Internships in Peru

The following is a guest post by Nils Schulz. Nils is CEO at Inside Peru. He lives in Hamburg, Germany and visits Peru regularly.

Internships abroad are increasingly common today and there are many good reasons for that. Broad language and cultural skills are needed in many jobs if you want to succeed in a global economy. Many degree programs require at least one internship as part of the training and many students choose to go abroad. For many people their years of study are the time in their life where they are able to live abroad for a while without much hassle.

There are many ways to do so: volunteering, work and travel, taking a language course, study one or more semesters abroad, or – last but not least – doing an internship. Of course, apart from learning new skills and testing possible future career paths, a given time abroad always enriches ones personality and leaves you with many new experiences, memories, friends, ideas…

At Inside Peru, a placement agency from Germany specializing in Peru, we notice that Peru is also a place which is increasingly popular with young people from all over the world. It’s a relatively stable country with continuous economic growth (which has been a bit slower lately) and the Spanish spoken in Peru is considered to be especially “pure” and easier to learn and to understand than in many other Spanish speaking countries. But above all, Peru is just an exciting country full of colors and contrasts, perfect to discover marvelous landscapes and ancient cultures.

Yet when people start planning their stay in Peru they often encounter obstacles. How do I find the place for my internship that really fits? Why is it so hard to get in touch and they never answer to my emails? These are typical situations many have to deal with. Let alone the language barrier or concerns about security, visa matters, and the like. So reaching out to a place like Inside Peru turns out to be a good decision for many people willing to go to Peru in order to get things done well right from the start. For a modest one-time fee they get professional help planning the trip, finding the right internship and a cosy and secure place to stay. Also while staying in Peru they get follow-up assistance via Internet or with a local contact person and regular activities with other foreign interns.

Many interns going to Peru are social-minded and look for internships dealing e.g. with indigenous people or human rights matters, development cooperation or social work (working with vulnerable groups in society). But also many other work areas like law, teaching, environment or sturdy marketing and economy-related internships are asked for and provided by Inside Peru. If you are interested in a stay in Peru visit Inside Peru’s website and get in touch with us. We are happy to help. -Nils Schulz

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Ley de Retorno: How the Peruvian Government is Trying to Get Peruvians to Come Back to Peru

One of my most popular posts of all time is how to get Peruvian citizenship. I thought this post might benefits Peruvians like me who have left. (I got citizenship in early 2009 and left in early 2010. I haven't been back since.) I saw a poster about the Ley de Retorno when I went to the embassy a bit ago here in Seoul. Since so many Peruvians have gone abroad and not come back, their human capital is diminishing. They're trying to do something to entice people to come back.

The complete name of the law is Ley de Reinsercion Economica y Social para el Migrante Retornado and is number 30001 and there are monetary and social benefits. For the monetary benefits there are no taxes on cars up to $30k, household goods up to $30k, instruments, machines, equipment, and capital assets up to $150k when you repatriate to Peru. For the social benefits, they will help you find loans, jobs, with certification, and assistance with psychological and social integration.

In order to qualify for the monetary benefits you must be a Peruvian who has lived abroad for at least 4 years. If you have to leave the foreign country due to immigration issues then they lower it to 2 years. For the social benefits you must be a Peruvian who has lived abroad for at least 3 years. If you have to leave the foreign country due to immigration issues then they lower it to 2 years.

You can find out more about this law on RREE, Ley de Retorno, Facebook, or leyderetorno@rree.gob.pe

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Voting in Peru, Padron Electoral, and Fines for Not Voting

From Elecciones en Peru

Updated 2 March 2017

All Peruvian citizens living in Peru are required by law to vote; it's compulsory. If you don't vote, you will be fined. Another law concerning voting is Ley Seca, which forbids the sale of alcohol shortly before and after elections.

Peru does 4 things:

• Requires people to vote
• Makes the sale of alcohol illegal
• Has short-term proof of voting
• Has long-term proof of voting

By doing this, Peru is trying to cut down on corruption and become more transparent.

