Any American full-timers have experience w/ Tax Exclusion?

[new2this44]

Let's say you work online, spend half the year in Mexico and half the year in Canada, thus you qualify for FEIE.

Has anybody actually done this? Did you register your vehicle/camper in the US?

I'm trying to imagine how I would justify myself in case of an audit. American registered truck, no receipts of stay because I'm boondocking...I'd be relegated to gasoline receipts. I can't imagine that ending well?

[sayoung]

new2this44 wrote:
Let's say you work online, spend half the year in Mexico and half the year in Canada, thus you qualify for FEIE.

Has anybody actually done this? Did you register your vehicle/camper in the US?

I'm trying to imagine how I would justify myself in case of an audit. American registered truck, no receipts of stay because I'm boondocking...I'd be relegated to gasoline receipts. I can't imagine that ending well?

If you spend half year in Canada & half year in Mexico, how are you getting from one to the other in an rv without entering the USA ? Tramp steamer ?
Hard to prove the 330 day rule isn't it if every 6 months your driving across the Nation you are trying to screw.

[Optimistic_Para]

new2this44 wrote:
Passing the physical residency test is the standard, not paying taxes elsewhere.

Are you planning to somehow get a Canadian or Mexican Drivers License, Vehicle Registration, and Vehicle insurance?

To get an American Driver's License, Registration, and Insurance, - not to mention Health Insurance - you're going to have to give them an address in one of our 50 states. Absent proof that you rented an apartment or something in Canada/Mexico, I rather suspect that the IRS, as well as the state government involved, are going to claim THAT address is your legal residence.

In any event, you really should stop asking strangers on the Internet for free legal and tax advice and find a good tax attorney to give you the straight scoop.

Now, if you want free MEDICAL advice, most of us here would be happy to tell you how to treat that painful rectal itch you've developed ...

[westernrvparkow]

new2this44 wrote:

westernrvparkowner wrote:
In the unlikely event this isn't just a troll, maybe you should just buck up like the rest of us and realize there is a cost of living. legally minimizing taxes and expenses is your business, but skipping out on federally insured student loans you have the capacity to repay puts that burden on me and your fellow citizens. For that reason, I hope your plan/scheme fails with severe repurcussions.

Suffice to say you have a very naive (but not uncommon) understanding of how the economy works. I nevertheless wish you success in all future endeavors.

Yes, I have a different view on economics than you apparently do. On a microeconomics level, I believe that a person should repay the debt obligations they incur. I do not make tax avoidance and tax evasion a centerpoint of my business and residency decisions. On a macroeconomics level I believe that people who do not repay obligations put an additional burden on those that do. Therefore, I believe your plans to retain you rights as a US citizen, yet take affirmative action to completely avoid the financial obligations that come with those rights is wrong. You wishing me continued success does not suddenly put us morally level ground.

[valhalla360]

new2this44 wrote:

valhalla360 wrote:
I do a fair bit of overseas work but not enough to qualify.

Your passport stamps can document how much time you spent out of the country but check with the IRS in regards to what qualifies as your official residence/domicile. You might be in the right but still get a nasty audit because you are outside of the norm.

Also, you need to check on how the online income will be reported. Typically, if it is for a job that occurs and is paid in the other country. If the online income shows up as US based income, it doesn't matter where your residence is.

Per the IRS, if an American citizen passes the physical residence test (330+ days per year abroad) he/she qualifies for the exclusion regardless of where your employer is located. It's all about the nuts and bolts of proving you pass said test, which I can imagine proves difficult for a full-timer vs, say, someone living in a normal apartment.

valhalla360 wrote:

A final thought: If you are boondocking mostly, I'm guessing there isn't a ton of income involved. If you are only making say $30k/yr, is it worth the hassle? After standard deduction, you may only be paying 10% on $6-8k. If you can claim business expenses, it might not even be that much. Is it easier and more foolproof to just file and pay the taxes?

I make around 90k. I have six figure federal student loan debt. Qualification for this exemption not only means that I avoid income taxes but also that my income based student loan payment falls to zero. In total, it's about 30k a year, which is substantial given my income. Definitely worth it.

Thank you everyone for your opinions and information thus far. Although unlikely, if one of you reading this thread has actually done this and been audited, I'd love to hear from you. Thanks.

It's not a question of where the company is located. It's where the "income" is located. If you are physically in Mexico but working for an Indiana company on a project remotely that is in Indiana...that's domestic income.

Foreign income generally assumes it was work on foreign projects..it can be for a US Parent Company but the work must be associated with another country. It can get a little complicated depending on specifics but you haven't indicated you are working on a Mexican project for a company that happens to be US based so it's unlikely.

Also, the 330 day rule is dependent on residency/domicile. If you just read the clif notes version, you may get in trouble later.

As far as purposely not paying what you owe on your student loans, you may or may not get away with it legally but that is pure and simple theft ethically, since you have the ability to pay what you owe and you are purposely not paying it. Yes, it makes me mad because stupid politicians are trying to use MY TAX MONEY to pay off these loans.

