Can you advise “legal” structure to pay tax less for international income?
U.S residents should pay tax regardless of where you make money and that means you have to pay tax twice for international income (to the U.S and to the country where you make income). I know I can get some tax return for that.
I want to be more clever at paying tax. I think few options yet I don't know what's most efficient.
1. Have the company make a branch in the U.S and get paid from the U.S arm.
2. Incorporate my own LLC or C-corp and have the company pay to my own company. (LLC vs C-corp, which one is better?)
3. Get paid to my U.S checking account.
4. Simply get paid to my account in the country and transfer to U.S.
Any advice would be appreciated.
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comments
1. Reduces forex costs for you. Doesn’t reduce taxes. Trinet is useful if they don’t want to deal with having a full presence in the USA. Typically you want to remain an employee
2. Implies you aren’t an employee of the main company, instead an employee of your LLC/C-corp. Doesn’t reduce forex, can reduce taxes. Can you live off part of the income? If yes C-corp would have a lower personal tax burden but operating a C-corp cost more money than a LLC.
3. High personal tax burden and forex risk.
4. High personal tax burden and forex risk.
Let's say you buy for 1m, live in it for five years, rent it out for the next five, and sell it for 2m after ten years. IRS won't give you ANY primary residence exception, will tack on tax on depreciation, and a bunch of other things the other country may not do, while the other country may give you a primary residence exception for at least part of the gain. The can result in IRS taxing you on 650k, if they calculate depreciation as 150k, while the other country may decide you owe nothing or much less if you still qualify for their primary residence exception.
Because it's such as big transaction and because it's often taxed very differently by different countries it's often the trigger for a surprise six digit tax bill.