Will life really be less taxing if you Move to the Philippines?
Well I certainly hope so. It really has been for me. This email just came in today and I thought I’d share some of it with you so you can see what an internationally recognized expert ahs to say about living in and retiring to the Philippines (and a few other countries he recommends):
The world is truly a big place, and there are a lot of options out there.
When you retire overseas your money can often go further, so a pension that might have you eating baked beans out of a tin can in the United States can buy you a gourmet dinner elsewhere.
You’ll enjoy a better quality of life in a country where medical costs aren’t at the outrageous levels that they are in the US.
With all that money you save you’ll be able to catch up on new experiences that you missed out on while you were working to support your family.
The Philippines is one of the easiest places in the world to retire to.
Residency is incredibly easy to attain for retirees. If you’re over 35, a refundable bank deposit of just $20,000 – or in some cases even less – qualifies you residency in the Philippines.
If you’re over 50 and have a pension income of at least $800 a month, a bank deposit of as little as $10,000 will suffice.
Income you have remitted to the country from overseas, such as any pension income you may have, is free from tax.
English is widely spoken and almost universally understood, so you won’t have to struggle with a new language.
It doesn’t hurt that the Philippines is an incredibly beautiful place with a low cost of living that allows you to stretch your pension longer there and truly have an enjoyable time.
You can get the full text and get daily information on retiring overseas and other subjects of interest to most of my readers at Simon’s main site: http://www.sovereignman.com/
Go ahead and sign up for his free daily intelligence emails .. it’s free, no obligation, and no, Mr. Landis and the other skeptic’s club members, I have no business relationship with Sovereign Man and I don’t make a dime from this.
But How is the Philippines Less Taxing?
Well there are three major tax issues that come to mind.
(Remember I am not a professional tax adviser, account or lawyer, be sure ti deal with competent, relaible resources when making life changing decisions.)
That disclaimer out of the way I can tell you flat out, moving to the Philippines has been, hand’s down, the best and most profitable money decision I have c=ever made.
I’m happily nearing my 8th anniversary here and enjoying life (and banking more) every day. You can read more on how I re-made myself financially here Economy Birding Philippines — A Mini-Retirement Plan? (and be sure to read the follow-on articles and the related articles linked to there.)
Federal Income Tax
Like every other law-abiding US citizen (and Legal Permanent Resident – Green Card Holder) I am required to report my entire world-wide income, and pay the US income taxes I am legally required to pay on the income. Well I do that. (if I didn’t I certainly wouldn’t say so here 😉 )
So what then makes the Philippines less “taxing” for me? Simple. A little feature of the US tax law called the Foreign Earned Income Exclusion. Income you earn while overseas has to be reported but for this coming tax year the first $99,200 can be excluded. That’s a huge savings for the average wage earner of (most importantly) small businessman/entrepreneur.
See why I always advise everyone, young or old, to get on the bandwagon and make yourself at least semi-independent from government entitlements? And unlike the concept many have of this benefit, this income doesn’t have to be “sourced” in a foreign country, it can be US income from a regular (W-2) job of from your own small business. It only matters that you are overseas when it is earned, not that the money come from overseas.
One importation thing to remember, though, is that pensions (private, state or Federal, military retirement and Social Security, etc.) are not, for the purposes of the IRS anyway, “Earned Income” … but everything else you earn most certainly is.
Makes a nice difference for me when I start filling in my online tax form and after writing down all my income (and see the estimated tax due) to hit than key for the Foreign Income Exclusion and watch the IRS’s share of my life dwindle dramatically.
State Income Tax.
A few of you probably already live in states with no income tax. But the majority of you have to “pony up” to your state after Uncle Sam takes his own share. But that won’t happen if you live in the Philippines.
You can legally change your state of residence to one with no income tax, or just not have a state of residence. There is no law that says any American Citizen also has to be a resident of any state … in fact thousands of American citizens are born, live and die overseas never having been in a US state. This can be another significant savings, for sure.
And I Just Can’t Resist This Last Advantage … Obamacare
No dealing with mandatory insurance laws, no such thing as being “fined” or otherwise penalized if you fail to spend your time fighting with some non-functional website trying to comply with a law you didn’t want in the first place.
If you live outside the United States 300 or more days a tear, you are exempt from the infamous ACA/Obamacare completely. How’s that for a hidden advantage that will put a smile on your face and probably lower your blood pressure a few points.
There are a lot of advantages tax-wise and otherwise, if you Move to the Philippines.