreign company, all of that stuff. 250 00:19:43,940 --> 00:19:44,940 It doesn't matter. 251 00:19:44,940 --> 00:19:50,380 You make that money when you pay taxes in the US, you fill out the 2555 and your income is 252 00:19:50,380 --> 00:19:51,660 excluded. 253 00:19:51,660 --> 00:19:58,620 In the same way, if you have a fully remote job as a design engineer for a corporation in 254 00:19:58,620 --> 00:20:04,380 the US, but they are fine with you working remotely, even though that's a US corporation. 255 00:20:04,380 --> 00:20:07,020 And your job is fully American. 256 00:20:07,020 --> 00:20:12,980 If you are not in the US for more than 330 days out of a 12 month period, then you qualify 257 00:20:12,980 --> 00:20:20,140 for the FEI and you don't pay taxes on $125,000 of your earned income. 258 00:20:20,140 --> 00:20:24,740 The qualification is your physical presence, not what job you have, not what country you 259 00:20:24,740 --> 00:20:26,220 go to, none of that. 260 00:20:26,220 --> 00:20:33,860 It's simply outside of the US more than 330 days in a 12 month period of your choosing 261 00:20:33,860 --> 00:20:38,060 that provides you with the greatest income exclusion. 262 00:20:38,060 --> 00:20:40,300 It's great, isn't that great? 263 00:20:40,300 --> 00:20:47,540 I was blown away when I found out about this because US tax laws are just awful and so 264 00:20:47,540 --> 00:20:49,820 unnecessarily onerous. 265 00:20:49,820 --> 00:20:53,380 So I was very happy to find out about this and I've used it every year since. 266 00:20:53,380 --> 00:20:55,780 I think you should too. 267 00:20:55,780 --> 00:21:00,820 This also, importantly, doesn't mean you can't add on other deductions. 268 00:21:00,820 --> 00:21:06,340 If you make over 120,000 whatever and you still have some income, you can pay tax on. 269 00:21:06,340 --> 00:21:14,500 You can still take other deductions, office deductions, home office deductions, rent, hospital 270 00:21:14,500 --> 00:21:15,500 bills. 271 00:21:15,500 --> 00:21:18,100 You can still take all of those deductions as well. 272 00:21:18,100 --> 00:21:20,820 This is just another deduction you take, basically. 273 00:21:20,820 --> 00:21:26,300 It's just the biggest deduction and it rocks and all you have to do is travel to the country 274 00:21:26,300 --> 00:21:31,940 of your dreams and live there for most of a year. 275 00:21:31,940 --> 00:21:36,820 If there's anything I'm missing or anything that you're curious about or want some clarification 276 00:21:36,820 --> 00:21:48,660 on, please send me an email at bit of a rambler@gmail.com and I will get back to you because I 277 00:21:48,660 --> 00:21:50,100 mentioned the rules earlier. 278 00:21:50,100 --> 00:21:55,900 They're simple but they're sort of non-intuitive and it just seems too good to be true really. 279 00:21:55,900 --> 00:22:00,980 That's what the holdup seems to be for a lot of people that ask me questions about this. 280 00:22:00,980 --> 00:22:04,580 They just can't believe that all they have to do is not live in the country and then they 281 00:22:04,580 --> 00:22:06,340 can stop paying taxes. 282 00:22:06,340 --> 00:22:11,940 It's one of the only situations in which you cannot pay tax on your earned income in the 283 00:22:11,940 --> 00:22:13,340 US. 284 00:22:13,340 --> 00:22:15,260 Much better tax laws in every other country. 285 00:22:15,260 --> 00:22:24,340 But yeah, if you have any questions or clarifications, tax lawyers get at me definitely, yeah, hit me 286 00:22:24,340 --> 00:22:26,180 up, right me up. 287 00:22:26,180 --> 00:22:31,940 And do your taxes, well abroad because chances are there is a free service I haven't paid 288 00:22:31,940 --> 00:22:33,300 for federal taxes. 289 00:22:33,300 --> 00:22:38,380 I don't think I've ever paid for federal taxes. 290 00:22:38,380 --> 00:22:43,260 There's a free service willing to e-file for you and the consequences of trying to dodge 291 00:22:43,260 --> 00:22:51,140 taxes is not worth the couple hours or days you're trying to save or if you're having someone 292 00:22:51,140 --> 00:22:55,180 else do it for you, it's not worth saving the $100 or whatever. 293 00:22:55,180 --> 00:23:00,100 US tax laws are, I mean they come with heavy penalties and you'll be under scrutiny for 294 00:23:00,100 --> 00:23:04,740 the rest of your life basically if you try to evade the taxes. 295 00:23:04,740 --> 00:23:08,140 If you try not to pay the taxes you legally owe. 296 00:23:08,140 --> 00:23:16,820 So instead I avoid taxes by traveling to countries I want to see and visit and then legally following 297 00:23:16,820 --> 00:23:24,260 IRS procedure claiming my income exclusion, partying in Japan for the cherry blossoms and 298 00:23:24,260 --> 00:23:33,180 then Guatemala for the volcanoes and Portugal for the white cliffs and crashing waves and 299 00:23:33,180 --> 00:23:36,180 by traveling I don't pay taxes. 300 00:23:36,180 --> 00:23:39,060 It's such a good deal. 301 00:23:39,060 --> 00:23:46,940 So get out there, enjoy yourself, write to me if you feel like it, claim your foreign earned 302 00:23:46,940 --> 00:23:49,780 income exclusion, enjoy yourself. 303 00:23:49,780 --> 00:24:14,780 [no audio]