Thursday, April 25, 2013

Tax Obligations for US Expats Living in Peru



The following is a guest post by Greenback Tax Services



If you’ve chosen to leave the US for a new cultural experience in Peru, there are a few financial issues you’ll need to be prepared for, including new tax rules and regulations. As a US expat, unfortunately taxes tend to get more complicated when you go to a new country. Why? Because although you may be working in Peru, you are still required to file US tax returns.



As a result, you’ll need to be aware of your tax commitments in both Peru and the US.



Filing Peruvian Taxes

Taxes in Peru are filed with the Superintendencia Nacional de Administración Tributaria (SUNAT). Taxes are due within three months of the end of the previous tax year – tax years end on Dec. 31.



Resident Status in Peru

For income tax purposes, individuals in Peru are considered to be either Peruvian residents or Peruvian non-residents. The category you fall under will determine how much and what kind of income taxes, if any, you must pay.



Peruvian Residents vs. Non-Residents

In Peru, domiciled individuals, or those who are in Peru for many than 183 days (need not be consecutive) during any 12-month period, are considered residents.



Peruvian Income Tax Rates

If you are a Peruvian Resident, you are required to pay tax on your worldwide income. The amount that you pay will depend on your net income. Peru uses an Annual Tax Unit or UIT that is equivalent to PEN3,650 ($1,251.85). The income tax rate is calculated according to the following table:



Peru Income Tax Rates
UIT
Tax Rate
0 to 7
0%
7 to 27
15%
27 to 54
21%
More than 54
30%



For Non-Residents, you are only required to pay taxes on Peruvian sourced income. This is taxed at a fixed rate of 30%.



Taxable Income

In Peru, income is classified into 5 categories, which are listed below:

Cat. 1: Rental or subleasing income

Cat. 2: Capital Revenue – Interest, royalties, patents, dividends, capital gains

Cat. 3: Trade or business partnership

Cat. 4: Income from self-employment

Cat. 5: Earned income


Filing US Taxes

As a US citizen or Green Card holder, you are required to file a US tax return each year even if you reside in a foreign country. Fortunately, as a US expat you receive an automatic two-month filing extension.



NOTE: This extension is for filing purposes only and does not apply to any money owed to the IRS. If you owe taxes, you are still required to pay by April 15th or you may be subject to late payment penalties.



Depending on how much money you have in foreign bank accounts and institutions, you may also be required to complete FBAR Form TD 90.22.1. This form is required for individuals who have more than $10,000 (cumulative) in foreign bank accounts. This form must be filed by June 30th.



Fortunately, there are certain provisions that help prevent double taxation, including:



o   The foreign earned income exclusion, which allows you to exclude up to $95,100 of foreign earned income from your US taxes (this will increase to $97,600 for the 2013 tax year),

  • The foreign tax credit, which allows you to offset the taxes you paid in your host country with your US expat taxes dollar for dollar, and
  • The foreign housing exclusion, which allows you to exclude certain household expenses that occur as a result of living abroad.



If your income is over the minimum thresholds for filing US taxes you are required to file regardless of where in the world you live, even if you don’t owe any money.  Choosing not to file or filing late could result in late payment and late filing penalties if you owe money on your taxes.  Failure to file the FBAR can result in fines, seizure of assets or even jail time, in extreme cases.



Need Help Preparing Your US Taxes

If you’re feeling a bit overwhelmed and need some help preparing your US Tax Returns or FBAR Forms, Greenback Expat Services can help. For questions or tax preparation inquires, contact us today.





The Ultimate Peru List recommends:

Wednesday, April 3, 2013

Natural Peruvian Remedies

Updated 20 May 2014

Local remedies seem to abound in Peru. Here are just a few. Peru Herbals and Peruvian recipes have some more.
  • Aloe vera juice: It's commonly drunk on the street where vendors use aloe vera plants. It's supposed to make your immune system stronger and make you healthier.
  • Ceviche: Cures hangovers and is an aphrodisiac. 
  • Chicken soup: Cures hangovers. 
  • Egg: Cures fright. If someone is scared you're supposed to break an egg under their bed and the evil spirits go into at while that person is sleeping. In the morning the egg will be fried. Don't use it with babies or young children since the are still delicate and can't handle the egg's powers.
  • Frog juice: If you can stomach have a frog killed in front of you and the juices squeezed out of you, frog juice is supposed to help with asthma, asthma, brochitis, impotence, and tiredness. It's also an aphrodisiac.You can see an advert for it on the right. 
  • Lemons: Small, green, and the size of a golf ball, most people would call them limes, but in Peru, they're lemons. They supposedly can find anything from a hangover to the common cold. 
  • Maca: It's supposed to make your immune system stronger and make you healthier.
  • Newspaper with or without kerosene: If someone is sick with a cough or fever you're supposed to put newspaper directly on their chest, under their clothes. If they're really sick then you should soak the newspaper in kerosene. Newspaper shouldn't be used on infants because it's too strong. You should use paper instead. My grandfather said that in Romania gypsies typically douse their heads in kerosene in order to kill lice.
  • Orange peel: Similar to newspaper, orange peel pulls out cough and fever. However, you're supposed to use orange peel before the person gets sick.
  • Pulling hair: If you have a headache, taking a couple strands of hair and pulling sharply can help relieve the pain. 
  • Quinoa: It's supposed to make your immune stystem stronger and make you healthier.
Peruvians love talking about their famous remedies, so learn Spanish so you can talk to the locals and learn more about the culture. If you're looking to learn Spanish, check out Fluenz Spanish, Rosetta Stone, and Synergy Spanish.




The Ultimate Peru List recommends:

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