Changing your address
You MUST vote in the district that is reflected on your DNI. Many people don't bother changing their DNI because it's such a pain to do so. This means that if you live in Lima but your DNI has an address for Arequipa, you will have to travel back to Arequipa to vote. Transportation companies really take advantage of this and jack up their prices.

I highly recommend you change your DNI to reflect your new address so you won't get fined. It usually takes about 3 months to change addresses and they cannot be done about 4 months before any election or 1 month after any election. 

Fines
There are exceptions to being fined such as illness, death of a family member, losing yor DNI, natural disasters, and more. ONPE has a complete list of the exceptions. If you're a miembro de mesa you will have to pay more than those who aren't. Different areas of Peru will pay less depending on whether they are classified as a poor area or not. Elecciones en Peru also has more info about different fees for fines. For the October 2014 Elections the maximum fines were S/. 76.

Here is the website to find out if you have any fines. You can also find the form here. There is a guide on YouTube showing you how to check if you have fines. Terra also has a guide telling you how to check if you have fines.

If you live abroad, you don't have to vote, but if you are a miembro de mesa you will have to participate in the elections or get fined. Currently for those living abroad the fines can be up to $64. 

Proof of voting
There are two things that Peru does to prove that you have voted: one is short-term and one is long-term. The day of the elections you're going to see people with ink on their index fingers. This is done in order to prevent double voting.

You will also be given a hologram sticker that will be put on the back of your DNI as proof of voting (sufragio). If you are fined, you will have to go to the Banco de la Nacion en Peru and pay the fine. Someone can pay the fine on your behalf if you give them your DNI. They will not give that person a sticker though. The sticker can only be given to the person whose fine is being paid.

I've heard that some embassies and consulates may allow you to pay the fine there. Someone told me that you can do this at the New York Consulate. I know the Seoul embassy will not allow you to pay. Without the sticker on the back of your DNI, legally you are not able to use it for any transactions in Peru, such as at the bank, at a notary, etc so it's best to pay the fines. Every once in a while they're forgiven, but it's not guaranteed.

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Why Peruvians Put Things Off Until Tomorrow

Growing up I hear the story of the grasshopper and the ants. During the summer the ants worked hard and stored food for the upcoming winter. The grasshopper, on the other hand, played all summer. When winter came he had nothing. Luckily, the ants took pity on him and gave him food. It reminds me a lot of the Peruvian mentality.

Latin America is known for its laid back lifestyle, but this could be too much of a good thing. This lackadaisical attitude meaning that planning is thrown out the window and things are done in a slipshod manner. This goes for roads, bridges, buildings as well as the future, such as planning for retirement. However, you have to take things into stride and try to understand more about Peruvian culture.

Because Peru is generally a warm country, planning really isn't needed and the country can't move forward. There are a lot of theories (source) about why this may be true. If you're really interested in this topic, I recommend reading Why Nations Fail: The Origins of Power, Prosperity, and Poverty and How Rich Countries Got Rich and Why Poor Countries Stay Poor.

Source: http://www.centerforfinancialinclusion.org/storage/images/Peru_chart.png

1. Cold air makes people more vigorous and increases the size of their brain. (Source)

2. Frost makes the soil fertile and crops grow better in places further from the equator.

3. Due to the fact that there are a lot of diseases around the equator people have to spend more time and effort trying to prevent the diseases and can't use their time to do other things.

4. Animals were domesticated away from the equator so those countries have had a head start.

5. People in warmer climates have year-long access to food and can live day by day.

6. Heat makes people lazy. No one wants to work when it's really hot.

7. In cold climates you can't do much during the winter except think.

What do you think?

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Poll Results 2014: How much is your monthly salary?

The 2014 poll was "How much is your monthly salary?" Here are the results.

• less than $500: 14% with 17 votes
• $501-$1000: 9% with 11 votes
• $1001-$2000: 20% with 24 votes
• $2001-$3000: 13% with 16 votes
• $3001-$4000: 10% with 12 votes
• $4001-$5000: 9% with 11 votes
• more than $5001: 21% with 25 votes

I wonder if they people who voted actually live in Peru. Peru is a developing country and most people there certainly aren't earning more than $5000 a month. Teachers in Peru make less than those in China. You can read the comparison here. I'd say most people living in Peru make about $1000-$2000. People on expat packages would make more, but they're in the minority.

