US Taxes: How to Legally Pay Zero Tax as a US Citizen

TL;DR

Learn how to legally reduce your tax liability as a US citizen or permanent resident by incorporating a company in Dubai and utilizing strategies such as the Foreign Earned Income Exclusion and the Global Intangible Low-Taxed Income rule.

Transcript

hi it's the wealthy expat here in this channel we have a lot of people watching from the united states so today i'm going to talk about lowering your taxes as a u.s citizen or u.s permanent resident a u.s person just like me i'm hoping to not be a us person very soon but i've dug through everything that you need to pay less taxes potentially zero p... Read More

Key Insights

• ☠️ Incorporating a company in Dubai, UAE, allows US citizens to benefit from zero percent corporate taxes and pay a reduced GILTI tax rate.
• ⌛ The Foreign Earned Income Exclusion provides an opportunity to exclude a portion of personal income from taxation for individuals who spend a significant amount of time outside of the US.
• 🇵🇷 Becoming a bona fide resident of Puerto Rico can help in lowering capital gains and passive income taxes to zero percent.
• ❓ Renouncing US citizenship or giving up permanent residency status can completely eliminate the obligation to pay US taxes, but it requires careful consideration and may have additional implications.

Questions & Answers

Q: How can I lower my business income taxes as a US citizen or permanent resident?

One strategy is to incorporate a company in Dubai, UAE, where there is currently zero percent corporate tax. However, you would still need to pay the Global Intangible Low-Taxed Income (GILTI) tax of 10.5 percent to the IRS.

Q: What is the Foreign Earned Income Exclusion and how can it help in reducing taxes?

The Foreign Earned Income Exclusion allows you to exclude up to $112,000 (adjusted for inflation) in personal income from taxation if you qualify as a bona fide resident of a foreign country and spend a significant amount of time outside of the US.

Q: Can I lower my capital gains and passive income taxes?

One option is to become a bona fide resident of Puerto Rico, where you can pay zero percent capital gains tax. However, this requires meeting residency requirements, such as living in Puerto Rico for at least two to three years, and making donations to Puerto Rican non-profit organizations.

Q: What are the options for completely eliminating US taxes?

One option is to renounce US citizenship or give up permanent residency status, which will eliminate the obligation to pay US taxes. However, this is a complex process and may have additional tax implications, such as an exit tax for high net worth individuals.

Summary & Key Takeaways

• To lower business income taxes, incorporate a company in Dubai, UAE, where there are currently zero percent corporate taxes. Pay a Global Intangible Low-Taxed Income (GILTI) tax of 10.5 percent to the IRS as a US citizen.

• Utilize the Foreign Earned Income Exclusion to exclude up to $112,000 in personal income from taxation if you spend significant time outside of the US.

• Lower capital gains and passive income taxes by becoming a bona fide resident of Puerto Rico, where you can pay zero percent capital gains tax. However, this requires meeting residency requirements and making donations to Puerto Rican non-profits.

• Another option for reducing taxes is to renounce US citizenship or give up permanent residency status, which eliminates the obligation to pay US taxes.