www.CostaRicaTicas.com

Ok, I'm not ready to retire, but I want to live in CR.

I can tele-commute for work back to the US

What is the best approach you guys would do? I don't think I can get residency because I have a felony back in the 90's. So what are my options?

-realkewl

Depends upon whether your employer/clients will permit it. I can only swing a long weekend a month.

You need to talk with an Attorney in CR. No point in asking a monger board about that. Better to ask for references.

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bypassin' kinky, and usin' the whole chicken!!!

I agree...but in my asking I'm hoping someone has done this and can give some guidance...like an attorney...what to ask and what to expect...any loop holes...stuff like that.

The 90 day rule I'm reading about is it or is it not true.

BTW I went to the ARCR forum and registered...but you still cannot read or post anything questions. I heard they are not the best option.

-realkewl

90 days is the max they are allowed to give you, but are under no obligation to do so. I have gotten as few as 7 days. If asked how long you are coming for, your length of stay will depend on your answer. Note that for the past couple of years, it seems that the government is trying to dissuade perpetual tourism and encourage residency, so it has been reported that consistently getting 90 days is harder. They often look at your previous entry stamps to see if you have been living there.

I've never heard anything good about that group. Just speak with an Attorney when you are there. Or several, in fact. I'll PM you my Attorney's contact info. Her office is about 5 minutes from Relax and Idem.

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bypassin' kinky, and usin' the whole chicken!!!

Well, seems as though it's a lot harder then I thought it would be to live in Costa Rica...unless you making serious money, retired (making 1k /month min), or married or have a Ch*ld that's costarican. According to the attorney. Bummer...

-realkewl

If your criminal record is in a state or locality, other than your place of birth, then it's possible to "slip" through the cracks in the residency process. That is you may be able to get a state or country police report that omits convictions in other jurisdictions. Immigration will generally accept a local report if there are no red flags.

However, if you start coming and going and living perpetually with a tourist visa, then immigration will see this activity, red flag you and instead of a state report demand the federal FBI report. I've talked to people recently who didn't get hit with this requirement and none lived here perpetually, were new arrivals.

In any case, getting residency is a deal for tele-communicating because you can become a "Bonafide Resident", establish a new tax home in Costa Rica. You then claim the foreign earned income credit, receive a refund or all or most of your federal income tax and not be subject to any state income tax. You can also opt out of the individual personal mandate to buy a qualified health insurance plan, under the terms of the Affordable Care Act.

If you are a perpetual tourist, then you are not bonafide and could only apply the calendar year rule. It is likely difficult to "tele-commute" under the calendar year rule as your employer may want to see your face more than once every 330 days. As a bonafide you could make occasional short trips back to the US and only see a marginal reduction in your maximum tax credit.

Of course none of these tax benefits (except possibly getting out of state income tax) apply to investment income or those who are retired and receive social security or pension income. The foreign earned income credit is just for people who receive income from employment. If you have an doubts as to how the "source" of foreign earned income is defined, then consult a certified accountant or tax attorney. It's always best to have a CPA prepare in any case.

Some complain that the caja taxes in Costa Rica are high on Rentista residency. However, they are less than the cost of buying an individual health care plan in the US. If you need real coverage, and not just the caja for emergencies, then a private plan with INS is likely to cost a good deal less than an individual plan in the states after you factor in deductibles and coinsurance due to high income.

The big draw however, is that Costa Rica doesn't tax your worldwide income. The caja has no effective way to track your foreign income. My advice is to live well within your means, avoid buying property or bringing in serious assets, particularly if you plan to start a family.

Other countries in Latin America demand a piece of the action on your worldwide income when you stay there more than half of the year.

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Costa Rica, the Number ONE party destination in Latin America!

This only holds true if you are not issued tax documents (1099,etc) in the USA. So, telecommuting for a USA company isn't going to immediately exempt you from IRS's reach, especially if checks are deposited in a US-based bank.

Is there an income tax in CR that you then become responsible for?

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bypassin' kinky, and usin' the whole chicken!!!

Actually no, with all due respect your statement is absolutely and unequivocally incorrect. Ask a CPA with international tax experience who is willing to do the tax return.

Or, you can take the advice straight from the IRS.

https://www.irs.gov/Individuals/Interna ... ned-Income



The source of the income is the place where you actually perform the work. If your tax home is outside of the US, the work is performed outside of the US, and you meet one of the two IRS tests, then you may claim the foreign earned income credit. You can do this if you are an independent contractor (1099) or a regular employee.

The only restriction is that social security and medicare tax must be paid when the company or entity making the payment is US-based and as such is subject to payroll taxes. So, work from Costa Rica and your first $100,800 for 2015 is free of federal and state income tax. If you are bonafide (foreign resident or dual citizenship) then the maximum amount is only partially reduced for your short trips back to the US. If you are not bonafide (perpetual tourist), then short trips back to the US make you ineligible to receive the credit altogether.

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Costa Rica, the Number ONE party destination in Latin America!

Thanks...good solid advise, you hit all the points I was going after...but I do not meet the requirements for residency...and I definitely don't want to do the perpetually tourist thing. So I'll just have to keep coming and going...hopefully that will not raise a red flag...I was there in Nov, Came back in Dec...they looked at me a little funny...now I thinking of coming back again in a week.

-realkewl

No because Costa Rica does not have an income tax for worldwide income. However, the question you should really ask is does Costa Rica have a social security tax for earned income?

Some may argue that a person working from home in Costa Rica for company outside the country should register in Costa Rica as an independent worker and declare the amount of income received from work activity in the national territory. If a person did this, then they would be paying social security tax in both the US and Costa Rica. That's a big bite, considering that combined social security and medicare tax rates in the US are 15.3 percent and between 20 and 36 percent in Costa Rica.

In practice, however what most people would do is register in the Costa Rica voluntary insurance program instead and just pay social security taxes on the amount of their monthly rentista annuity. This works best when you live within your means, i.e. actually pay all your bills with just the monthly annuity as a budget.

There has been some great information posted so far, but allow me to return to the beginning. Kewl has been a member since 09, and has taken TWO trips to CR. Obviously he is motivated, and a quick study, yet He has probably spent a week to ten days TOTAL in country, and now he wants to live here. hmmm..

I would encourage my fellow CRT brother to , maybe, take a few more trips and experience more of the country. and possibly take a month long trip, with his laptop- so he can work and earn some money telecomuting. and increase his knowledge base. Before looking to get residency, try using the normal 90 day allowance on your entry stamp to test the waters.

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Having too much fun. 8)

Thanks rico1040...for your wise words and encouragement.

-realkewl

So what you're saying is, unless you are a legal resident of Costa Rica (and spend the majority of your time there), telecommuting work is not eligible for the credit, and you will in fact have to pay US taxes. I highlighted the pertinent statement in your quote above. You have to change your tax home in order to legally claim the credit.

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bypassin' kinky, and usin' the whole chicken!!!

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.