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Read More About Peru at TEFL Tips

In addition to blogging here at the Ultimate Peru List, I have a couple of other blogs. On TEFL Tips, I have written quite a number of posts about living and work in Peru. You can read all of those posts about Peru by clicking here.

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Tips for Taking Taxis in Peru

A Peruvian moto (epidemicfun.com)

Like combis, taxis, or ticos as they're somethings called, in Peru are often gutted and look like they're on their last legs. Metal's often missing and most of the components from the dashboard will probably have been taken out. Nontheless many people use them to get around and they can be a faster option than combis. If you're looking for an even cheaper option, consider motos. If you're going to take taxis there are a couple of things you should consider.

1. Call ahead of time. If you're worried about safety then call for a taxi. There are a handful of taxi companies out there, or find a taxi driver that you trust and can call when you need them.

2. Agree on the fare. Many taxis don't have meters. And if they do, they probably won't use it. Be sure to agree on the fare before you even get into the taxi. I actually prefer not using the meter as it's less likely that the driver will take you on the scenic route.

3. Text someone the license plate. You just never know, it's better to be safe than sorry. 

4. Speak Spanish. If you don't want to get the foreigner price you're going to have to speak Spanish. Learning a bit of the local language will help you out so much no matter where you go. It'll help you assimilate to the culture and you'll be able to communicate easier.

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3 Reasons Why Peruvians Prefer Not to Get Married

Many people ask me about whether they should marry their Peruvian boyfriend or girlfriend and what documents are required to get married in Peru. Marriage seems to be getting less popular these days. Not only in Peru, but worldwide. Here are three reasons why I believe Peruvians would rather have parejas (partners) than get married. There are a lot of hoops you'll have to jump through if you want to get a divorce in Peru.

Peruvians aren't as Catholic as they think they are

From www.chattycatholics.blogspot.com

Despite the fact that most Peruvians perceive themselves as being Catholic, I just don't see this as being true. I, personally, would refer to them as lapsed Catholics, meaning that they'd probably only attend church for weddings, funerals, Easter, and Christmas. While I don't think that you have to go to church to be religious, I also don't see them practice what they're preaching.

Catholicism does not allow living together before marriage (ie living in sin) or having children out of wedlock (ie illegitimate children) and many Peruvians do both of these things.

Despite the number of times I see it I'll always find it a bit disturbing to see people shouting or arguing on the bus, pass a church, and frantically cross themselves many times over, and then go back to shouting or arguing. It's almost a superstition rather than a religion in my opinion.

Divorce is painful
People get divorced for different reasons, some people fall out of love, others realise they are more different than they thought, others were taken advantage of by bricheros or bricheras.  Going to marry a Peruvian? Make an effort to learn about the culture and the language.

Despite being common, divorce isn't easy; few divorces are truly amicable. Divorce tends to bring out the worst in people even with spouses who get along, but just don't love each other anymore. People fight about money, children, material goods, retirement portfolios, and even friends. Skeletons come out of the closet and the people become very bitter as divorce drags on.

From millennialinflux.com

Peru's becoming more liberal
Along with many countries around the world, things that were once taboo, such as living together before marriage, having sex before marriage, having kids outside of marriage, gay rights, abortion, and so on, are not only accepted, but people who disagree with these topics are often perceived as being old-fashioned or backwards.

Look at the picture on the right. Well 38% of people surveyed think it's a bad thing to live together, 50% don't think it matters at all and 10% actually think it's good. The people who think it's bad are in the minority and that number's just going to decrease in the future as people become more forward minded.

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Menial Jobs are Dragging Peru Down

From canstockphoto.com

When countries shift towards first world economies they move from being primarily manufacturing economies to being service economies. While manufacturing does help the economy it has a negative impact on the environment and people's lifestyles. Countries can change rapidly when changes are made. The USA has led the way in becoming a service sector and as a result people's lives have dramatically increased. If you think that a short while ago there were no child labor laws, slave wages, and sweat shops were commonplace.

