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I've received a seriously large order and if I can get the parts to build all the boards I will make enough money to want to avoid paying any more taxes than I have to. I was looking up something unrelated and stumbled across a totally legit way to avoid paying federal income tax at all, moving to Puerto Rico!
Yeah, I've only made a first pass at it, but it appears you can avoid all federal and state income taxes and only pay much lower Puerto Rico taxes if you are a resident and run a business. This doesn't work for salary, but other income is only taxed at 4%. Of course I'll need to check this out with a lawyer who knows the details, but it seems correct.
I don't want to throw any real numbers out, but the difference in taxes will be enough to pay for the trip, the expenses and even buy a place in Puerto Rico I can use as a winter home and/or rent out when I'm not there.
Once this year is over, I can resume a US residence since I won't be making this kind of money again. So it's a bit like serving a 6 month jail sentence for robbing a bank, except I get to keep the money and the prison is not a bad place to be at all. -
the prison is not a bad place to be at all.
The next one may not be so nice.
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Handling a large income might be less stressful when assuming another stance on paying taxes: Paying a lot of taxes means a lot of income as well, enjoy the luxury.
I have that line from someone who has that 'problem'. I wish I need to pay a lot of tax. -
...I can resume a US residence since..
Is there not enough states on the mainland that eventually tick all boxes compare to be in exile? -
I've received a seriously large order and if I can get the parts to build all the boards I will make enough money to want to avoid paying any more taxes than I have to. I was looking up something unrelated and stumbled across a totally legit way to avoid paying federal income tax at all, moving to Puerto Rico!
Yeah, I've only made a first pass at it, but it appears you can avoid all federal and state income taxes and only pay much lower Puerto Rico taxes if you are a resident and run a business. This doesn't work for salary, but other income is only taxed at 4%. Of course I'll need to check this out with a lawyer who knows the details, but it seems correct.
I don't want to throw any real numbers out, but the difference in taxes will be enough to pay for the trip, the expenses and even buy a place in Puerto Rico I can use as a winter home and/or rent out when I'm not there.
Once this year is over, I can resume a US residence since I won't be making this kind of money again. So it's a bit like serving a 6 month jail sentence for robbing a bank, except I get to keep the money and the prison is not a bad place to be at all.
Maybe some additional reading is in order, because it sounds like you think you hit upon one of those free lunches that nobody else knows about and that should be setting off 105 dB alarms but the thought of all that $$$ has deafened you.
https://www.7thheavenproperties.com/2020/07/puerto-rico-residency/
So, for example, you seem to think that you can pop over there for a year and enjoy the advantage of lowered taxes for that year and then pop back to the mainland and continue along with all that cash..."Once this year is over, I can resume a US residence since I won't be making this kind of money again.", but it does not seem like you satisfy the main requirements (and that is an interpretation from folks that sell real estate there)
See citation: Spend at least 549 days in Puerto Rico during the 3-year period of the current tax year and the 2 preceding years, including at least 60 days in Puerto Rico during each tax year.
Write again when you have read and understand Act 60-2019, so we don't ask you what you have been smoking.
BTW: "I will make enough money to want to avoid paying any more taxes than I have to." What is your threshold for not wanting to pay any more taxes than you have to?
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I've received a seriously large order and if I can get the parts to build all the boards I will make enough money to want to avoid paying any more taxes than I have to. I was looking up something unrelated and stumbled across a totally legit way to avoid paying federal income tax at all, moving to Puerto Rico!
Yeah, I've only made a first pass at it, but it appears you can avoid all federal and state income taxes and only pay much lower Puerto Rico taxes if you are a resident and run a business. This doesn't work for salary, but other income is only taxed at 4%. Of course I'll need to check this out with a lawyer who knows the details, but it seems correct.
I don't want to throw any real numbers out, but the difference in taxes will be enough to pay for the trip, the expenses and even buy a place in Puerto Rico I can use as a winter home and/or rent out when I'm not there.
Once this year is over, I can resume a US residence since I won't be making this kind of money again. So it's a bit like serving a 6 month jail sentence for robbing a bank, except I get to keep the money and the prison is not a bad place to be at all.
