When I decided to move to Buenos Aires last year, I wasn’t aware that there could also be some pretty interesting tax savings involved in living out of the country.  As a U.S. citizen living out of the country you are still taxed on your worldwide income and must still file a tax return. In fact, it is against the law to give up your U.S. citizenship in order to avoid U.S. taxes.  However, you may be able to exclude the first $87,600 of your income from taxes as well as exclude or deduct certain foreign housing payments.

According to the IRS Publication 54 which covers this, to claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements.

1. Your tax home must be in a foreign country.
2. You must have foreign earned income.
3. You must be either:
   1. A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
   2. A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
   3. A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

Clearly, one of the biggest benefits for U.S. expats is the ability to exclude up to $87,600 in foreign earned income.  According to the IRS, foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements:

• Your tax home is in a foreign country.
• You meet either the bona fide residence test or the physical presence test.

The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for working in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in Argentina is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City.

The IRS covers this in a lot of detail in Publication 54 and, of course, you should consult with an accountant as well.

For some additional reference, Don Nelson an attorney and CPA has a good post on this titled “US Taxation Of Americans Living Abroad.”His post also covers the need for self-employed Americans to file a Schedule C and pay the self-employment tax of 15.3% which is not reduced by the foreign earned income exclusion.  The Career By Choice blog also has an excellent two-part article on this:  Expat Tax: Foreign Earned Income Exclusion Explained – Part 1 and Expat Tax: Bona Fide Residency Test for FEIE – Part 2.

Hopefully this will work out for you as well!

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1. Head to prorrogas de permanencia at the office of migraciones and pay for a 90 day extension. The cost is $100 pesos and you can only do this once per 90 day original visa. Since our Spanish is pretty poor, we thought this would be too much of a headache.
2. Overstay your visa and pay the $50 peso penalty (UPDATE, 4/21: This fee has increased to $300 pesos.) when you leave. A lot of people report no problem with doing this, but we wanted to be completely legal in case we ever apply for a full visa. We just didn’t want this to ever be an issue.
3. Head out of the country and get a new 90 day stamp when you come back.  We opted for this approach and took off with our friend Scott to Uruguay last weekend.

Getting from Buenos Aires to Colonia, Uruguay is a pretty easy process.  The Buquebus ferry leaves several times a day from their terminal near Puerto Madero.  They have both high-speed ($250 peso round-trip, takes 1 hour) and regular ($181 peso round-trip, takes 3 hours) service, but I’d strongly recommend the high-speed option if you’re only going for the day.  I’d also recommend buying tickets in advance from their web site, and not showing up at 11:15am to try and get tickets for the 11:30am ferry. (Yes, we missed it and had to wait for the 2:30pm ferry.)  The trip itself is pretty comfortable and you end up in Colonia in just under an hour.

Colonia is a small city (pop. 21,714) with 7 kilometers of beach front along the Rio de la Plata and a renowned historic quarter. It’s a great place for a day trip, but I couldn’t see spending much more time than that there.  We decided to rent transportation so that we could take in all of Colonia in the few hours that we had there, but since we missed the early ferry, the car rental places at the end of the ferry dock were mostly sold out for the day.  Luckily, Thrifty had one golf cart left – for only U$12 per hour. So, we hopped in our new wheels and took off exploring.

We cruised down the beachfront taking in the coastline and stopping at a couple of parks before heading up to check out the Sheraton Colonia Golf Club.  Then, we headed over to check out the old bull fighting ring before driving back to the historic quarter. The old town part of Colonia is a designated World Heritage Site, and provides a lot of photo opportunities. There’s also a lot of bars, restaurants and shops to explore. Make sure you try a chivito from one of the silver roadside food vendors – it’s a high-calorie sandwich made up of churrasco beef, ham, mayonnaise, olives, mozzarella, tomatoes, and egg served on a roll with a side of fries. Yum!

After that, we dropped off the golf cart and it was back to the ferry for our trip back to Buenos Aires. There’s a duty-free store on the ferry that is extremely popular. Just remember to bring cash if you want to buy anything as they only take credit cards at the end of the trip and then it often doesn’t work.

Here’s our gallery of the day!

[View with PicLens]

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In addition, today’s La Nacion newspaper has an article quoting the Interior Minister that such a reciprocal fee is an “act of justice” and that a U$134 fee will be charged for Americans entering the country. He also states that it has nothing to do with the visa, which means that every 90 days us expats on tourist visas will have to leave the country and re-pay this fee upon entering again. There will not be a requirement to get a visa before coming to the country, just the need to pay this fee when entering.

While Brazil already charges Americans a reciprocal U$150 fee for a visa, this visa is good for 5 years. While the new Argentine fee may not hit many one-time visitors that hard, it will add a significant financial burden to the expat community on tourist visas who must leave and return every 90 days.  It might be time to look into getting a longer term visa as the lawyer’s fees and hassle might now be easily worth it.