Certain stereotypes exist about menial job workers in the US and one is language. Since many immigrants are from Mexico, some people look down on those who speak Spanish. Whether they like it or not, Spanish is becoming a very important language not only in the USA, but also in the world. Learning Spanish will help you assimilate to the culture and you'll be able to communicate easier.

While Peru isn't well known as a manufacturing company, no cars are made there, few electronic are, many items are imported from China. However, menial jobs are to Peru as manufacturing was to the USA.  Some of these menial jobs include:

• fare takers (cobradores) on the buses
• gas attendants
• street vendors
• people who sell things on buses
• shoe shine kids
• live-in nannies
• the people who shout numbers out to the bus drivers to let them know about their competition

Peru has come a long way in recent years. Fujimori's gone. As is the Shining Path. But there are still many obstacles in the way keeping Peru from becoming a developed country.

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Beware the Bait and Switch in Peru

Bait and switch can refer to a number of things, such as jobs and shopping, but it always refers to fraud. Recruiters may use bait and switch when they dangle a cushy job in front of someone only to change it at the last minute. It's also commonly used in Peru when shopping at the markets or buying something off someone on the street. I've known plenty of people who have fallen victim to this trick both in Peru and elsewhere. Here are some tips to help you avoid the bait and switch trap.

From http://www.findingbetteragencies.com/category/agency-search/page/16/

Take your time. Sellers who use bait and switch try to get time on their side and have you rush. When you rush you're not paying as much attention. Beware of people who want to make you rush.

Refuse a bag. Bags can hide a lot of sins. If there's no bag it's harder for the seller to hide anything.

Buy from reputable people. I love shopping at markets, but some people hate it. The noise, the sellers hawking their wares, etc. However, if you can build relationships with the people you buy from you'll find it can be a great experience. They might give you discounts or the latest and the greatest. Ask other people who they buy from and keep going back to people who give you good deals and good items.

Speak Spanish. Sick of getting the foreigner's price? Learn Spanish. Plain and simple. It's a pretty easy to learn a couple of words and phrases here and there. Knowing Spanish will help you assimilate to the culture and you'll be able to communicate easier.

Be careful about meeting people you find online. I find that living abroad is safer than living at home. I've met many of my friends online through Facebook, forums, and even Craigslist. Back home you wouldn't do that. However, not everyone is safe. Meeting people online can always be dangerous. Be sure to meet in a well-lit place, preferably during the day with other people around.

Trust your instinct. If something doesn't feel right it probably isn't. Move on and find somewhere else to go shopping.

More Shopping Tips
I wrote about markets in Lima as well as shopping in Peru and while markets are great, you have to be careful. Shopping in markets can be a fun experience. These 3 tips will help you make the most of your shopping experience.

1. Get recommendations: ask friends which sellers are good and which ones should be avoided.
2. Pricing: be wary of pricing, especially sellers who drop their prices drastically.
3. Trust your instinct: it's usually right.

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TEFL in China vs TEFL in Peru

From blog.simplek12.com

One of the most common questions I get asked about Peru (in addition to marriage, divorce, and visa info) is what it's like to teach English there. Many people know what it's like to teach English in China, so I thought I'd compare TEFLing (not international schools) in Peru and China.

Here is a basic summary of what it's like to TEFL in both countries. 

	China	Peru
Salary	About $1000-$1600 a month. Jobs in the south and big cities pay more but may not include accommodation.	About $700-$1500 a month. Hourly pay is usually about $10 an hour. Institutes usually pay hourly.
Flights	Included. You usually get half of your flight paid for after six months and the other half at the end of your contract.	Usually not included.
Accommodation	Usually included or a stipend is given.	Usually not included.
Visa	Legally you should get a Z (work) visa, though some places will have you work on an f (business) visa or an L (tourist visa).	Most places will not get you a visa and will either hire people who already have visas or people on tourist visas.
Types of jobs	Kindergarten, institute, and university jobs are the most common.	Most jobs are at institutes. Universities do hire native English speakers, but few will go through the trouble to get work visas.
Contracts	12 months for kindergartens and institutes. 10 months for universities with some universities paying you during the two month vacation if you renew your contract with them.	12 month contracts are the norm, though if you're on a tourist visa you might not sign a contract at all.
Extra work	The British Council often looks for IELTS examiners. You can also find private students.	Many teachers work at a couple different places as well as teach private students.