Maybe some additional reading is in order, because it sounds like you think you hit upon one of those free lunches that nobody else knows about and that should be setting off 105 dB alarms but the thought of all that $$$ has deafened you.
https://www.7thheavenproperties.com/2020/07/puerto-rico-residency/
So, for example, you seem to think that you can pop over there for a year and enjoy the advantage of lowered taxes for that year and then pop back to the mainland and continue along with all that cash..."Once this year is over, I can resume a US residence since I won't be making this kind of money again.", but it does not seem like you satisfy the main requirements (and that is an interpretation from folks that sell real estate there)
See citation: Spend at least 549 days in Puerto Rico during the 3-year period of the current tax year and the 2 preceding years, including at least 60 days in Puerto Rico during each tax year.
Write again when you have read and understand Act 60-2019, so we don't ask you what you have been smoking.
Part of the reason I posted this here is because I can use some sanity checking. I appreciate the feedback. Oh, and I will be contacting a lawyer to make sure I dot the I's and cross the T's. But I think you did not read fully on this issue. There are five conditions for establishing a "bona fide residency" in Puerto Rico. However...
"satisfying just a single one is sufficient"
So 183 days in the tax year OR 549 days in the current and two previous will suffice. You can also qualify by spending no more than 90 days in the year in the US or two others. Logical OR, not logical AND.
Then you also have to meet the requirements of Puerto Rico to get the 4% tax rate. Salary is taxed separately at a higher rate. Looks like property taxes are high. So it's not a free lunch, but well worth the price.QuoteBTW: "I will make enough money to want to avoid paying any more taxes than I have to." What is your threshold for not wanting to pay any more taxes than you have to?
If we are talking about $5, I'm not leaving the country. I'm not even leaving my chair. Hmmm... I need to stop thinking of Puerto Rico as being outside the US. It's not. -
I've received a seriously large order and if I can get the parts to build all the boards I will make enough money to want to avoid paying any more taxes than I have to. I was looking up something unrelated and stumbled across a totally legit way to avoid paying federal income tax at all, moving to Puerto Rico!
Yeah, I've only made a first pass at it, but it appears you can avoid all federal and state income taxes and only pay much lower Puerto Rico taxes if you are a resident and run a business. This doesn't work for salary, but other income is only taxed at 4%. Of course I'll need to check this out with a lawyer who knows the details, but it seems correct.
I don't want to throw any real numbers out, but the difference in taxes will be enough to pay for the trip, the expenses and even buy a place in Puerto Rico I can use as a winter home and/or rent out when I'm not there.
Once this year is over, I can resume a US residence since I won't be making this kind of money again. So it's a bit like serving a 6 month jail sentence for robbing a bank, except I get to keep the money and the prison is not a bad place to be at all.
Maybe some additional reading is in order, because it sounds like you think you hit upon one of those free lunches that nobody else knows about and that should be setting off 105 dB alarms but the thought of all that $$$ has deafened you.
https://www.7thheavenproperties.com/2020/07/puerto-rico-residency/
So, for example, you seem to think that you can pop over there for a year and enjoy the advantage of lowered taxes for that year and then pop back to the mainland and continue along with all that cash..."Once this year is over, I can resume a US residence since I won't be making this kind of money again.", but it does not seem like you satisfy the main requirements (and that is an interpretation from folks that sell real estate there)
See citation: Spend at least 549 days in Puerto Rico during the 3-year period of the current tax year and the 2 preceding years, including at least 60 days in Puerto Rico during each tax year.
Write again when you have read and understand Act 60-2019, so we don't ask you what you have been smoking.
Part of the reason I posted this here is because I can use some sanity checking. I appreciate the feedback. Oh, and I will be contacting a lawyer to make sure I dot the I's and cross the T's. But I think you did not read fully on this issue. There are five conditions for establishing a "bona fide residency" in Puerto Rico. However...
"satisfying just a single one is sufficient"
So 183 days in the tax year OR 549 days in the current and two previous will suffice. You can also qualify by spending no more than 90 days in the year in the US or two others. Logical OR, not logical AND.
Then you also have to meet the requirements of Puerto Rico to get the 4% tax rate. Salary is taxed separately at a higher rate. Looks like property taxes are high. So it's not a free lunch, but well worth the price.QuoteBTW: "I will make enough money to want to avoid paying any more taxes than I have to." What is your threshold for not wanting to pay any more taxes than you have to?
If we are talking about $5, I'm not leaving the country. I'm not even leaving my chair. Hmmm... I need to stop thinking of Puerto Rico as being outside the US. It's not.
You are too intent on trying to show that I am wrong and seem to be spending almost no time trying to understand why your plan is half-baked with virtually no chance of succeeding as you think it will. The CYA with a 'sanity check' based on a posting in a public electronics forum (what could go wrong?) is a dead giveaway.
