Off-shoring, Tax issues

[seanhowell]

Hello,

I thought I read in the book that Timothy mentioned a link to a site about using off-shore incorporation for legitimate tax savings. I just read 4HWW again and couldn't find mention of it. Was I imaginging it?

Does anyone have any other links about this stuff? Or book recommendations?

[clanshrapnel]

Google? (http://www.google.com/search?hl=en&rls=com.microsoft:*:IE-SearchBox&rlz=1I7DMUS&sa=X&oi=spell&resnum=0&ct=result&cd=1&q=offshore+incorporation&spell=1)

There have been a few mentions of offshore tax savings for US citizens on these message boards along the lines of your first 80k of income are not taxed if you spend more than 330 days of the year outside of the US. Ask any expat (Hong Kong has a ton of expats if you need a starting point) and they can fill you in.

I don't recall reading about this in the book (or at least any details about it, if he even mentioned it).

[froldt]

The only off-shore anything that I can remember from the book is outsourcing your work. I have seen off-shore incorporation mentioned on the forums a number of times, though.

[kamakiri]

The search function is your friend here. I have said it many times. Not paying your taxes is the fastest way to the zero hour work week. If you have any delusions about off shore tax havens or unnumbered Swiss accounts, you have been watching too many movies from the 80s.

[TimW]

Tax avoidance is legal.
Tax evasion is not.

[JDSalinger]

I don't recall reading about this in the book. However, it is very true that you can get tax savings by incorporating offshore. This usually is caused by a reduction in costs for filing and registration requirements. Popular places for incorporation on the Western Hemisphere are Panama, British Virgin Islands, and the Cayman Islands. The most popular of these is Panama and so I would start there.

As for why people choose to go offshore, there are many advantages beyond just the perceived benefit of tax savings or tax evasion. (Yes, if you are from an established country, you do have to pay taxes on offshore accounts.) The lesser known benefits are more privacy in your transactions, keep your money away from creditors, tapping into the global economy for investment opportunities ranging from foreign stocks, bonds, mutual funds, companies, forex, etc. In addition, even basic checking and savings accounts tend to usually pay more in interest than domestic version. Plus, many people go with offshore merchant accounts because they cannot afford or get access to domestic ones. Bottom line: there are still a large number of advantages to incorporating offshore or to get an offshore bank account that extend far beyond any tax advantage.

If you would like to read more, feel free to visit this site:
http://www.theoffshorebankaccount.com

[kamakiri]

That is the hokiest web site I have seen in a while. Not a shred of fact to be had. No numbers, no law citations, nothing but hot air.

The bottom line is that unless you live outside of the USA for 330 days in a 12 month period and make less than 87,600 (qualifying you for the Foreign Earned Income Exclusion (http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html)), you are taxed on your worldly income.

In every case I have ever seen, the minimum standard deduction in the US is cheaper than the fees related to the operation of a foreign account. Even in a country like Panama where capital gains aren't taxed, you still pay fees for money transfers, and exchanges, and you are taxed in the US anyway. It is essentially a tax increase for the stupid.

If you have the income to pay your attorney $150 an hour to set up your accounts, then you should look into it, but even there most people selling these accounts and/or investments are hucksters like Madoff (http://www.trumpuniversity.com/blog/post/2008/12/madoff-teaches-lessons-in-due-diligence.cfm) and the adwords farmer site like the one mentioned above.

[bmonsma]

Hi everyone.

Does anyone know of a good currency localizer for websites? I'm trying to sell shoes online in another country and have them pay in their currency and have it instantly exchanged into US $ and into my bank or paypal account. I've seen oanda.com and hear there are others. Oanda looks good but want a second opinion.

Thanks in advance.

[tbootz]

Is there any non-taxing (or close to) country for non US citizens to save on taxable income? .

[sub8hr]

Tax law depends on two things, what country you are a citizen of and what country you reside in. Just moving to another country alone won't necessarily cut your taxes by much. Though for example, as Kami was explaining above there are circumstances under which you wouldn't have to pay US income tax. I know ex-pats in South Korea who claim to only be paying a 17% flat "foreigner" income tax.

If you are not a US citizen then obviously you would need to find out what the laws are for your own country.