If you're looking for more info about TEFLing, you can find a lot of articles about teaching in China and teaching in Peru at TEFL Tips. If you decide to go to Peru, you should start learning the language. Knowing Spanish will help you assimilate to the culture and you'll be able to communicate easier.

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Reader Request: Alternative Ways to Get Residency in Peru Besides Marriage

From blog.smalltownkid.net

Updated 30 April 2017

About once a month I get an email from someone asking me how in the world they can get residency in Peru. Usually it's due to the fact that a significant other in Peru, but they don't want to or aren't able to get married.

One tip to remember is that speaking Spanish will help you greatly. You'll be treated differently than if you speak English all the time, it'll help you assimilate to the culture, and you'll be able to communicate easier.

The good news is that after three years of residency you can apply for inmigrante status (permanent residency) or become a Peruvian citizen.

Here are some other alternatives to residency besides getting married.

1. Get a work visa. If you can score an expat package, all the better.
2. Start your own business. It'll get you a visa. You'll need $30,000 and there's a lot of paperwork involved.
3. Get a student visa. You will be able to work part-time as well. married.
4. Get a retirement visa. You'll have to prove a steady source of income, not from a job. (ex, government retirement scheme, private retirement scheme, etc.)
5. Get a family visa. If you have children that were born in Peru, they can become Peruvian citizens. If your kids are Peruvian, you might be able to get a visa through them. Get a lawyer. I've heard it's possible, but don't know anyone who has done it.

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Peruvian Universities That Offer Distance Learning Bachelor Degrees

Distance learning is a new concept in Peru. In the US it's been around for ages. I remember looking at my dad's old comic books and they had adverts for correspondence courses in order to finish high school and get your high school diploma. High school diplomas are now the bare minimum needed for jobs. Most places ask for a bachelor degree, if not a master.

One tip to remember is that speaking Spanish will help you greatly. You'll be treated differently than if you speak English all the time, it'll help you assimilate to the culture, and you'll be able to communicate easier.

Background to Bachelor Degrees in Peru
In Peru there are two levels of bachelor's degrees. You get your bachiller and your titlulo. The first means you've finished all the courses. The second means you've done a capstone course: such as an intensive course, internship, or thesis.

3 Universities in Peru
Peru has three universities that I know of that offer distance learning, but even then it's not completely possible to do if you don't have someone in Peru to help you. My husband is going through Garcilaso de la Vega University and he had to go there in order to apply and spent a couple months trying to get credits transferred and whatnot. At the beginning in 2011 he had to have relatives physically go to the university and pick up the books and post them to him.

• Garcilaso de la Vega University: 3 semestres a year. You should be able to finish in about 3 years. Affordable. It's not that organised. Even a month into most semestres not all the professors have told you what work is expected to you and if they tell you it's vague. They'll tell you to write a paper or do research but will have no word or page limit. In order to get your diploma for either your bachiller or your titulo you also have to physically go to the university and fill out tramites and wait a couple months. The kicker? If you want to do your titulo at another university, which is common enough in Peru, you have to wait until you have your diploma in hand. Idiotic.
  Passing your thesis is another grey area. Not only do you have to rent the space where you give the thesis, but you also have to pay the profs for their time. It seems like they'd be pretty likely to fail you since then you'd have to hire them again. Peruvian culture is full of shades of grey and bribery: reminds me why I left Peru in the first place.

• Los Angeles Chimbote University: Should be affordable. Not that well-known of a university.

• San Ignacio Loyola University: Pretty expensive. Aimed towards rich people or those whose companies will pay.

Conclusion
Hopefully there will be more universities that offer BA degrees and they'll organise their info better so that you don't physically have to go there to get stuff done.

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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 move 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 arerequired 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 15^th 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 30^th.

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.

