Whether you are moving abroad or are simply visiting amazing places such as Utah, there are some major pitfalls that you need to make sure to avoid when it comes to your taxation situation.
You want to minimise your tax bill as much as possible without stepping across the line. If you are constantly travelling, it can be easy to become distracted and potentially forget that the season of tax returns is nearly upon you. This can lead to a lot of panic and stress, something which can ruin your travelling experience.
Therefore, you need to have a durable and automatic plan in place when you set off on your travels to prevent this from happening. Here are some tips on how to do just that.
Don’t Take a Laid Back Approach
When it comes to filing your taxes, there is no room for messing around or putting it on the long finger. When you are planning on moving to a new area for an extended period of time, you need to understand the exact taxation requirements of the specific region.
Failure to do so can cost you a lot of money in the long term thanks to penalties. Some places may have a bad reputation for having a penal tax system on the surface; however in reality once you thoroughly look into the rules and regulations, you will understand that it is not so penal.
Don’t Try To Hide
Some people may move to a region for a short period of time and try to avoid paying taxes at all. This is a dreadful idea that at best will land you with severe monetary punishments with worst case scenario seeing you being put into prison. In this day and age with the prevalence of digital payments and information, it is extremely hard to go undetected and not leave a paper trail.
Don’t Rely On Double Tax Treaties
If you are a resident of a so called tax haven as well as your home country, yet you don’t spend much time in the tax haven, you will not be able to reap the benefits of this so called residence when it comes to tax time.
Presenting this as an argument to the tax man will not get you very far. You need to know exactly how long you need to spend outside of your native country in order to legally having to pay taxes there.
A double tax treaty is an agreement between two countries that allows the freedom of information when it comes to taxation matters. You cannot rely on these in order to pay less tax in one of the specified countries.
Never Have No Tax Resident Status
If you are not a tax resident in any country, then you have a serious problem. Normally people, who find themselves in this situation, have severely misunderstood the taxation rules and regulations.
While technically it is true that you don’t have to be a tax resident anywhere, unless you know the exact rules of each region to travel to, you will eventually get caught out.