Nevertheless, I guess I did not read thoroughly, in fact, I spent about 5 min reading before I knew it was a half-baked plan, to be kind. So, yes, you got me there, so you are good to go...but let's check...which ONE of these do you satisfy? [I assume they mean mainland USA, but they are real estate people not tax lawyers]
Firstly, an individual must be “present” in Puerto Rico for defined period. To pass this test, an individual should be able to satisfy 1 of the following conditions:
Be present in Puerto Rico for a minimum of 183 days in the tax year.
You have ~70 days to get over there, so yeah, that's possible.
Spend at least 549 days in Puerto Rico during the 3-year period of the current tax year and the 2 preceding years, including at least 60 days in Puerto Rico during each tax year.
Nope, not this one
Not be present in the USA for more than 90 days during the tax year.
Nope, not this one (unless, of course you really are in Antarctica)
Not earn more than $3,000 in earned income in the USA during the tax year and be present in Puerto Rico for more days than in the USA.
Gotta say no on this one as well.
Have no significant connection to the USA during the tax year.
Again, thinking nope.
So, since I did not read it well, let's assume that you are moving there tomorrow and living there for the next 183 days...now you are good to go, except....rather than boolean dumfuckery to show that I am wrong, you could have just read a little further...
Secondly, an individual should not have a “tax home” outside of Puerto Rico.
This means that Puerto Rico should be your primary place or residence or your primary place of employment. To benefit from the tax advantages under Act 60-2019 (detailed below) an individual must purchase property in Puerto Rico within 2 years. This property must be the individual’s primary residence and not rented out.
Read this one carefully - when did you buy a home/office there?
Thirdly, an individual should not have a “closer connection” to the USA or to a foreign country than to Puerto Rico.
Various factors such as the presence of an individual’s permanent home, family, belongings, principal bank and business in Puerto Rico, as well as the existence of professional, cultural, religious, social and political affiliations and links in Puerto Rico, may help to demonstrate a closer connection to Puerto Rico than to anywhere else.
That is a big fat open-ended test that you or your lawyer do not get to decide and, IMO, it is designed to prevent people from doing what you want to do....which you have now publicly stated
Rather than a clever response, do yourself a favor and read a little more about the issue: Here is a good start https://ustax.bz/puerto-rico/
Finally, I want to avoid paying more taxes than I have to, regardless of how much money I earn. Lots of good honest people think the same way and don't start thinking that way based on the possibility of a big increase in earnings.
To borrow from Professor Kingsfield, "...here is a dime. Take it, call your mother, and tell her there is serious doubt about you moving to PR to avoid paying taxes"
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DrG, you seem to have a lot of pent up hostility. Don't know why you call my responses "clever" rather than honest. Bottom line is you know less about this than I do, you know nothing of my situation and you are talking like I'm an idiot.
I won't bother pointing out your mistakes since you clearly don't wish to hear from me. I think I'd prefer if you didn't reply further unless you wish to be constructive rather than argumentative. -
Here's my advice: Skip moving to PR (or Guam?). Get a good tax focused CPA and take their advice. Especially before you start selling or spending.
I married a CPA and based on her relatively conservative recommendations, I was able to only earn a few taxable dollars in my business. But you should see the cool stuff I bought for the business. The US tax laws are like spaghetti code but it is amazing what benefits there are for a small business.
By the way, my wife often gets a new business client, goes through their past several years of tax records and finds all sorts of things they didn't claim. Before you know it, she's getting them lots of money back by refiling previous year's business tax returns. And she is scrupulous - never makes dubious claims so with the audits that have happened, she never had a single claim rejected. -
DrG, you seem to have a lot of pent up hostility. Don't know why you call my responses "clever" rather than honest. Bottom line is you know less about this than I do, you know nothing of my situation and you are talking like I'm an idiot.
I won't bother pointing out your mistakes since you clearly don't wish to hear from me. I think I'd prefer if you didn't reply further unless you wish to be constructive rather than argumentative.
Look, I was harsh and I get that and I can even believe that I hurt your feelings, but I am not sorry. You are not going to correct me because you really can't correct me - you now know that the whole thing is ill-conceived. It is nonsensical and you are not going to do it. You put out an incredibly naive plan and if it bothers you that I called you out, too bad - life is tough, wear a helmet.
