cinalaowai
6/10/2016 21:00 EST
Hi everyone!
I am an American, my wife is Chinese with a US Permanent resident card. We are in the USA now but want to move somewhere with nicer climate and due to high level of income we pay ALOT of taxes in the US. If we leave the US we can avoid paying state income tax (10%) and we would also get the Foreign Earned Income credit if we were outside of the US for 330 days a year. All in all this would save us $60,000 every year and possibly more as our income could increase. We run an online company and work remotely. Our company is an Oregon S-Corporation.
My questions are:
1. As I understand it, the first three years as a resident of Chile we would not pay taxes on income derived outside of Chile, but on the 4th year we would. As the sole owner of my USA S-Corporation I pay myself $35,000 a year but earn much more in the form of profits from the business which considered "Ordinary Business Income" (not dividends). I am taxed on all this income in the USA, but would the Chilean IRS try to tax me on this income too? Or is there some way for me to indicate to them that I paid taxes on it in the USA and end of story? Or would they want to see my income from my US Company, deduct what the US charged me in taxes and then apply their own tax rate and charge me the difference?
Example: If I was in Chile, I would pay about 20% taxes on my US derived income (no Oregon state income taxes and reduced Federal Taxes after claiming the Foreign Earned Income Exclusion), but according to Chilean Tax code if I made as much as I do I could be taxed at the rate of 40%. So... would pay I taxes on the 20% in the USA and then pay 40% to Chile but less what I already paid to the US?
2. Finally, we would need to get samples of teas from China and Taiwan sent to us regularly. Any idea about receiving parcels like that? Will they be subject to VAT? Are they likely to get delivered? What delivery services from abroad are the safest and less likely to get hung up in Customs?
Thanks in advance for any help or insight ya'all can offer!
Thanks in advance!
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jesseUSArmyVet
6/21/2016 12:43 EST
Is it not far more beneficial to simply sell your online company to your wife who can then setup the ownership of that company in any tax haven she wishes. That may be a dumb question as other considerations may preclude you from going in that direction. However, I have noticed that many high net worth Americans arrange for their spouse to gain citizenship in another country, such as St Kitts. Then they can setup a company which is immune from US taxation. A famous US Billionaire married a French citizen who then achieved dual citizenship in Bermuda where they setup a holding company and then proceeded to essentially pay zero taxes on all their income.
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cinalaowai
6/21/2016 13:43 EST
I have thought about this, but she is a US Permanent Resident. Would she not have to give up her Permanent Residence status or risk breaking the law by not declaring that income? Although she is Chinese and they don't allow dual citizenship I would imagine St. Kitts doesn't care. She'd just have not tell the Chinese govt. (and give up her US Green Card).
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celsdon
6/23/2016 16:39 EST
We are in almost an indenticle position to you, online business, S-Corp, same citizenship scenario. Our plan though is to keep on moving though, Chile then Argentina, Peru, Equador.
As we plan to be out of the US for more that 330 days, we will be able to take advantage of the Foreign Earned Income provision but as we are an S-Corp we are still going to have to pay US Medicare and Social Security as part of our payroll. We are also considering an offshore solution to this but I need to learn a lot more about that before we make that leap. Let us know if you learn anything further.
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cinalaowai
6/24/2016 01:02 EST
I am wanting to head back overseas too... have the dog as well, so it's going to be tricky. She's more like a poorly behaved dragon than a dog. ;-)
Foreign Earned Income Exclusion - I had it in China, then moved back had to give it up. Now I am seeing this rule here, which you should most definitely know about (but nobody seems to).
https://www.irs.gov/individuals/international-taxpayers/revocation-of-the-foreign-earned-income-exclusion
Basically I gave it up in 2014 because I no longer lived overseas, and according to that IRS link I cannot claim it again until tax year 2020. I have heard some people tried to get IRS approval to get it back before the 5 years but failed.
Plenty of offshore solutions. I wonder what the IRS would think if suddenly a profitable S Corp was dissolved and you had no income from business anymore. I have to suspect this is a big red flag. Ireland is another option that I believe is still legal at this time. That being said, not paying state income taxes and getting the FEIE is a pretty sweet deal.
