TOTALLY tax-free up to $85,700?

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  1. #11

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    Apr 2003
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    As long as your offshore company is getting paid for the work, you're here as a visitor .. you'll be ok.

    Like I said there are some finer points that you'll need to comply with.

    Similar to say, business visitors who are employed by overseas companies as directors / employees visiting Hong Kong to negotiate deals, train local employees, setup systems, assist in various business functions...


  2. #12

    Join Date
    Oct 2004
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    Midlevels / USA (MD) / London
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    You are walking a very fine line here and one I would not want to defend in tax court....

    You should note that you would not be eligible for the overseas $87k until after you live overseas for one year. It is not an instant credit the moment you get off a plane. In addition, I think there is a requirement that you have a "tax home" or bona fide residence in another country, not just be traveling around. You might want to check the document from the IRS on this.

    http://www.irs.gov/publications/p54/index.html

    Setting up a shell company to pay yourself a salary can be done, but can be utter hell if you get called up for an audit. There are zillions of cases of 'piercing the company veil' in situations like this, including some very high profile ones just recently (and that guy spent a ton of money with his lawyers to hide millions).

    I guess what I'm really saying is this isn't just something that is pretty simple to do. As people have pointed out, you might spend more money trying to avoid a tax than the actual tax itself, and you could end up down a slippery slope if an audit ever comes to you. Salary from a foreign company in a tax haven, overseas bank accounts, etc--these are RED FLAGS for the tax auditors and kick you into a 'more likely to be questioned group'. As someone said 'these are many great tricks to use to avoid taxes, until you get caught.'

    I'd recommend talking to a lawyer or an accountant who specializes in offshore accounts. There are a few in Hong Kong, there are also quite a few in Florida, NY, and Washington DC area (there are a ton of people who live in the DC area who end up as expats for military or government reasons)

    Last edited by penguinsix; 18-01-2007 at 04:10 AM.

  3. #13
    Quote Originally Posted by penguinsix:
    You are walking a very fine line here and one I would not want to defend in tax court....

    Setting up a shell company to pay yourself a salary can be done, but can be utter hell if you get called up for an audit. There are zillions of cases of 'piercing the company veil' in situations like this, including some very high profile ones just recently (and that guy spent a ton of money with his lawyers to hide millions).
    I'd love to read about that case - do you remember anything else about it? He was obviously breaking the law if he was trying to hide money from the IRS. Not at all what I have in mind, but it still sounds like an interesting story...

    Quote Originally Posted by penguinsix:
    I guess what I'm really saying is this isn't just something that is pretty simple to do. As people have pointed out, you might spend more money trying to avoid a tax than the actual tax itself, and you could end up down a slippery slope if an audit ever comes to you. Salary from a foreign company in a tax haven, overseas bank accounts, etc--these are RED FLAGS for the tax auditors and kick you into a 'more likely to be questioned group'. As someone said 'these are many great tricks to use to avoid taxes, until you get caught.'
    I hear what you're saying about 'red flags'. But 'getting caught' implies that the intention was tax evasion, which is illegal. I'm talking about tax avoidance - arranging my affairs to pay little or no tax, as allowed by the law. I would never be so foolish as to think I could hide money or in any way cheat the IRS. I just assume that if I do anything wrong, they will catch me sooner or later. I'm 100% sure of that, which is why I want to stay well within the law. That way, they won't audit me, or if they do, I'll have nothing to worry about.

    Now that I've clarified that, do you still maintain that this is going to be more trouble than it's worth?

    Quote Originally Posted by penguinsix:
    I'd recommend talking to a lawyer or an accountant who specializes in offshore accounts. There are a few in Hong Kong, there are also quite a few in Florida, NY, and Washington DC area (there are a ton of people who live in the DC area who end up as expats for military or government reasons)
    Point taken - thanks for the good advice. Any tips on how to find a good tax attorney who specializes in this area and will really keep me out of trouble? I mean, Consumer Reports rates cars and all kinds of products, but how can I know who's a good (and honest) attorney?

  4. #14

    Join Date
    Oct 2005
    Posts
    14,372
    Quote Originally Posted by tom.nadeau:
    how can I know who's a good (and honest) attorney?
    Easy! they're just like santa clause and the pixie at the bottom of your garden, I.E they don't exist!

    seriously though I'd just arrange preliminary chats with a few and see what develops, some will do free initial consultation.

    Just pick somebody from a reputable firm and who you feel comfortable dealing with or somebody registered with the law society or something like that.

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