OK I start this thread to learn from all of you masters who are profitablle. What do you do to legally reduce pay out to the IRS. I live in California, can i form a Nevada corp ? Offshores ? Suppose I open an IRA account, how much money can I put in there ? Thanks
Use the search feature alot has been written on all of the subjects you just mentioned. Move out of CA. I did and live in CO now. CA will probably catch you if you try the Nevada corp scam. I say that because most try not to pay the $800 per year and CA tax. They know about ppl from CA setting up accross the border in NV and CA looks for it. You better not be getting money wired into a CA bank account from a Nevada Corp! It will raise red flags instantly. Offshore can be done from what I have read and talked with people that have done it, but when you try to repatriate the money to a US account watch out. The IRS is hip to this scheme. The trick is to get the money back into the US without being flagged, especially with the Patriot Act involving banking. Hint.....trade under a corp account and wire money to a US based corp bank account, never offshore corp to US personal account. This isn't watched as closely because many international corps do business between each other. This will cost you though with 2 set ups, accounting,etc. You get the picture. Good luck Dan
That's old USA law. Current law is that the earnigns are fully and immediately taxable in USA even if the money never comes back into the USA. See IRS form 5471 http://www.irs.gov/businesses/small/international/article/0,,id=154943,00.html
Traderstatus-I think we are talking about 2 different things. I realize that according to law you must report. I am assuming, maybe I shouldn't, that because offshore was referred to Abodian is looking to skirt or evade the law. I am not advocating anyone do that. I am simply warning him/her were they will most liklely be caught if they attempt such a thing. I am in no way advocating some break the law. In fact, I am a member of a Colorado LLC that fully pays all taxes. I did read that webpage/link, thank you. There is no mention though of the 90/180k deduction if living abroad, which I believe is still in effect. I mention this because I am contemplating living overseas and trading and this may apply to Abodian situation.
Dasdxg, I was just referring to the repatriating rule which is not applicable any longer. Now the profits are a "deemed distribution" (repatriation) back into the USA even if the actual funds remain overseas. That link given earlier is for determining the taxable income from the disclosed profits so that the deemed taxable distribtion can be subjected to tax. As to "getting away with it" the IRS knows that the 1099's do not get sent to the IRS so they rely on other sources, such as credit card companies, and as you said banking transactions under the Patriot Act, and from attacking the offices of the promoters who set up or otherwise facilitate the offshore entites, and from attacking the offices of NV incorporation shops who oftentimes are in bed with the offshore scam artists.. IMO, if someone is talking under many several millions in offshore assets - it just isn't worth it. (separately) That $80K EARNED income exclusion is when a US citizen lives overseas for about 330+ days and EARNS (subject to FICA) income (wages). For this situation the first $80K is not subject to federal income tax. http://www.irs.gov/businesses/small/international/article/0,,id=96980,00.html