As for your preferences, feel free to put me on your ignore list, but I will continue to respond to your posts if I feel like it because there is nothing uncivil about my response...and the next time you want a 'sanity test' be sure to qualify it by saying that you don't want anyone to say anything that might burst your bubble.
Good luck in PR. -
DrG, you seem to have a lot of pent up hostility. Don't know why you call my responses "clever" rather than honest. Bottom line is you know less about this than I do, you know nothing of my situation and you are talking like I'm an idiot.
I won't bother pointing out your mistakes since you clearly don't wish to hear from me. I think I'd prefer if you didn't reply further unless you wish to be constructive rather than argumentative.
Look, I was harsh and I get that and I can even believe that I hurt your feelings, but I am not sorry. You are not going to correct me because you really can't correct me - you now know that the whole thing is ill-conceived. It is nonsensical and you are not going to do it. You put out an incredibly naive plan and if it bothers you that I called you out, too bad - life is tough, wear a helmet.
As for your preferences, feel free to put me on your ignore list, but I will continue to respond to your posts if I feel like it because there is nothing uncivil about my response...and the next time you want a 'sanity test' be sure to qualify it by saying that you don't want anyone to say anything that might burst your bubble.
Good luck in PR.
It's not a matter of hurt feelings. It's not a matter of you being harsh even. It's the fact that you have declared yourself an expert by reading probably the same web pages I've read and are telling me I'm wrong about things that you are wrong about. If you actually said anything useful rather than just saying it's "half-baked", I would welcome the advice. Even now you continue to spew crap rather than saying anything useful or understanding the issues.
The idea may not pan out in the end. It only takes one glitch to screw it up. That's why I am contacting a lawyer, to make sure it doesn't get screwed up or to find the things that can't be done to make it work. One I reached today wants nearly $600 per hour! The lawyer won't just be for some quick advice. I will have them perform all the needed steps to form the corporation and assure I meet both the PR regulations as well as the IRS.
But at this point I'm pretty sure I can do without your further advice. Thank you -
DrG, you seem to have a lot of pent up hostility. Don't know why you call my responses "clever" rather than honest. Bottom line is you know less about this than I do, you know nothing of my situation and you are talking like I'm an idiot.
I won't bother pointing out your mistakes since you clearly don't wish to hear from me. I think I'd prefer if you didn't reply further unless you wish to be constructive rather than argumentative.
Look, I was harsh and I get that and I can even believe that I hurt your feelings, but I am not sorry. You are not going to correct me because you really can't correct me - you now know that the whole thing is ill-conceived. It is nonsensical and you are not going to do it. You put out an incredibly naive plan and if it bothers you that I called you out, too bad - life is tough, wear a helmet.
As for your preferences, feel free to put me on your ignore list, but I will continue to respond to your posts if I feel like it because there is nothing uncivil about my response...and the next time you want a 'sanity test' be sure to qualify it by saying that you don't want anyone to say anything that might burst your bubble.
Good luck in PR.
It's not a matter of hurt feelings. It's not a matter of you being harsh even. It's the fact that you have declared yourself an expert by reading probably the same web pages I've read and are telling me I'm wrong about things that you are wrong about. If you actually said anything useful rather than just saying it's "half-baked", I would welcome the advice. Even now you continue to spew crap rather than saying anything useful or understanding the issues.
The idea may not pan out in the end. It only takes one glitch to screw it up. That's why I am contacting a lawyer, to make sure it doesn't get screwed up or to find the things that can't be done to make it work. One I reached today wants nearly $600 per hour! The lawyer won't just be for some quick advice. I will have them perform all the needed steps to form the corporation and assure I meet both the PR regulations as well as the IRS.
But at this point I'm pretty sure I can do without your further advice. Thank you
I am so glad I didn't hurt your feelings as I worry about that a lot....and you are most welcome for my advice, I know it made an impression on you and, again, I wish you all the best in your new life in PR and please let us know when you come back and have counted all of your money. We're done now, right> Or do you have more to say - like your moving day or how you are going to pay a lawyer $250/hr to tell you what I told you for free? Bwahahahahahah I crack myself up sometimes. Relax man, stay calm...don't panic
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Bonjour gnuarm:
PR has been flooded with those from USA fleeing taxes, etc. for years.
The result is a bidding up of real-estate prices.
The island had some serious hurricane damages to the power system and otherwise that it is still recovering from,
Finally you must speak Spanish to effective relocate there.
The demos will try to get PR statehood soon, ending the tax benefits.