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CaptainJT
6/27/2016 13:02 EST
Dear Sir, you have already given out entirely too much information about your situation!
I am in Chile. I came here to determine if I want to live here. I have traveled more than 12,000 Km meeting people and looking at the government and the potential to open a business. I have determined it is a complete waste of time! The government is exactly like the government of the USA (Union of Soviet America), the people are pathological liars and lazy. I will be leaving here soon to go to Panama or Nicaragua.
First, and most important never open a bank account anywhere that insists you sign the illegal IRS form that every bank in Chile will tell you that you must sign! If you sign that illegal form the criminal IRS will illegaly hound you for the rest of your life in order to extort illegal taxes from you. Find a bank anywhere in the world that does not require you to sign that IRS form. The people in the government and the banks in Chile know that IRS form is illegal in the USA, but, the criminal US government forces most countries to comply with illegal laws only to steal money from US citizens in the form of illegal taxes. The IRS only has a legal right to tax corporations, not the wages of the citizens! The US Supreme Court ruled that one hundred years ago! The US government does not care, those thieving politicians use the IRS only to extort illegal taxes from the innocent sheeple how stupidly live in the Union of Soviet America.
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captainsursea
6/27/2016 14:15 EST
CaptainJT - It would serve our Chilean expat community immensely if you would stop your quasi-legal tax advise, your bigoted view referring to the intelligence of our South and Central American citizens and misguided political musings.
We do not care where you live or want to live or your personal issues with the world at large.
This is not what this forum is for; please find someplace on the net where personal ramblings are acceptable.
A reply to this posting is not necessary or required - just go away quietly.
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CaptainJT
7/2/2016 15:19 EST
captainsursea: It would serve our Chilean expat community immensely if you would stop your quasi-legal tax advise, your bigoted view referring to the intelligence of our South and Central American citizens and misguided political musings. we do not care where you live or want to live or your personal issues with the world at large. This is not what this forum is for; please find someplace on the net where personal ramblings are acceptable. A reply to this posting is necessary because it is about time all Expats learn that captainsursea is an agent of the CIA who planted captainsursea here to stick his nose into your business in an effort to assist the crooked US government to force you to pay illegal taxes!
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CaptainJT
7/21/2016 09:39 EST
What do you mean by, "I am an American"? Stop being so arrogant! Everyone who lives in the Western Hemisphere is an American! You are a North American. You go around most of Central and South America claiming to be an "American" will really piss off a lot of Central and South Americans!
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AlPavarotti
7/21/2016 11:48 EST
I don't totally agree with what you're saying. In my years in the service I was stationed with my family in several latin countries. And made lots of friends in each country So, I know for a fact that people in central and south american have always referred to people from the US as "Americans" or "gringos" But on the other hand if you say I am from "America" meaning the USA then you would sound to them not only very arrogant but very ignorant also. Because they know America is the whole continent. from Alaska to Argentina/Chile.
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CaptainJT
7/21/2016 12:10 EST
alpavorotti,
I suggest you ask the people in the countries where you are. I have been to many Central and South American countries and the people usually ask if I am from Estados Unitos and I say yes. Some times they say, "Are you an american" and I say yes, "I am as american as you are." This stops them and they always smile and say, you are one of the few from estados unidos who knows we are all americans. They invariably want to be my friend! When I was in Costa Rica many of the Ticos became angry at Norte Americanos who claimed to be "Americans". They insisted people from Canada and the USA say they are from North America. Why don't you try being less arrogant and learn to treat people of other countries with more respect? You will learn that they will treat you with more respect as well.
I don't totally agree with what you're saying. In my years in the service I was stationed with my family in several latin countries. And made lots of friends in each country So, I know for a fact that people in central and south american have always referred to people from the US as "Americans" or "gringos" But on the other hand if you say I am from "America" meaning the USA then you would sound to them not only very arrogant but very ignorant also. Because they know America is the whole continent. from Alaska to Argentina/Chile.
If you continue with the attitude you are now presenting, do not write to me again, EVER!
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