Peru - Big Decision!

[Mike 52]

Hello everyone!

My name is Mike (36) and I currently reside in Orlando, FL with my wife (30) (Peruana) and our 9 year old daughter. My wife currently visits Peru several times a year with my daughter as she has family there, In our 11 years together I have never been to Peru.

My wife boasts how much better Peru is than the US and although I have a good solid job here in the US where I work from home I am thinking that I may very well be able to relocate to Peru and keep my job here at least for a while. I am a professional RC Helicopter Pilot and do phone and internet sales...hopefully I can get VoIp with a US number in Peru.

I would really like to bring my 2006 Nissan Xterra 4x4 as well as a few other household items but I suppose I can probably do without most and simply sell them.

At this point with the money that my wife and I are making I assume we could live like royalty in Peru but I truly have no idea for myself.

Can anyone give and or suggest some things I should know or consider prior to making my decision? I also need to get my passport just to get over there.

Thanks and all your help is very, very much appreciated.

[Pollo mani]

Mike, The best advice is to get your passport and come to visit Peru first before making that big leap, Peru is nice but It is not for everyone. Spend some time here looking around and shopping around for Apartments and food cost to see just how things are. Lima is not the bargin it use to be.

[Mike 52]

My wife is actually in Peru this week visiting her family. So she's got intimate knowledge of Lima I think overall we'd be comfortable there.

My biggest issue is that I regularly get items shipped to me for my job but from what I understand there is some sort of tax or fee when items are shipped?

[Pollo mani]

Mike, there is a tax charged on things shipped into Peru, I am not sure of the percentage but have heard it is near 30% . But maybe others here can anwser that better for you. I do know shipping cost to and from Peru are costly.

[chi chi]

I also suggest that you first come to Peru for at least a month.
And when you are here, that you don't behave like a tourist here. I mean not visiting things every day, going to restaurants every day and going out every day.

But live here like you do now at home. Go to the market, cook your own food, take the bus. Don't stay in a luxury hotel but a normal flat.
It must be like you live here and not being here as a tourist. Because, being here as a tourist is all fun and everything looks nice but that touristy feeling will wear of soon and things might change for worse and you might regret your decision.

If you speak Spanish then it will be a big help in settling in. If you don't then there are some challenges ahead. But you can learn Spanish quickly when you are in Peru. Don't worry too much about that.

Regarding to household items, I suggest you sell your stuff in the US. Furniture, white goods and all other things you need can be bought here much cheaper than in the US. And you avoid all the hassle with customs and transportation costs.

About your car. First visit Lima and see the driving 'culture' here.
Car crime is rampant here too.

[Kelly]

I may be mistaken, but I don't think you can bring your car in; I think it has to be less than 5 years old.

[renodante]

My wife boasts how much better Peru is than the US and although I have a good solid job here in the US where I work from home I am thinking that I may very well be able to relocate to Peru and keep my job here at least for a while.

why "at least for a while" if you work online? i work here online for the same company i worked for in the U.S, get paid in U.S dollars and i'm here to tell ya, it's very sweet. not only do you get paid more dollar-to-sol, but then your money doubles, AND the cost of living is less, AND you don't pay U.S federal income taxes. so much win, if you can do it, keep doing it here indefinitely.

[rama0929]

Hello everyone!

My name is Mike (36) and I currently reside in Orlando, FL with my wife (30) (Peruana) and our 9 year old daughter. My wife currently visits Peru several times a year with my daughter as she has family there, In our 11 years together I have never been to Peru.

I'm surprised to hear that you've never been...

My wife boasts how much better Peru is than the US and although I have a good solid job here in the US where I work from home I am thinking that I may very well be able to relocate to Peru and keep my job here at least for a while. I am a professional RC Helicopter Pilot and do phone and internet sales...hopefully I can get VoIp with a US number in Peru.

You're a Pro RC helicopter Pilot? I had no idea they even existed!

