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Thread: Investments and taxes: Corp / Personal

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    God/dess Bridgette's Avatar
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    Default Investments and taxes: Corp / Personal

    Spinoff of previous thread. This is mostly directed at those who know about corp vs personal taxes and investments.

    I'm incorporating now, so all my future income will be counted under the corp. I am going C corp, and I have my reasons. Will pay myself salary as an employee.

    If I'm planning some aggressive saving/investing for the near future, would it be best to do all the investments under the corp, personal, or split?

    Also, in the not-too-distant future I will be an expat with a corp in the other country. Will probably pay for services from my US corp to the foreign corp - US corp will continue to earn money in the US. I know as long as I earn money in the US I will be responsible for US taxes on that income. If I'm paying most of my US income to the foreign corp for services, my US tax would be minimal, correct? If the foreign corp has a US bank account and keeps most assets in the US, does the foreign corp have to pay US tax on that income, or the other country? Does it make a difference if I am doing the work as an employee of the foreign corp (no longer under the US corp) in that other country, so the income would be foreign earned income?

    I have other questions but this will get me started Must decide the basics of how to set up now for my greatest future benefit.

    Quote Originally Posted by pheno View Post
    When you lead a nontraditional life don't try to measure it with traditional milestones.

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    Banned Katrine's Avatar
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    Default Re: Investments and taxes: Corp / Personal

    C-corp may work well for you. Its going to be a bit of a bitch to start-up though.

    As far a taxation between the two countries, you REALLY need to do your homework on the economic relations, treaties, business incentives, etc. You may have to pay full taxes in both countries and receive a FEI credit. THAT will take a lot of strategic maneuvering, but it can be done.

    As a matter of fact, I am doing the EXACT planning idea with a client right now about to retire and move to Belize.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
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    Default Re: Investments and taxes: Corp / Personal

    there's also the US tax on foreign earnings issue to consider. Just because you are an employee of a foreign corporation and residing outside the USA does NOT free you from US taxes on that foreign income as long as you retain US citizenship. Also, keeping bank accounts and/or a subsidiary corporation in the USA makes it easier for the IRS to 'collect'.

    This is a proverbial 'sticky wicket' . Maybe Stuart knows something helpful about offshore corp setups.

    PS IMHO the best retirement plan there is is getting yourself and your money the hell out of the USA well before you retire !

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    Senior Member DanMorris95156's Avatar
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    Default Re: Investments and taxes: Corp / Personal

    Owning controlled foreign corporations (CFCs) have advantages however if transactions are occuring between related parties - it is easy to violate laws and reuglations that end up costing more tax then savings.

    It is very easy to set up a CFC incorrectly (I see way too many in this condition) and it is somewhat expensive to establish them correctly including the required IRS disclosures and annual reorting required for all US taxpayers.

    This isn't an area for self-reprentation and creative trailblazing. Competent counsel should be consulted just to make sure you aren't setting yourself up for failure.

    Regarding moving your money and retirement savings out of the US.....well I guess that is a function of personal opinion however be certain you control the access to and investment decisions. I am not ignorant of the challenges facing the US in economic terms - however there probably is no better long-term substitute.
    Daniel D. Morris, CPA
    [email protected]

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    God/dess Bridgette's Avatar
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    Default Re: Investments and taxes: Corp / Personal

    Thanks. I knew there must be more for me to consider regarding the foreign corp situation, so I will be sure to seek professional advice for that. Actually I'll be seeking pro advice for the US corp too, since I know so little about how to manage it properly.

    My main concern regarding getting my money out of the US is that I have full access to it, where ever I am and at anytime. I don't want to be stuck paying tax to 2 countries for same income or unable to access funds when needed. With the online business, I can run it from anywhere I there's internet but I need to be able to conduct business without hindrance and without paying through the nose for the privilege. And the last thing I need is to have accounts frozen or some such because I failed to set things up correctly and legally on all ends.

    Ah. Lots to take care of and learn for this, but it will be worth it when I'm running business from my laptop in paradise!

    Quote Originally Posted by pheno View Post
    When you lead a nontraditional life don't try to measure it with traditional milestones.

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