See the financial site of John Mauldin, who relocated to PR years ago, for the same reason.
https://www.mauldineconomics.com/
Bon Chance
Jon
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I have done a lot more digging into this and it is solid, not going to put anyone in jail.
I have the PO in hand so the financial incentive is solid. Tomorrow morning I will start making the arrangements to create the Puerto Rico company and by the end of the month I will be a Puerto Rico resident.
It's a great deal really. PR gets 4% of my profits they otherwise would not have gotten a penny of. I have to meet a few conditions which I believe includes donating $10,000 to a local charity. I spend half my time in PR and obviously money since I will be living there. In return I get the advantage of living federal income tax free because it is a territory and not a state.
This is going to be a fun trip as well as reducing my taxes. I'm psych'ed about the move!!! -
Gnuarm,
Since you haven't told us what your secret-plan-that-no-one-else-has-thought-of actually is, it's hard to give an opinion about whether this a smart move for YOU but I think that I agree with Dr G, that it probably isn't. But it's very clear that you've taken offense with the advice offered by him and others and are now more determined than ever to go to PR and to prove them wrong. Go right ahead. No one here is going to stop you so right ahead. But let me just point out one fact, Hundreds of thousands, and most likely millions, of Puerto Ricans themselves have fled PR in the last few years and moved to the US because of the deplorable conditions and their own future prospects in PR. So if you think that your prospects there are somehow better than their's were, then go right ahead. But to me, it appears that you're about to embark on a rapidly sinking ship!
One, no, two, quick examples; a good friend of mine is PR and lives in the US. His family was in PR but after spending MONTHS without power, water or sewage after the last big hurricane his entire family gave up and moved to the US forever. Second, someone that I just met two days ago told me his own horror story of living in PR for six months without power, etc and of the massive corruption in every level of the government there that prevented them from restoring essential services even to this day. He's a young and obviously well educated man and has taken a job as a roofer in Florida in order to make ends meet but he still says that he will NEVER, EVER return to PR!
You don't need to reply. Frankly, I really don't care what you do in the future so you don't need to even attempt to convince me that I'm wrong. You asked for advice but then choose to argue with it so take your arguments to PR with you and see how well they work there. Bye-Bye! -
Gnuarm,
Since you haven't told us what your secret-plan-that-no-one-else-has-thought-of actually is, it's hard to give an opinion about whether this a smart move for YOU but I think that I agree with Dr G, that it probably isn't. But it's very clear that you've taken offense with the advice offered by him and others and are now more determined than ever to go to PR and to prove them wrong. Go right ahead. No one here is going to stop you so right ahead. But let me just point out one fact, Hundreds of thousands, and most likely millions, of Puerto Ricans themselves have fled PR in the last few years and moved to the US because of the deplorable conditions and their own future prospects in PR. So if you think that your prospects there are somehow better than their's were, then go right ahead. But to me, it appears that you're about to embark on a rapidly sinking ship!
One, no, two, quick examples; a good friend of mine is PR and lives in the US. His family was in PR but after spending MONTHS without power, water or sewage after the last big hurricane his entire family gave up and moved to the US forever. Second, someone that I just met two days ago told me his own horror story of living in PR for six months without power, etc and of the massive corruption in every level of the government there that prevented them from restoring essential services even to this day. He's a young and obviously well educated man and has taken a job as a roofer in Florida in order to make ends meet but he still says that he will NEVER, EVER return to PR!
You don't need to reply. Frankly, I really don't care what you do in the future so you don't need to even attempt to convince me that I'm wrong. You asked for advice but then choose to argue with it so take your arguments to PR with you and see how well they work there. Bye-Bye!
Wow! This thread has attracted some amazingly strange replies.
I'm not sure what you are talking about in regards to my "secret-plan-that-no-one-else-has-thought-of". Maybe I didn't make it clear that this is common knowledge which is talked about on many web sites, including lawyers' web pages. At this point I've talked to several professionals including a lawyer and it is totally legit.
Since you don't want to know I won't bother giving you details. I'm going to start with a couple of day visit to line up a longer visit of a month or so to get more familiar with the island. The cost of doing that is actually minimal in the grand scheme. The reasons for doing this are 1.2 million. Yep, that approximately the tax money I would save in all this.
Yeah, I've read about the problems they've had in Puerto Rico. If they were as bad as you make out, why would everyone on the island not leave? -
Cher gnuarm
BRAVO for the bold move.
We are fascinated to see ho this works out financal, tax and life wise.
BON CHANCE
Jon