UPDATE (2/25/09): The new fee which was scheduled to start march 2009 has now been postponed indefinitely.

UPDATE (12/11/09): That indefinite postponement is coming to an end as the new fees were just announced today.  Read more…

- Visa Fee To Hit Tourists Starting Jan 1 [The Argentine Post]
- The new tax on tourists: “It is an act of justice” (English) |  (español) [La Nacion]
- Argentina To Require Visas For Tourists? [The Argentine Post]

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New Website for Overseas Voters
We encourage you to visit the newly redesigned Federal Voting Assistance Program website at www.fvap.gov, the official U.S. government website for overseas voters.  The updated website features an automated Voter Registration and Ballot Delivery tool that will greatly improve the vote-by-mail process.

There are two options for overseas voters using the FVAP website:

• Visit www.fvap.gov and click “Get Started” to be directed to an online Federal Postcard Application and instructions for your state; or
• Visit www.fvap.gov and click “Use our New Automated Tool to Register/Request a Ballot” under Quick Links in the lower right-hand corner of the home page.  You will be redirected to www.fvap.com, a fully automated site that requires you to create a user account and password.

Voter Registration & Requesting an Absentee Ballot
Voters who have not yet registered to vote and requested an absentee ballot should do so now using the FVAP website.  You may also pick up a hard copy of the Federal Postcard Application (FPCA) from any U.S. Embassy or Consulate.

You should also complete a new Federal Postcard Application if you have moved or changed your name since the last time you voted.

Voting
Your local voting officials should mail your absentee ballot 30 to 45 days before the November 4 general election.  Return your voted ballot as early as possible.  Be aware of your state’s ballot receipt deadline, as well as any postmarking requirements.

Emergency Ballots
The Federal Write-In Absentee Ballot (FWAB) serves as an emergency ballot for voters who registered in time but fail to receive an official ballot from local election officials.  You can access the FWAB using www.fvap.gov as well.

Questions?
The Voting Assistance Officer at the U.S. Embassy is also always available to answer questions about absentee voting.  To contact the Voting Assistance Officer, call 011-5777-4818 or send an e-mail to VoteBuenosAires@state.gov.

If you use the online application, it will generate a ballot request PDF file for you to download and then mail or fax to the local voting office of your last U.S. address. They will then send you a ballot via mail or fax when it’s time to vote. (Need a fax number? Check out eFax for a free incoming fax-to-email service. You have to pay to send faxes.)

So, what are you waiting for? Get registered to vote now.

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I’d strongly recommend Marco if you’re in the area. I also interviewed a couple of great private tutors who will come to your house, but I decided I needed something to get me out of the apartment. I also considered enrolling in a group class, but I liked Marco’s approach more. If you’re looking for advice on what may be best for you, the BA Expats Forum is a great place to ask for recommendations for schools or tutors.

I also have a copy of Rosetta Stone, which is a great program.  I started to use it before I moved, but did not keep up with it. I’m planning to go back to that as well to learn as much as I can as quickly as possible.

There are also a number of new Web 2.0 sites that promise to help you learn Spanish:

• http://www.mangolanguages.com
• http://spanishpod.com/
• http://www.babbel.com/

I didn’t use these too much, but they may be another good resource for you. I’ll let you know how my lessons progress.

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Yep, my LCD screen is completely busted – cracked beyond repair. It now looks like moderrn art, so while I may set it up on the wall in the living room (just kidding), it’s not going to do me much good in the office.  Luckily, the apartment came with a computer that has a small monitor, so I’m making do, but I’ll be looking for a new LCD shortly. The one thing that I didn’t want to do since electronics are so expensive here. Oh well, in the grand scheme of what has happened in the last day, this is relatively minor. I still have not had the energy to write all about that, but it will be coming shortly…look for Part I.

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Four hours later and I’m still sitting on the tarmac at JFK. The Atlanta airport had closed because of storms and we were waiting for it to re-open. Ughh. Delilah had been very well behaved on her first flight, but was growing restless. The lunch we had that was supposed to take us through dinner was long gone. They did offer us free headsets and a free movie – Fool’s Gold with Matthew McConaughey. Ughh, again. I was pretty sure I was going to miss the connection and end up spending the night in Atlanta.

Luckily, the weather cleared and we finally took off. Since the problems were in Atlanta it turned out that all the flights were delayed! The flight to BsAs didn’t leave until 11:15pm, so I made it with time to spare. I arrived in BsAs only about 3 hours later than scheduled and caught a private bus (only U$55) that I had reserved to the apartment. I had so many bags I needed a bus since their taxis are pretty small.

I pretty much collapsed when I got in, but I made it safe and sound with Delilah and all the bags. I’ve had a bunch of other excitement already, but that will have to wait for another day…

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• Access to cash
• ATM and credit card fees
• Depositing checks in the U.S.

