These are the 5 topics that I share with you in this publication:
1. How to achieve financial freedom without stress
2. How to make the most of your investments in the United States without living there
3. Independent contractor or employee?
4. Optimize your tax deductions!
5. Florida Real Estate: A Comprehensive Guide for Global Investors
1 - How to achieve financial freedom without stress
In this article, I will give you five simple steps that will help you improve your relationship with money and create your own action plan.
Step 1: Know your current situation
The first step to achieving financial freedom is to know where you are right now. You must have a clear understanding of how much money comes in and goes out of your pocket each month, and how you spend or invest it. Once you have this information, you can calculate your financial balance, which will give you an idea of your financial health and your degree of dependency on money.
Step 2: Define your goal
The second step to achieving financial freedom is to know where you want to go. To do this, you must define your goal in a specific and measurable way. It's not enough to say "I want to be financially free," but you must attach a number and a deadline to it.
Step 3: Create your action plan
The third step to achieving financial freedom is to know how you are going to reach your goal. For this, you must create an action plan that contains the specific actions you are going to take to increase your passive income and reduce unnecessary expenses.
Step 4: Execute your action plan
The fourth step to achieving financial freedom is to put your action plan into practice. To do this, you must be disciplined, consistent, and flexible. Disciplined, because you must follow through with the actions you have set for yourself, without excuses or distractions. Consistent, because you must maintain the pace and motivation, without giving up or getting discouraged. Flexible, because you must adapt to changes and circumstances, without losing sight of your goal.
Step 5: Enjoy the process
The fifth and final step to achieve financial freedom is to enjoy the process. It's not just about reaching the destination, but also about enjoying the journey. Financial freedom is not an end in itself, but a means to live the life you desire.
2 - How to make the most of your investments in the United States without living there
What does it mean to be a non-resident taxpayer?
Before we delve into the subject, let's clarify what it means to be a non-resident taxpayer in the United States. This refers to a person who is neither a citizen nor a permanent resident of the United States and who also does not meet the substantial presence test in the country.
This means that you have not been present in the country for more than 31 days in the current year or for more than 183 days in the last three years, counting all the days of the current year, one-third of the days of the previous year, and one-sixth of the days of the year before the previous one.
If you meet these conditions, you are considered a non-resident taxpayer and only need to pay taxes in the United States on your income from U.S. sources.
What tax benefits can you obtain?
Some of the most significant benefits include:
Exemption from taxes on capital gains from the sale of stocks or bonds of U.S. companies, as long as they do not exceed 10% ownership of the entity and the investor does not have substantial presence in the country. This means you can buy and sell shares of the most successful companies in the world without having to share your gains with the U.S. tax authorities.
Reduction or elimination of withholding tax on dividends, interests, and royalties paid by U.S. entities, under the double taxation avoidance treaties that exist between the United States and many countries.
Asset protection against potential lawsuits or liens, using appropriate legal structures such as trusts or limited liability companies.
3 - Independent Contractor or Employee?
For business owners, it's important to correctly determine whether the individuals providing services are employees or independent contractors.
Generally, you must withhold and deposit income taxes, Social Security taxes, and Medicare taxes from wages paid to an employee. Additionally, you are also responsible for paying the business's portion of Social Security and Medicare taxes, as well as unemployment tax on wages paid to an employee. Usually, you don't have to withhold or pay any taxes on payments made to independent contractors.
So, you must choose the situation that applies to you:
You are an independent contractor or have your own business: If you are a business owner or contractor providing services to other businesses, you are generally considered a self-employed worker. You can find more information about your tax obligations if you are self-employed (an independent contractor) on the IRS website at irs.gov (Tax Help for the Self-Employed Individuals).
You employ or hire individuals to provide services for your business: If you are a business owner who hires other people to provide services, then you need to determine whether the individuals providing the services are employees or independent contractors.
Determining whether the individuals providing services are employees or independent contractors
To determine whether the person providing services is an employee or an independent contractor, you must consider all the information that shows the degree of control and independence.
For more information, visit www.irs.gov.
4 - Optimize Your Tax Deductions!
In the complex world of taxes, it is essential to be aware of legal opportunities to optimize your deductions and maximize your tax-free wealth.
The Main Rule for Deducting an Expense:
This rule can be summarized in one phrase: "As long as the expense is ordinary and necessary for your business, you can deduct it."
Remember that each business situation may have specific circumstances, so it's important to evaluate your expenses based on their nature and their relation to your business activity. It is always recommended to consult with an accounting and tax professional to ensure that you apply the main rule correctly and maximize your deductions within the corresponding legal framework.
Documentation to Support Your Deductions:
Once you identify deductible expenses, having the appropriate documentation to support your claim is essential.
Strategies to Optimize Your Deductions:
In addition to understanding the main rule and having the proper documentation, there are additional strategies that can help you optimize your deductions.
For example, you can consider deferring some income until the next fiscal year if it allows you to reduce your current tax burden. Similarly, you can reclassify certain expenses to take advantage of more beneficial deductions. For instance, if you have a home-based business, you can allocate a portion of your general expenses, such as utilities or rent, as business deductions. These strategies will allow you to maximize your deductions and, ultimately, increase your wealth.
By understanding the main rule for deducting an expense and having the proper documentation, you can optimize your deductions and reduce your tax burden in a legal and effective manner. By implementing practical strategies, such as deferring income and reclassifying expenses, you can make the most of available tax opportunities and achieve your financial goals.
5. Florida Real Estate: A Comprehensive Guide for Global Investors.
Today, I share with you some of the specific tax implications that non-resident investors face when buying, holding, and selling properties in Florida.
Capital gains taxes:
Non-resident investors who realize capital gains from the sale of real estate in Florida are subject to federal and state taxes. The tax rate on capital gains for non-residents may differ from that applied to US citizens or residents. It is important to be aware of the current tax rates and how they apply, as they may vary depending on the length of time the property has been held.
When a non-resident investor sells real estate in Florida, the buyer is required to withhold a percentage of the purchase price and remit it to the Internal Revenue Service (IRS). Currently, the withholding tax rate is 15% of the sale price, though this percentage may vary based on changes in legislation or international tax treaties between the US and other countries.
Benefits of specific ownership structures:
Non-resident investors may consider setting up a Limited Liability Company (LLC) or other structures to own properties in Florida. These entities can offer certain tax and asset protection advantages. An LLC can provide greater flexibility in income and expense distribution and may limit personal liability in case of legal issues.
Tax exemptions and incentive programs:
It is important to research whether there are any tax exemptions or specific incentive programs for foreign investors looking to invest in properties in Florida. Some programs may offer reductions in certain taxes or incentives to encourage foreign investment in the state's real estate market.
Proper tax planning is essential to maximize benefits and minimize taxes associated with real estate investments in Florida. Non-resident investors should understand these tax considerations before making investments. Seeking advice from local experts and tax professionals can be beneficial in ensuring compliance with regulations and taking advantage of available tax benefits. It is worth noting that tax laws and regulations may change over time, so staying updated with the current legislation is essential for making informed financial decisions.
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Antonio Coa, CPA
Tax Specialist &
Antonio Coa, LLC
Whatsapp: (561) 814-4558