Four huge ways to minimize your tax burden as an American remote worker

I began getting paid for remote web development work when I was just fourteen years old. While my classmates were reading Wuthering Heights in English Literature, I was in the bathroom selling websites. While my friends were in the lunch room, I was in the library building them. Anyway, I was introduced to self employment tax far earlier than most.

I have read the IRS website many times over and have searched under practically every stone in order to find ways to legally minimize my tax burden. In fifteen years of practice, I’ve learned about the things that make the “big” impact. If you use the following strategies, as a remote worker earning $200k/yr you can save yourself millions over the course of your career.

Self employed 401k

This was the first option I pursued that really allows you to save a lot of cash that would otherwise be immediately taxable. The 401k in particular I believe is better than the IRA because the contribution limit is higher and it’s available to high earners where the IRA is capped. Some features of the self employed 401k:

  • The contribution limit is over $50k/yr
  • You can give yourself loans of up to 50k (allowing you to use your non-taxed income in the real world)
  • Flexibility in how you can spend the money (for instance direct real estate investments)
  • You can use your trust documentation to open a business checking account and have direct control over your funds, or a brokerage account (so for example you can get the best margin rates — I use Interactive Brokers)

There are a number of providers who can help you set this up, including Vanguard (but you can only invest in mutual funds and you can’t do loans), and MySolo401k (who I personally use).

Foreign Earned Income Exclusion

If you want to save an insane amount of money, the FEIE is far and beyond the best method for doing so. It will allow you to take a deduction of $105,900 in 2019 (and it increases every year). The requirements are that you either spend the majority of your time (330 days per year) outside of the US or you have bonafide residency in a foreign country.

This means you must either become a “permanent tourist”, constantly changing your location based on visa stays, which is quite tiring, or you become a resident of a foreign country that will not tax your remote earnings (i.e. a territorial tax system). I chose Panama. With a cost of less than $5000 in legal fees and a process that takes less than six months, it represents by far the best value in the world (in my personal opinion).

One note on the FEIE — if you claim it along with other deductions the amount you can deduct is reduced. In order to maximize the benefit of the FEIE you will want to incorporate in the US or a foreign country. If you incorporate in a foreign jurisdiction and pay yourself a salary, you will be able to use the full amount of the FEIE while also eliminating the need to pay self employment tax.

I personally chose to use a US C Corp so I can take advantage of retained earnings (not possible through a foreign corp under the Trump tax changes) as corporate tax rates in the US are below my individual income tax level after the exclusion amount, but that is a discussion for another time.

Health Savings Account

I mention the HSA because not only will it save you ~$3500 per year, but it’s money that you can actually use. I have certainly used mine. The idea is that you pay for a high deductible health plan (low premium, high deductible — I pay around $50/mo), and then pay for low cost medical items directly. If something terrible happens you still have coverage, but the plan costs you very little.

Even when I was a domestic resident, this made more sense to me than paying a high monthly premium (I got quotes from Obamacare for $600/mo and more). I have been able to use my HSA for paying for medicine, doctors visits, dental visits and more, and best of all I can use it abroad.

529 College Savings Plan

If you have higher education in your future (even if it’s Coursera courses with the proper accreditations), you can name yourself the beneficiary of a 529 plan and save tens of thousands more in money that you can actually use for something in the real world rather than waiting for retirement. Like the HSA and 401k, this will legally reduce the amount you need to pay to the IRS.


By planning now and knowing the rules, you can legally save yourself even tens of thousands of dollars every year. Especially if you’re young, starting these things sooner rather than later could make a massive impact on your long term financial well being. *Required disclaimer:* Make sure you consult with a certified tax professional before doing anything I suggest.

Software developer, investor, energy markets analyst.

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