GCC: Tax Day is just around the corner, so what better time to showcase someone who has gone head-to-head with the US tax code and come out the victor.
Today’s guest post is by the Frugal Professor, and he is here to highlight how the Earned Income Tax Credit has accelerated his family’s path to Financial Independence.
Another year, another tax return.
For the 4th year in a row, we’ve had taxable income in the six figures range with income tax burdens of ~zero, or even negative. Uncle Sam is by far my most generous relative.
This year is much the same, although I decided to throw the IRS a token dollar.
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Every now and then I get some curious emails. For example:
Hi, great blog! I was wondering, who does your taxes?
Strangely enough… I do. And I think you should too. (Yours, not mine.)
GCC: Ever since I became an accidental business owner when this blog started making a little dough, I have had a small problem… Self-Employment taxes. Extra money and an interesting tax dilemma are fun problems to have, I agree, but those confounded SE taxes were totally ruining my Never Pay Taxes Again street cred. And that, I simply could not abide.
So I began exploring my options, writing as I went. For example, last year I shared Never Pay Taxes Again by Moving Abroad, which explains how digital nomads (working for themselves or a US employer) can reduce or eliminate their US federal income tax burden simply by traveling the globe. Amazing! But it still didn’t address my SE tax challenge.
Shortly thereafter, I had my first phone call to discuss creating a Belize Corporation with Stewart Patton, a US tax attorney, expat entrepreneur, and founder of U.S Tax Services.
“You’ve done your research”, he said.
“I think you’ve just solved my most annoying problem”, I replied.
We liked each other immediately.
See, even though the US tax code has something for everybody, it offers just a little bit more to business owners. Of course, with better tax benefits come more complicated rules. So I’ve asked Stewart to share a guest post about how expat entrepreneurs (like you? like me?) can truly Never Pay Taxes Again. This time, with your own Overseas Corp.
Moana Surfrider Hotel, Oahu, Hawaii
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It’s that time of year again, when households across the land are excited to fill out their tax forms. Yeah for Tax Day!
Goal #1 is of course to minimize tax burden using the numerous options available. Be sure to contribute to those deductible IRAs and 401ks!
Some households will have a zero or even negative tax burden, but most will have a tax obligation for the year. This is usually paid at least in part through paycheck withholding or estimated tax payments.
This is also the case for us since we pay Self-Employment tax on blog income. (But… plans are in motion to reduce/eliminate this.)
And I don’t know about you, but if I have to pay some taxes…. I at least better get a ridiculously cheap☆ trip to Hawaii out of the deal.
(I was feeling a little frisky today, so this one is fun….)
Several years ago I wrote a post with a rather obnoxious title, Never Pay Taxes Again, in which I outline our strategy to minimize our tax burden in the years to come. It is still one of the most popular posts on this rather obnoxious blog.
Then I recently outlined how we’ve paid no income tax for 4 years while increasing Roth accounts from $0 to $100k and raising basis in our stock portfolio by $145k. Not only was this all tax free, but will be tax free forever.
As you might expect, quite a few people have taken time out of their busy schedules to express their opinion about the taxes of a guy who writes stuff on a blog. There is something truly magical about the Internet that encourages this kind of sharing.
The strongest opinions seem to come in 3 main forms:
