| Paying U.S. Taxes on Offshore Online Income |
|
|
|
|
|
sparky
First Time Poster
Cash: $ 0.25
Posts: 1
Joined: 12 Sep 2005
Location: ny
|
| Paying U.S. Taxes on Offshore Online Income |
 |
|
I'm expecting income from an Online Company doing business from Belize. I'm not clear on the following: 1. How to claim on my taxes. 2. What can I expect to be paying in taxes on this income? What would be some strategies in reducing the tax impact?
|
Wed Sep 21, 2005 4:47 pm |
|
|
coaster
Senior Advisor
Cash: $ 1355.60
Posts: 6675
Joined: 11 Oct 2005
Location: Wisconsin
|
|
|
|
You're obligated to pay taxes on the income according to the type of income, e.g. dividend income, and the tax rate will be accordingly, e.g. whether it's qualified dividends or not, ordinary income or capital gains, etc. I don't know what type of documentation you get from the company. If you don't get any, then just report it on an attachment to your return. Dividend income is reported on Schedule B and is broken down into qualified dividends vs. ordinary income on Form 1040. If it doesn't fit into any of the usual categories, then there's a line for "Other Income" on the 1040 and you can explain it on your attachment.
If you paid any Belize taxes, be sure to take the Foreign Tax Paid deduction (or credit, as applicable).
If you have any control on when it's paid you can shift it into this year or next, depending on which year you expect to have lesser other income.
A good tax book should give you more specific information if you need it. And a good tax software package like Turbo Tax can be quite helpful, also.
I guess it's better to have the extra income and the tax headaches than to not have the income, but sometimes I wonder!! 
~Tim~
Eye Candy : Why Whimsy
|
|
Sat Dec 03, 2005 4:34 am |
|
|
Day Trader
Full Member
Cash: $ 13.45
Posts: 58
Joined: 05 Jul 2005
|
My boss has registered companies in Belize, Bahamas and Cayman Islands. He does not report his income to Canadian government nor do the foreign governments.
dantol.com
|
|
Sat Dec 03, 2005 6:10 am |
|
|
coaster
Senior Advisor
Cash: $ 1355.60
Posts: 6675
Joined: 11 Oct 2005
Location: Wisconsin
|
I think that's a different situation. Companies based in other countries don't report their income to the U.S. government, nor do the owners of those companies. They come under the tax laws of the country in which the company is incorporated. An individual who is a U.S. citizen who receives income from a foreign company is obligated to pay U.S. taxes on that income. Unless this company that sparky mentions is his company, then it's a whole different story. My advice only applies to individuals. I don't have any knowledge of corporate tax law.
http://www.irs.gov/newsroom/article/0,,id=108276,00.html
I think the way it works with corporate entities is that the income from foreign holdings is not taxed as long as it stays outside the U.S. When it's repatriated, then it's taxed. I saw some companies whose stock I own take some charges against earnings this year for repatriation of foreign earnings.
~Tim~
Eye Candy : Why Whimsy
|
|
Sat Dec 03, 2005 2:21 pm |
|
|
|