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Basic Overview of US Expatriate Tax Requirements

The following is a guest post by I.J. Zemelman, EA. Tax Operations Director at Taxes for Expats              

                                                                             

Bottom Line:  File Your Taxes Every Year

As a US expatriate working overseas you must file your US federal taxes annually just as you would if you were living in the United States.  Why?  Because your total world income determines your tax liability – not simply the income you receive in the states.  As an American expatriate, though, you have more tax saving options than those with a stateside residence such as housing and subsistence allowance, income exclusions, foreign tax credits, and more.  Savvy taxpayers who’ve taken the time to research additional deductions and savings opportunities or who work with a tax professional may have access to even more options.  Let’s refer back to the bottom line, though:  If you don’t file your taxes you don’t qualify for such deductions and exclusions. There are lots of tax guides out there designed to help you.

How to qualify for FEIE (Foreign Earned Income Exclusion)?

In order to qualify for the Foreign Earned Income Exclusion on Form 2225 or Form 2555-EZ you only have to be a resident of another country and file your taxes in said country.  Married couples who both live overseas may file jointly.

A number of taxpayers are unclear as to what income qualifies for exclusion, and the answer is simple:  Only income earned as an employee or contractor.  Any monetary gain from dividends, interest, rental income, and other types of investment returns are not excludable from your US tax liability.  The last update to the amount US expats were able to claim as exclusion is $92,900 for 2011 and $95,100 for 2012.

Another definition it’s important to take a look at is exactly what constitutes foreign.  For IRS taxation purposes, foreign income is viewed as any income received outside of the United States or any US Territory, which include American Samoa, Guam, Micronesia, Northern Mariana Islands, Puerto Rico, and the Republic of Marshall Islands.

Before you can claim FEIE there are certain additional requirements you must meet; you will be required to have lived in a foreign country for a full year, or at least a minimum of 330 days out of a 12 month period.

Information on Foreign Tax Credits?

Tax treaties with the United States ensure that you will be not taxed twice by 2 countries for the same income.  In order to ensure you receive your foreign tax credits you must file Form 1116 if you are an individual and Form 1118 if you are a corporation.  If you still owe anything to the United States after having applied your credits, the total amount you owe should be very low.

While tax treaties are great for saving international taxpayers money, there are a few important rules and exceptions of which you should be aware:

• Travelling Restrictions:  Some treaties become ineffective if the taxpayer travelled to a country with restrictions such as Cuba.  It is important for you to check with the State Department before travelling.
• Tax Home:  If you are involved in a civil unrest you may qualify for an exception which allows you to claim your overseas residence as a tax home.

Note: There are a variety of other rules included in international tax treaties such as those regarding the IRS auditing process.  Filing any return begins the 3 year backtracking period to which an IRS agent can perform an audit – including international returns or returns with no taxable income.

Keep in mind that it will not behoove you to try to give false information to the IRS, as quite a few countries including Barbados, Colombia, Dominican Republic, Honduras, Jamaica, México, Trinidad, and many more have active information exchange agreements in place with the US.

Social Security for Self-Employed Expats

If you are living overseas and you are self-employed you will be subject to all US income and SE taxes just as you would if you were living stateside.  It is important to be aware that foreign income credits CANNOT be used to decrease your SE tax liability. 

You will be protected, however, along the lines of Medicare and Social Security contributions.  The US has what is known as Totalization Agreements with multiple countries which prevent a taxpayer from having to pay into 2 social insurance systems.

Timing is Critical

American expats who are known to be working overseas or who can prove their income originated overseas will be automatically granted a filing extension to June 15th instead of April 15th.  Both military members and civilians working on overseas assignments qualify for this automatic extension. See our complete list of US Tax Deadlines for expats for more information.

Expats are also able to request a further extension and not be required to file taxes until October 15th.  This extension, however, is only for filing.  If you are an American expatriate and you owe taxes which aren’t paid by June 15th you will most likely be subject to penalties and interest.  If you are unable to pay before October you may be able to minimize your penalties by filing Form 2210.

The article is merely an overview of an overwhelming amount of US expat tax information. For additional help, please contact the experts at Taxes for Expats today or read more about taxes at these tax guides.

I.J. Zemelman, EA is the founder of Taxes for Expats She may be reached at: +1-646-397-2887 Email: questions@taxesforexpats.com Web site: www.taxesforexpats.com.

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