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In every case you have to meet the general requirements with respect to tax home, earned income, ect.

However, some of the rules with respect to where you spend your time and travel are subject to two different set of rules, based on the specific residence test that you claim.

Under the physical presence test you would have to be out of the country for 12 months, continuously with no return to US soil of more than 24 hours during that period.

Under the bonafide residence test you are allowed to make brief trips to the US. However the time in the US reduces the overall maximum credit. For example, if you spent 30 days total, out of the tax year in the US, then you would see a 1/12 reduction in the maximum credit. In, 2016 the maximum credit is $101,300. So, a month in the US would reduce your maximum to $92,858.

Being a citizen or legal resident of the country of your foreign residence is strong evidence of meeting the bonafide residence test. Also, you have to certify that you are required to pay income taxes in the country of your foreign residence. A perpetual tourist in Costa Rica may have difficulty certifying that they are subject to pay income taxes in Costa Rica. I suppose it may be possible to qualify as bonafide without residency and perhaps with a foreign spouse and some dependents. But, it wouldn't be ideal.

Ok. I am a little confused. I have also been told I can work 6 months out of the year outside the US. My intention is to do 3 months in CR, then go back to the US for 3 months and repeat this cycle. Orange stated that sometimes you may not get the 90 days on arrival, which could be a problem. If you have a return plane ticket 90 days away, does that help? I do not want residency, just a more relaxed lifestyle. I will probably be staying in Tamarindo. Any advice or past experience would be appreciated. Thanks in advance.

In every case you have to meet the general requirements with respect to tax home, earned income, ect.

However, some of the rules with respect to where you spend your time and travel are subject to two different set of rules, based on the specific residence test that you claim.

Under the physical presence test you would have to be out of the country for 12 months, continuously with no return to US soil of more than 24 hours during that period.

Under the bonafide residence test you are allowed to make brief trips to the US. However the time in the US reduces the overall maximum credit. For example, if you spent 30 days total, out of the tax year in the US, then you would see a 1/12 reduction in the maximum credit. In, 2016 the maximum credit is $101,300. So, a month in the US would reduce your maximum to $92,858.

Being a citizen or legal resident of the country of your foreign residence is strong evidence of meeting the bonafide residence test. Also, you have to certify that you are required to pay income taxes in the country of your foreign residence. A perpetual tourist in Costa Rica may have difficulty certifying that they are subject to pay income taxes in Costa Rica. I suppose it may be possible to qualify as bonafide without residency and perhaps with a foreign spouse and some dependents. But, it wouldn't be ideal.

Technically, if you're a perpetual tourist and you're out of the US for 12 months wouldn't you meet criteria one? Physical presence...

Thanks this is some great info...next question, would CR think you're a perpetual tourist if you come back every 3 months and stayed 3 months?

I don't believe so, because you still have the USA as your tax home. You do not have legal residence anywhere but the US, so they can tax you at their leisure.

Hmmm..ok...I had a friend who worked in IRAQ and his home was USA...and he was paid from a USA company and he was exempt from the first $99,999 of his salary as long as he remain outside the USA for 12 months.


If you leave for 3 months, you are in no way suspected of perpetual tourism. That term means you are living there without legal residence. Visiting every other 3 months isn't. Every other week now, that may attract attention, but only 2 entry stamps a year isn't an issue.

I have a separate question:

How does CR know when you leave? They do not scan your passport as on entry, nor do they stamp it as in Colombia, so how do they know if you've overstayed? Is it the job of the exit official to search for the stamp and count the days, because I've not seen them ever look for the entry stamp?

Well, this will be interesting when I go back next week. I would have been back and forth to CR 3 times since Nov 13th 2015.

I've done 18 trips this year. I was stopped once and the questions started flowing. "Why?", "When?", "Where?", etc. I just lied and said I was there to see prostitutes. The guy high-fived me and gave me 90 days!! (NOT!)

Wow!!! you around next week?

I'm free Monday - Wednesday.

Cool...

So here's my next question...Can I open a bank account in CR without being a resident? I would like to start making deposits into a CR account...so during my visits I do not get hit with a foreign transaction fee from my checking account. I have a credit card with no transaction fees...but chicas dont take america express (haha). Also, would like to start testing transferring money from US account into CR account.

Cool...

So here's my next question...Can I open a bank account in CR without being a resident? I would like to start making deposits into a CR account...so during my visits I do not get hit with a foreign transaction fee from my checking account. I have a credit card with no transaction fees...but chicas dont take america express (haha). Also, would like to start testing transferring money from US account into CR account.

Thanks,
-realkewl

There are some banks that may open an account for a non-resident. You will need a utility bill and whatever else they ask, so they can hopefully blow you off and not have to deal with you (depends on the mood of the banking employee). Sometimes a letter of introduction in Spanish from your existing US bank is requested.

The problem is these non-resident foreign accounts are odd animals because they have a non-standard numbering format (no cedula number) they can't be used to transfer money electronically in the SINPE.

So, the answer is yes maybe you can open a bank account. However, you won't be able to do much with it expect withdraw cash at an ATM machine or pay some bills online. There may be a delay of 6 months before you can deposit foreign checks and then 30 days to clear.

Any large amounts will trigger paperwork and then the bank may demand you become a resident so that it can be reported to the tax ministry and the IRS with the right number format. International wire transfers are generally a pain in the ass.

You can get around the ATM fees with a checking account from Schwab Bank. However, some of the banks in Costa Rica impose limits on how much you can withdraw from their ATM with a foreign card.