Yet another reason US > Peru. You can be a professional RC Helicopter Pilot, you can be a professional bass fisherman, you can build an empire with drawings of mutant turtles who practice martial arts and eat pizza, or by putting large tires on a Ford F-150

That said, if you have an internet job where you can work anywhere, I don't see why you couldn't try living in Peru. It has its pluses and minuses, just like anywhere else.

I would really like to bring my 2006 Nissan Xterra 4x4 as well as a few other household items but I suppose I can probably do without most and simply sell them.

It would be better to sell. Between customs, costs and taxes, you'd be better off selling everything and starting anew. You can buy cars and household items there

At this point with the money that my wife and I are making I assume we could live like royalty in Peru but I truly have no idea for myself.

There's a COL thread pinned @ the top, you could check that

Can anyone give and or suggest some things I should know or consider prior to making my decision? I also need to get my passport just to get over there.

Visit to get acclimated. I'm surprised you haven't been there yet, at the very least to meet your in-laws. Where do they stay in Lima?

[renodante]

yeah i looked into shipping my car here and the shipping rates were reasonable, but the taxes/fees Peru charges you, of course, NOT reasonable, they rob you.

[Alpineprince]

My wife boasts how much better Peru is than the US and although I have a good solid job here in the US where I work from home I am thinking that I may very well be able to relocate to Peru and keep my job here at least for a while.

why "at least for a while" if you work online? i work here online for the same company i worked for in the U.S, get paid in U.S dollars and i'm here to tell ya, it's very sweet. not only do you get paid more dollar-to-sol, but then your money doubles, AND the cost of living is less, AND you don't pay U.S federal income taxes. so much win, if you can do it, keep doing it here indefinitely.

As a USA citizen, you are obligated to pay Federal income taxes regardless of where you live. If you choose not to pay them it is a different matter entirely and you may be opening up yourself to a world of hurt! Advising others to become a "tax cheat" on an internet forum is not to smart either!

[falconagain]

The Peruvian National Bank has intervened more often this year (2012)
to keep the Dollar from falling. I do not think that it would be advisable
for you to stay in Peru unless you plan to get stuck here for the long term.
Unless you speak Spanish and have good contacts (either you or your wife),
it would not be a pleasant stay.

[renodante]

As a USA citizen, you are obligated to pay Federal income taxes regardless of where you live. If you choose not to pay them it is a different matter entirely and you may be opening up yourself to a world of hurt! Advising others to become a "tax cheat" on an internet forum is not to smart either!

wrong, as long as the amount your exempt for on your return is less than $91,000 and you're outside of the country at least 330 days of the year.

http://en.wikipedia.org/wiki/Foreign_ea ... _exclusion

[captsirl]

You will have to pay taxes to the USA, I am no tax cheat , But when it comes to being an xpat there are some great Tax benefits. If you want to know my CPA in Palm Beach I would be glad to share his info on a privet basis.
I share this info with everyone.
From the .gov web page you will find this.
http://www.irs.gov/pub/irs-pdf/f2555.pdf (37Maximum foreign earned income exclusion.... $92,900.00)
http://www.irs.gov/pub/irs-pdf/f8919.pdf (7 Maximum amount of wages subject to social security tax $106,800.00)
I have lived off shore most of my life. and have far too much to loose in the USA to mess with the IRS. But if your CPA in not familiar with this and may not be unless he has clients off shore. I will help you find one that does.
The dollar amount mentioned above are the cut offs and do not reflect my income.
I have had my fare share of little to nothing earned in a year / LOL / I'm the original survivor
Only post the forms so you could learn from my past experiences.

[renodante]

you must make a ton of money.

[Alpineprince]

The Peruvian National Bank has intervened more often this year (2012)
to keep the Dollar from falling. I do not think that it would be advisable
for you to stay in Peru unless you plan to get stuck here for the long term.
Unless you speak Spanish and have good contacts (either you or your wife),
it would not be a pleasant stay.

Longer term, it is only advisable if you have the ability to benefit from the countries growth and have the ability to exit once it subsides. If you own RE, own a business that deals with the growing middle class or have converted your wealth in to Soles and have invested in Sovereign debt or parked it in CD's yielding 8.5% or better yet a combination of all three!

