Guys, Andrew Henderson, the Nomad capitalist, is here in Cairo to make his final video. He wants to discuss a common tax mistake made by many US citizens when they leave the country to work remotely or run their businesses. As a party school dropout and serial entrepreneur, he can offer personal experience but is not an expert in expat taxes. He advises seeking advice from a professional or visiting Nomad capitalist for assistance. He previously made a video called the Nomad trap, which mainly addressed non-US citizens and their tax obligations. Many Europeans believe they can avoid taxes by leaving their home country and traveling the world, but this is not always the case. Some end up owing back taxes because they didn't follow proper procedures. In the US, it is not possible to completely avoid taxes as long as you are a US citizen. Only by giving up your US passport can you escape the tax system. However, there is a tax exemption for expats called the foreign earned income exemption. This exemption allows you to exclude a little over $100,000 of actively earned income each year. Income from business, salary, freelance work, etc., counts towards this exemption, but income from sources such as real estate rentals does not. Some people mistakenly believe that by leaving the US and spending very little time there, they can qualify for this exemption and avoid paying taxes on the first $100,000 of their profits. However, without proper planning, they still have to pay Social Security tax and Medicare tax, which amounts to 15.3% of their income. This can be avoided by setting up an offshore company and paying yourself through the company. Not all businesses qualify for this setup, but most do. Another mistake people make is not planning for the...
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