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Have you ever dreamed of quitting your 9-to-5 workday and heading to an exotic beach to live in the sun and sand? Believe it or not, more Americans than ever are doing just that!
Remote work and digital nomadism are here to stay and are expected to grow. By 2025, 36.2 million Americans are expected to work from home. About 16% of U.S. businesses are already fully remote, and as more workers demand the flexibility that remote work offers, more companies will need to follow suit to attract top talent.
as a result, Flying to a place where the cost of living and tax laws are more favorable is becoming an attractive option for Americans who are tired of not having much money going home.
Implementing something called “geo-arbitrage” will make inflation less impactful. This basically means earning dollars with a strong economy and living/spending where the cost of living is low.
Paying less for a better quality of life and lowering your tax burden may seem like a pipe dream, but it doesn’t have to be! Low cost of living, nice weather and things to do There are ways to eliminate the tax burden almost completely while enjoying the benefits of living in a densely populated area. In fact, Travel Off Path interviewed two of her Americans doing just that!
First, the tax background
Before catching up with interviewees, it is important to understand the tax benefits mentioned and discussed. All Americans can take advantage of this tax credit, called the Foreign Earned Income Credit Program (FEIE), which is a perfectly legal and easy way to reduce your taxable income.
meet Exclusion of Foreign Earned Income.
Essentially, Americans who meet certain requirements can use this exemption when filing their taxes to reduce their taxable income by $120,000 (for 2023, the amount will be adjusted for inflation each year). will be displayed). To take advantage of this, Americans must meet one of the following requirements:
- Be a valid resident of the foreign country for the entire tax year.
- Be a national or citizen of a country that has a valid income tax treaty with the United States and be a foreign resident for the entire tax year.
- Reside outside the United States and physically reside in another country (or countries) for 330 days in any calendar year.
Learn more about exclusions here.
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Latin America is the place to be
FEIE is available in many countries, but Latin America is a great place to call home as a digital nomad. The FEIE program is very attractive because most countries within Latin America have attractive “territorial tax” laws, so he is taxed at 0% in case of foreign income. Combine that with a lower cost of living, vibrant people, and luxury destinations. It’s a popular destination for digital nomads, and it’s also where our first interviewee, Vance, spends most of his time.
Vance started a popular podcast my latin lifehas CEO Kashlee Kucheran as a guest on the road to digital nomadism and runs a travel news website. He spends most of his year in Latin America, “jumping back and forth between Mexico, Panama, and Paraguay,” and it’s not surprising why.
“The low cost of living is amazing. Earn dollars and spend pesos. Feel more alive in Latin America. Maybe it’s the sun and increased vitamin D levels. My Spanish is also very good now.” I am happy that I was able to build a lifelong skill in speaking a foreign language well.I am so grateful to be able to spend the winter on the beach in Mexico instead of commuting to the office in the freezing cold. .”
Vance lived in the Northeastern United States, worked in IT before learning to be a digital nomad, and worked to build a skill set that enabled him to take the leap. One of his most influential factors was the tax incentives for becoming a digital nomad.
“I knew I was going to be a digital nomad anyway, but FEIE really made it easy. Taxes on an income of $112,000 would be about $17,000 in federal taxes alone. can actually reduce your tax bill to 0%, like the IRS saying you pay $17,000 a year to stay outside the U.S. and travel the world. Filing a return can be intimidating, but it’s more common than you might think and it’s completely legal.”
do you want to live like this? Earning an income online is the key.
Vance’s story is just one of many. More than ever, Americans are flocking to exotic locations to take advantage of the low cost of living and tax benefits offered by living outside the United States. But most people, especially those who have had traditional careers, wonder how to get started. Online His marketer and entrepreneur Dylan Madden has some great advice on how to make a world-class income.
First, “Use your current job to pay your bills, and use your free time to focus on your business. Of course, there are many ways to make money online as a digital nomad, but one of the easiest and longest lasting ways is freelancing.If you are looking to save time and are happy to do it Because there will always be someone willing to pay and help you increase your income.”
Dylan started doing just that in 2014 when he started writing for various blogs. In 2019, he landed his first email in his copywriting job, eventually running his two companies, including his Calm and Collected business his motivation brands, and expanding into more teams. It has reached its current state of employing his members. For those who truly want it, digital nomadism is achievable with the right skills, mindset, and dedication.
Why are Americans leaving the United States to live and work abroad?
In Dylan’s words, “More and more Americans are choosing to live and work abroad because they are fed up with the rising cost of living that does not improve our lifestyles much. When you can enjoy a much higher quality of life at a much lower price.”
To prove his point, he gave an eye-opening example. “I have one of the best apartments in Paraguay. A delicious steak dinner for two costs only $45, and the same meal could easily cost over $100 in the US.”
Becoming a digital nomad and leaving the US allowed Dylan to live a more stress-free life, retiring his mother, donating to an animal shelter, seeing 17 countries and living the life they wanted. I was able to build a team so that .
What are the best countries for Americans to start nomadic?
The best place to start your digital nomad journey depends on your budget, preferred climate, personal interests and of course which countries are tax friendly. has the following:
- United Arab Emirates (Dubai)
Its charm is not difficult to see. As more Americans begin to realize that they have more options than working 9-5 for 30 years and then retiring, they are taking advantage of the many advantages of living and working outside the United States. will start to
The interviewees above are just two examples that demonstrate the effectiveness of working remotely in another country and taking advantage of perfectly legitimate tax incentives. There are tens of thousands more. The only question is Are you ready to join them?
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This article originally appeared on TravelOffPath.com.