[Pollo mani]

AND you don't pay U.S federal income taxes. so much win, if you can do it, keep doing it here indefinitely.

[Physical presence test: the taxpayer must be outside the U.S. 330 days in any 12 month period.

bona fide resident test.The bona fide resident test is not available for nonresident aliens. Further, the test is not met if the taxpayer declares to the foreign government that they are not a resident. Such declaration could be on visa applications or tax returns, or imposed as a condition of a visa. Eligibility for the exclusion may be affected by some tax treaties

So you have declared you are a resident of peru?

[Kelly]

The way I understand that is that you can only declare an amount equal to your amount of foreign earned income - like, in a job that you're doing overseas. Which means if I'm doing work where a US company pays me in my US bank account, it doesn't count. Or am I wrong?

Also, the money I made through the sale of my house in the US is not foreign earned income.

If you don't have "foreign earned income" - you can't deduct anything - or am I not understanding it correctly?

[Pollo mani]

Kelly , that is my understanding as well. Maybe some one can show us a differant out look upon it.

[renodante]

Pollo: you mention only one of 3 possible conditions that can be met. you don't need to meet all three potential conditions to be eligible. for example, you can only fulfill the requirements for the "physical presence test" and be eligible. talk with an accountant that specializes in expat taxes, they'll verify what i'm saying for you.

The way I understand that is that you can only declare an amount equal to your amount of foreign earned income - like, in a job that you're doing overseas. Which means if I'm doing work where a US company pays me in my US bank account, it doesn't count. Or am I wrong?

i thought the same too. but no, you can work for a U.S company and have a U.S bank account, and still be eligible, as long as you fulfill one or more of the requirements.

Also, the money I made through the sale of my house in the US is not foreign earned income.

right, that would not apply, you'd have to file that normally

If you don't have "foreign earned income" - you can't deduct anything - or am I not understanding it correctly?

if you live in a foreign country for at least the minimum required time, your income is "foreign earned."

[renodante]

"I live in a foreign country and work for a U.S. company. Does this income qualify for the $91,400 foreign earned income exclusion?
If you meet the other requirements for the foreign earned income exclusion, the wages you receive from your U.S. employer can also be excluded. Your employer is still required to withhold Social Security and Medicare from your wages."

http://www.ustaxinternational.com/qa.html

"What is foreign earned income? Is it income paid by a foreign person for working abroad, or is it income paid by a U.S. company for working abroad?

Earned income is pay for personal services performed, such as wages, salaries, or professional fees.
Foreign earned income is income you receive for services you perform in a foreign country or countries.
Your tax home must be in a foreign country.
You must meet either the bona fide residence test or the physical presence test.
It does not matter whether earned income is paid by a U.S. employer or a foreign employer."

http://taxmap.ntis.gov/taxmap/faqs/faq_ ... MP251db236

oh, it's important to note that you can't have your official residence in the U.S. in that case, even if you pass the Physical Presence Test or any of the others, you don't qualify. there's all kinds of little complications that can arise so of course, don't take my word for it, check with an accountant. but what i'm saying is legit, i file taxes every year, don't cheat, and I use a legit CPA firm.

[sunflower]

Regarding your car: you won't be able to import it to Peru. It's older than 5 years. See here http://www.sunat.gob.pe/customsinformat ... index.html for detailed info (don't miss the "Indice" on the right with more info ).

Even though your wife is Peruvian and thinks you all will be happy here, I highly recommend coming down here and see if you (!!!) really can imagine living here. As said before, Peru is a great and lovely country, but it's surely not for everyone. And when you are in Peru you should check out possible schools for your daughter. I assume you prefer to continue with an US American education. They don't come cheap here.

[captsirl]

I have never been paid by a non USA company. So in my case I do qualify for the offshore deduction. Your CPA will not risk being jailed at least mine would not and I have used these forms to declare my income to the USA. Read them. I get paid from a company in the USA. When I was a yacht capt I got paid by the American companies that owned the yacht. And still I was able to get the deduction. Every year I help expats with this. I be leave that the USA is the only country that demands tax no matter where you live. But its all right there.

