Andrew Henderson

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Would you live in Paradise if it paid an extra $2,000 a month?

Dateline: Dublin, Ireland

In most countries of the world, if you live outside of the country of your citizenship you don’t pay income taxes back home. Americans don’t have that freedom and must pay income taxes no matter where they live.

However, as many of you reading this know, there is a ‘foreign income exclusion’ for Americans that can allow them to pay no tax on the first $102,000 of income earned outside the US. In round figures that relieves a single person of about $24,000 in taxes every year. A couple could double that. No loss of citizenship or rights, just a huge financial advantage for moving somewhere nice.

Moreover, many wonderful places, including plenty of tropical paradises, offer a much lower cost of living. That adds to the amount of money you keep. Not to mention the enhanced quality of life that is suddenly affordable, like a home full of fresh flowers, eating just-picked fruits and vegetables, non-processed meals, and hour-long massages every few days.

Two Americans earning exactly the same gross income; one throws away thousands every month on taxes and the costs of compliance, the other puts the same money to work enhancing his standard of living and making new investments.

The Massive Catalyst

None of this is very new. The original foreign earned income exclusion goes all the way back to 1926.

What is very new is the ease and practicality of any ordinary person to generate a six-figure income online and live anywhere in the world he or she wants. This has been a massive catalyst in recent years. An expat can also more easily plow his tax savings into an increasing number of international investment opportunities in markets that are growing faster than the one back home.

The fact is, the number of people now telling the IRS that they are self-employed is increasing faster than any other sector of employment. Many of these people are using the internet to facilitate their income through proven online business models ranging from freelancing to business to business enterprises in lucrative, well-established niches.

And once a person has enough income flowing in from online it’s only a matter of time until he realizes that he has new options in terms of where he calls his home for tax purposes. Since any place with reliable internet can serve as a base of operation, a person can live in the choice locations of Europe, the Caribbean, or Southeast Asia.

And who wouldn’t want that option? The way I view life is that I only have X number of years left, and I absolutely don’t want all those years to be the same one over and over. I want X number of different, interesting, personally enriching years. That’s what living as an expat can offer.

The fact that living as an expat is more affordable and offers more financial options is just more advantages piled on top of the obvious ones that relate to lifestyle and adventure.

Millions of Americans already live this way. And the twin drivers of technology that enables an easy transition, and the New Economy that forces individuals to build independent income streams, are guaranteeing that expat life will become more common every year.

Expats have more choices. Choice is the soul of freedom.

Pete Sisco

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