Access to Cash
While researching how to best get cash and pay bills when there, I found a lot of discussion on ATMs in Argentina starting to restrict access to cash. After some research, it seems that the U.S. Embassy in Buenos Aires sent this as part of a newsletter to expats living there:

9. Update on ATM Withdrawal Limits

Last July [2007], Visa debit- and credit-card holders got a surprise when ATM machines restricted withdrawal limits to about USD $100. MasterCard cardholders got the same surprise in late March. ACS has contacted card companies, banks and Argentine government officials to determine the cause of the restriction. So far, no clear reason for the change has emerged and no party is willing to take credit for this inconvenience to clients.

The good news, however, is that in response to receiving hundreds of complaints both Visa and MasterCard have doubled their withdrawal limits to USD $200. Both companies also explain that cardholders are free to make multiple successive withdrawals at the same machine up to their bank’s daily withdrawal limit. ACS continues to research the issue to determine the exact cause for the restriction on international ATM withdrawals and learn how much international cardholders pay in ATM fees as the teller machines do not normally provide this information.

So the good news is that you should still be able to access the cash you need even if you have to make multiple withdrawals. The bad news is that your fees could be increased for making multiple withdrawals.

ATM and Credit Card Fees
I decided that the best thing for me would be to reduce the fees I would pay by as much as possible.  Luckily, the Flyerguide Wiki has a complete guide to foreign credit card and ATM fees. After reviewing the list, I decided to open the Schwab High Yield Investor Checking account. Signing up was easy, and they provide online banking, mail-in deposit envelopes and free checks.  The account currently pays a 2.01% APY and also provides unlimited ATM fee rebates. According to the Flyerguide Wiki:

[Schwab] reimburses unlimited ATM-owner fees and many users report 0% forex fees applied by Schwab and customer service reports the same. Will not refund additional fees, on top of the transaction fees, applied by bank or atm you are withdrawing from. Confirmed on phone July 2008.

I also opened up an online savings account at Countrywide Bank because they were paying the highest interest rate (3.55%) and simply linked that to Schwab. The nice thing about Countrywide is that you can link up to five accounts which means you can use them as a middle-man to transfer money between your accounts if you have more than one.  I’m using this to transfer money between my personal and business accounts when needed (business account -> Countrywide -> Schwab account). Transfers are free but take one business day to complete. After this, you can close any other accounts that you do not need.

Depositing Checks in the U.S.
I was also waiting on some checks that didn’t quite make it before I left. Since I’m using Earth Class Mail (ECM), I know the checks will be forwarded to my online mail box, but since ECM does not yet have electronic check deposit (coming this year) I’ll have to have ECM forward those checks to my mom to mail in for me. I found out that checks do not need a signature to be deposited, just the words “FOR DEPOSIT ONLY” and the account number on the back, so while this is a bit inconvenient, it should work.

That pretty much sums it up.

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I’m leaving for the airport in a few hours and giving myself lots of extra time to get all of the luggage checked in. I’ve always wondered when I was at the airport who those people with all the bags were. Well, today that is going to be me, because no matter how much I tried, I still ended up with twelve bags! Yep, five duffel bags, three suitcases, a pet carrier, backpack and two large carry-on bags. I’ve been re-packing and weighing all the bags to make sure they’re under the 50 pound limit (of course, my scale is probably not going to match Delta’s and I’ll have to spend time at the airport moving things between bags). So, let’s do some quick math: 2 bags each = free, 4 extra bags at $150 each = $600, 1 Delilah (dog) = $100, TOTAL: $700 extra.  Hopefully, I do not get hit with any overweight or oversize charges!

Off to do some more re-packing and running around now!

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While I realize that this is not going to be a part of most people’s planning process, being the Internet guru, I started looking for BsAs domain names as soon as I decided to make the move. I figured, who knows what I’ll be doing or what’s going to interest me, but it might make sense to have some localized domain names. Now of course, having limited Spanish (at this time), I decided to only focus on English domain names. Also, since every possible decent combination of names in the .com space is most likely gone, I looked for expiring domain names. SnapNames is a great place to do this. They keep a list of expiring domain names and try to secure them for you once they expire and are released. They set up an auction for the domains and the highest bidder gets the name. If you do not get into a bidding war (which I did on one of them – more on that later), then you can end up with a good domain at a decent price.

I was able to register these domains so far:

buenosairesapt.com
buenosairesart.com (bidding war on this one – yow!)
buenosairesguide.co.uk
buenosairesmagazine.com
buenosairestrade.com
buenosaireszoo.com
discoverbuenosaires.com
experiencebuenosaires.com
vipbuenosaires.com

They all point to this site for now, but who knows what they may become in the future. Keep your eyes on them!

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