[renodante]

you can be paid by either a company in the U.S, or from a foreign company, the source of income doesn't matter. as long as your "tax home" is not the U.S and you meet either requirement and make less than the 92-whatever thousand a year maximum, you're golden.

in my case i'm a contractor so i still have to pay "self employment tax." if you're an employee you still need to pay medicare and social security taxes, and again, there can be little caveats depending on all kinds of details.

[Jimmy111]

Exactly.
The only deduction you really get is the earned income tax portion itself. You still have to pay the SSI Medicare, unearned income, capital gains so on and so forth on what ever you earned anywhere in the world. Status of resedency has nothing to do with it.

you can be paid by either a company in the U.S, or from a foreign company, the source of income doesn't matter. as long as your "tax home" is not the U.S and you meet either requirement and make less than the 92-whatever thousand a year maximum, you're golden.

in my case i'm a contractor so i still have to pay "self employment tax." if you're an employee you still need to pay medicare and social security taxes, and again, there can be little caveats depending on all kinds of details.

[renodante]

Exactly.
The only deduction you really get is the earned income tax portion itself. You still have to pay the SSI Medicare, unearned income, capital gains so on and so forth on what ever you earned anywhere in the world. Status of resedency has nothing to do with it.

you can be paid by either a company in the U.S, or from a foreign company, the source of income doesn't matter. as long as your "tax home" is not the U.S and you meet either requirement and make less than the 92-whatever thousand a year maximum, you're golden.

in my case i'm a contractor so i still have to pay "self employment tax." if you're an employee you still need to pay medicare and social security taxes, and again, there can be little caveats depending on all kinds of details.

right, i think people are misunderstanding me when i say "no federal income tax" and are interpreting it as "no taxes at all, whatsoever."

[JimOnTheBeach]

First step is to get your passport and make a trip. My first trip to Lima was for 10 weeks and I was ready to come back to U.S. I have now made 5 trips of 2 to 5 weeks and I am trying to decide how to move to Lima. It is totally different, but I now love it there. I find less stress (unless you drive) and lower cost of living makes it a pleasure to enjoy the beauty of the parks and the people..

[Kelly]

Well that's great information for me. I had interpreted that to mean that it only included money I made from a foreign income - as in it came from a foreign source. Still doesn't help me with the $6000 or so in capital gains tax I've got to pay.

[Mike 52]

Lots of great info here.

I've also been trying to find a place to fly my r/c helicopters.

[captsirl]

Well actually.
There is a huge RC Club here that has things going on every weekend on Costa Verde. But I would not hold my breath getting paid in that line of work here.

[jimuazu]

Re VoIP, I use diamondcard.us who can allocate numbers just about anywhere in the world (there must be other similar companies around as well). I have a London number allocated and when called, it rings here in Huancayo. Since I work UK hours (more or less), I avoid the high-traffic time in the Peruvian evening, so always get perfectly clear calls (my wife has instructions not to watch YouTube whilst I am working). I invested in a LinkSys phone adapter box, like they use in locutorios here in Peru, and a normal physical phone. So I think the VoIP part of your plan is pretty much covered.

As to the rest of it -- you MUST come and spend some time here before you commit!!

In our case, after investigating various options from the UK, we gave up on importing our personal items due to the high processing fees in Callao port. We packed 6 huge soft wheelie-cases up to the 23kg limit and paid excess luggage to take them on the plane -- it was much cheaper than sending them through the port.

[VicManu]

This information could be useful. Your wife can apply to this if she wants to return but I have to warn You the bureaucracy will make it very difficult.

http://www.rree.gob.pe/portal/aconsular ... enDocument
http://www.rree.gob.pe/portal/aconsular ... enDocument
http://www.rree.gob.pe/portal/aconsular ... enDocument
http://www.rree.gob.pe/portal/aconsular ... enDocument