I mentioned in my previous two articles how basically anyone can invest their money like a billionaire.. The key is to consider asset protection in the form of opening an offshore bank account to handle your savings.
This can be done in a number of ways depending on your circumstances and the amount of money that you have saved for retirement or just in overall finances. The foreign jurisdiction that you invest in is also a huge factor.
The United States taxes on worldwide income, so in most cases if you are making your money overseas you have to pay taxes in the United States and taxes for the money that you make in another country. That is to say, asset protection is about protecting your assets and not reducing your US taxes.
If you think this sounds unfair, you are not the only person who thinks this way. Think about it, you get taxed for all of the money that you earn while living in the United States and overseas even though there was zero help from the United States or any governmental aid that helped you make that profit.
Lucky for American citizens who have an international business or who are working in another country other than the United States there is a life jacket called the Foreign Earned Income Inclusion.
Last article I went into detail explaining all of the benefits of the Foreign Earned Income Inclusion and all of the ways in which one can take advantage of this. Unfortunately, American President Donald Trump has changed some ways in which the FEII works.
For example, it used to be that if you earned more than what the FEII stated you would just have to retain those profits in the offshore corporation bank account and it would maintain its status as tax deferred.
I have to clarify that what I am talking about right now is that you don’t have to pay the difference in taxes, yes you do. They were tax deferred until you brought them back to the United States.
Donald Trump has made a change in the way this works, now any quantity earned by an American that is above of what the Foreign Earned Income Inclusion accepts has to be paid in US taxes.
Think about that, you have to pay taxes both for your earned income and for capital gains. Every United States citizen must pay capital gains taxes no matter where you are currently residing, it could be home in San Diego or a beach in the Bahamas.
The only exception to this rule applies to Americans who are operating a business in Puerto Rico. That’s right, United States nationals living in Puerto Rico do not have to pay for federal taxes.
Americans have a habit of forgetting that Puerto Rico is a territory of the United States. Because Puerto Rico is a territory and not a state they have certain laws that are not applicable anywhere else in the country.
Such as, any American living in Puerto Rico pays no US tax on any Puerto Rico sourced income. The condition being that you must spend at least 183 days of the year on the caribbean island.
When I am talking about Puerto Rico sourced income, I am referring to business profits earned while in Puerto Rico and any capital gains profit that was created or sourced through Puerto Rico.
Puerto Rico has the ability to pass any tax laws it desires. This has come in handy as many high net worth individuals have taken advantage of this. Even though mostly Americans with steep bank accounts are taking advantage of this program, basically anyone can open a business in Puerto Rico and enjoy not paying federal tax.
There has not been any plan to make these laws go away, but I would not be surprised if Donald Trump does not have an agenda for Puerto Rico. I recommend you stay glued to your television or newspaper to hear of any changes in Puerto Rico’s laws.
Here is a great example of an asset protection plan that does not require you to leave the country. Moving your internet business to Puerto Rico, or any other type of business, is a fantastic way to save money.
Investing like a billionaire is not reserved only for, well billionaires. You could start thinking about the future in a big way, not just how small companies or entrepreneurs think. There is a whole other way to reap the benefits and make the most out of your money.
I hope you’ve found this article on investing like a billionaire to be helpful. For more information, or for assistance on investing using your IRA, please contact us below by filling out the form. We’ll be happy to assist you to move your retirement account offshore or to connect you with an IRA custodian who can form a self directed account.