[Lwiddis]

Wouldn't want to repay any of your student loan debt! Heavens no! Shock it to the sucker taxpayers who paid for your education.

[new2this44]

accsys wrote:
Also, if your doing work in Mexico and Canada AND being paid by companies in those countries AND paying income tax to those countries, that would be the only way you would qualify for a foreign income exclusion. If your income is from american companies while you are working for them online, you have no foreign income regardless of your location while earning that income unless you are paying foreign taxes on that income. Check out Form 2555 and its instructions and you will see what requirements exist.

Thanks. I did check it out and this is not the case. If you work for an American company and live abroad, you are eligible for the foreign income exclusion. Passing the physical residency test is the standard, not paying taxes elsewhere (I was surprised, too.) It's very common for digital nomads to wander around Europe for exactly this reason- no income taxes to anyone, perfectly legal.

[new2this44]

westernrvparkowner wrote:
Four months ago you were in you mid 30s, buying property in the Pacific Northwest, selling your car, buying a truck camper and living off the grid to avoid utilities. A big concern was the cost of a freezer.

That's still who I am. I had a question about a freezer. Why are you upset?

westernrvparkowner wrote:
Now you are transiting the US, making 90k, and want to avoid paying taxes and repaying A six figure student loan.

I'm sitting in my home, actually. I'm tossing around some ideas for the future...not even on the road yet.

westernrvparkowner wrote:
In the unlikely event this isn't just a troll, maybe you should just buck up like the rest of us and realize there is a cost of living. legally minimizing taxes and expenses is your business, but skipping out on federally insured student loans you have the capacity to repay puts that burden on me and your fellow citizens. For that reason, I hope your plan/scheme fails with severe repurcussions.

Suffice to say you have a very naive (but not uncommon) understanding of how the economy works. I nevertheless wish you success in all future endeavors.

[accsys]

Also, if your doing work in Mexico and Canada AND being paid by companies in those countries AND paying income tax to those countries, that would be the only way you would qualify for a foreign income exclusion. If your income is from american companies while you are working for them online, you have no foreign income regardless of your location while earning that income unless you are paying foreign taxes on that income. Check out Form 2555 and its instructions and you will see what requirements exist.

[westernrvparkow]

Four months ago you were in you mid 30s, buying property in the Pacific Northwest, selling your car, buying a truck camper and living off the grid to avoid utilities. A big concern was the cost of a freezer. Now you are transiting the US, making 90k, and want to avoid paying taxes and repaying A six figure student loan. In the unlikely event this isn't just a troll, maybe you should just buck up like the rest of us and realize there is a cost of living. legally minimizing taxes and expenses is your business, but skipping out on federally insured student loans you have the capacity to repay puts that burden on me and your fellow citizens. For that reason, I hope your plan/scheme fails with severe repurcussions.

[new2this44]

valhalla360 wrote:
I do a fair bit of overseas work but not enough to qualify.

Your passport stamps can document how much time you spent out of the country but check with the IRS in regards to what qualifies as your official residence/domicile. You might be in the right but still get a nasty audit because you are outside of the norm.

Also, you need to check on how the online income will be reported. Typically, if it is for a job that occurs and is paid in the other country. If the online income shows up as US based income, it doesn't matter where your residence is.

Per the IRS, if an American citizen passes the physical residence test (330+ days per year abroad) he/she qualifies for the exclusion regardless of where your employer is located. It's all about the nuts and bolts of proving you pass said test, which I can imagine proves difficult for a full-timer vs, say, someone living in a normal apartment.

valhalla360 wrote:

A final thought: If you are boondocking mostly, I'm guessing there isn't a ton of income involved. If you are only making say $30k/yr, is it worth the hassle? After standard deduction, you may only be paying 10% on $6-8k. If you can claim business expenses, it might not even be that much. Is it easier and more foolproof to just file and pay the taxes?

I make around 90k. I have six figure federal student loan debt. Qualification for this exemption not only means that I avoid income taxes but also that my income based student loan payment falls to zero. In total, it's about 30k a year, which is substantial given my income. Definitely worth it.

Thank you everyone for your opinions and information thus far. Although unlikely, if one of you reading this thread has actually done this and been audited, I'd love to hear from you. Thanks.

[valhalla360]

I do a fair bit of overseas work but not enough to qualify.

Your passport stamps can document how much time you spent out of the country but check with the IRS in regards to what qualifies as your official residence/domicile. You might be in the right but still get a nasty audit because you are outside of the norm.

Also, you need to check on how the online income will be reported. Typically, if it is for a job that occurs and is paid in the other country. If the online income shows up as US based income, it doesn't matter where your residence is.

A final thought: If you are boondocking mostly, I'm guessing there isn't a ton of income involved. If you are only making say $30k/yr, is it worth the hassle? After standard deduction, you may only be paying 10% on $6-8k. If you can claim business expenses, it might not even be that much. Is it easier and more foolproof to just file and pay the taxes?

[Lwiddis]

Engage a good E.A.

[accsys]

You may want to start your research at the IRS.

[midnightsadie]

is there paper work when you cross the border,over,an back dated?