Earlier this week, on late Monday afternoon, I was sitting at home on the couch with my daughter. I had just returned from China, so I was trying to catch up on the time difference while watching some cartoon about a horse.
While sitting on the couch, I started to get a stomach ache. “Hmmm…” I thought, “Am I getting sick from eating that delicious airline food?”
“It’ll pass,” I thought, “Just a minor stomach ache. No big deal.”
The next day, which was Tuesday, I boarded a flight to Puerto Rico for a couple meetings that I had with some lawyers (more about that in a second).
The flight landed in Puerto Rico late that Tuesday afternoon, and guess what? I still had a stomach ache. But, now the stomach ache wasn’t like a normal ‘sick’ stomach ache. It was more like a stabbing pain ache.
I’m usually pretty stubborn when it comes to physical pain. I’ll just try to ‘walk it off’ and pretend like the pain isn’t there. Because, usually, things get better on their own.
This pain wasn’t getting better. It was getting worse. And it started to scare me.
So, I called several of my friends who live in Puerto Rico to see if they knew of any good doctors I should visit. Within a couple minutes, I ended up on a text chain with some of the top doctors on the island (thank you guys!).
About an hour after that text chain, I was going through a big plastic tube – a CT scan – in some hospital in the middle of San Juan.
Fast forward to Wednesday and I’m laying in a bed with an IV in my arm and one less organ in my belly.
Goodbye appendix. I’ll miss you.
I stayed that night in the hospital and then the next day – Thursday – I left the hospital and finally got to the meeting with the lawyers.
Now it’s Friday and I’m back on a plane leaving Puerto Rico.
So, I learned two things this week:
#1 If you need your appendix removed, you can go to Puerto Rico to get that done.
#2 You can take advantage of Puerto Rico’s insanely attractive tax laws without moving there.
I’m pretty sure you don’t really care about that first thing I learned. And I actually hope you don’t have to ever worry about that.
But, that second thing might be of interest to you.
Now, I want to be clear. The best way to take advantage of Puerto Rico’s tax laws are to physically move there. If you spend more than six months in Puerto Rico, you can pay as little as 4% in tax. That is by far the best strategy for any US citizen looking to lower their tax burden. (There are also great incentives for non-US citizens.)
However, for many people, simply moving to Puerto Rico is not an option. There is family, and kids, and friends, and all kinds of entanglements that we have in our lives. Moving your life, belongings, and all of your other obligations to a new place just doesn’t work for a lot of folks.
Plus, some people don’t like Puerto Rico. The reality is that it’s a tropical island in the middle of the Caribbean. That’s paradise for some and a nightmare for others.
If you fall into the category of not wanting to live in Puerto Rico for at least six months out of the year, then you might think you’re out of luck. But, I found a way where you can reduce your tax rate significantly without actually moving there.
There are several catches…
First of all, the strategy works best if you own your own business or you’re an independent contractor. If you are a full time employee, this probably won’t work. This strategy can also work if you’re an investor or have some type of passive income.
Second, you are not going to get the 4% tax rate. You’re going to get something close, but not as sweet as the 4%.
Third, you need to know who to talk to. This is obvious, but it’s worth mentioning. Do not try to figure this out on your own, unless you are a professional tax lawyer and this is your game.
Explorer Partnership members, you’ll be hearing all about this very soon.
Whether or not you have the ability to move to Puerto Rico, you should definitely look into the amazing tax laws that are offered there. As we all know, the money you get to keep is just as important as the money that you make.