Quote: (Yesterday 04:18 AM)ArloDash Wrote:
Yes, but the costs don't make sense unless you're netting over $50,000 each year. You have to pay for bookkeeping, legal, etc. Then, the costs are basically the same as paying tax on that money.
In the end, you're still going to be paying rouhly $5000 a year or so to run your S-Corp instead of paying that in 15.3% self employment tax.
The U.S. self-employment tax is 15.3%, which means that you pay $15,300 in taxes on a $100,000 salary (even if you qualify for the Foreign Earned Income Exclusion and legally avoid paying U.S. federal income taxes). That equates to $7,650 in self-employment tax on a $50,000 salary.
Even if you did pay $5,000 annually to have a tax office handle everything for you, you would still net a $10,000 savings on a $100,000 salary. Even with a $50,000 salary, you would still save about $2,500 in taxes annually. In what universe does saving 2,500 annually on a $50,000 salary equate to a situation where "the costs are basically the same as paying tax on that money"?
With a salary less than $50,000, you can simply perform the work yourself instead of paying a professional (until you reach the point where it is worth paying a professional). If you perform the work yourself, it costs about $1,000 to form an IBC and another $300 to form a U.S. C corporation. For the peace of mind, you may still want to pay an international tax office $1,500 to prepare your annual business and personal taxes as an expat -- but you could still figure out how to prepare the tax documents yourself, if you wished.
Sure, everyone should pay their taxes, but there are plenty of tax savings for people who plan -- and no one is obligated to pay more tax than is owed.