http://www.offshorepress.com/vkjcpa/offshore-employment.htm - why has no one else told me about this?!!?!

excerpt:
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Section 911 of the U.S. tax law permits U.S. taxpayers to earn up to $91,400 per year of tax free income. (This amount is adjusted for inflation each year.)

But there is a "small" catch.

The taxpayer must earn that income by living and working outside the U.S. for at least 330 days out of 12 consecutive months or must become a permanment resident of the foreign country. This rule exists to encourage U.S. employees to accept assignments by their multi-national employers in various countries that may have poor living conditions and to encourge the employee to accept extended separation from his or her family in the U.S.
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Anyone that knows tax law well please let me know.

But from what I read if you are a citizen of US and your business isn't tied to belize you dont pay belize income:
"Residents of Belize (individuals and companies) are liable to tax on their worldwide income with the exception that individuals resident in Belize but domiciled elsewhere are not liable to tax in Belize on income earned outside of Belize unless that income is remitted to Belize."

So pretty much you stay here most of the year and can make 100k un taxed? This just made this place sooo much more awesome. I will be having my lawyers and accountants look into this (after i fire the current ones for not telling me about this).

Comments needed/welcomed?

AC

The basics are simple, albeit the details can be complicated, but it looks to me like you may be confused about those basic facts -- so you should definitely have your U.S. or Belize CPA or tax attorney 'splain it to you:

As a U.S. citizen, you owe income taxes on earnings and other income (dividends, interest, royalties, etc.) on your WORLDWIDE income.

However, there is an exception -- on FOREIGN EARNED income (that is, FOREIGN WAGES, in this case wages earned in Belize) up to the current excluded amount, US$91,400 for 2009 and US$91,500 for 2010 tax years -- if you meet certain strict tests such as physically living outside the U.S. for 330 days in a year or not claiming that you are not a resident of Belize subject to Belize taxes.

If you earn the money in the U.S., or are paid from a U.S. business, you don't get the exclusion. The exclusion also doesn't apply to non-earned income such as interest and dividends. There are some other potential benefits, such as an exclusion for foreign housing and education for your children.

As a U.S. citizen living in Belize, you don't owe Belize taxes on income earned outside Belize, but if you are earning the money IN BELIZE you DO owe Belize taxes, possibly both business taxes (the gross turnover tax) and personal income tax.

In other words, you can't earn income in the U.S. and get a foreign earned income exclusion, AND you can't live in Belize and earn income in Belize without paying Belize business and personal income taxes (which in some cases are higher than U.S. taxes).

You're going to have to pay the piper one way or the other. In other words, you are likely going to have to pay EITHER Belize taxes or U.S. taxes.

--Lan Sluder

thank you so much for the input. but what if my money going going to the US is coming from a foreign country. which is generally where i get paid from, and im doing the actual work in belize and the money stays in America?

AC

The devils (and the taxes) are in the details, but it sounds to me as if you may possibly owe U.S. taxes on your worldwide income mostly paid from a foreign country other than Belize and that if you're actually working in Belize, regardless of where the money ends up, you may also owe Belize taxes and may need a Belize work permit. I would hie to your U.S. and Belize tax and legal advisors forthwith before you get squeezed by the tax authorities of both countries.

And I wouldn't discuss the matter on a public board in Belize, as the Belize tax guys are notorious for squeezing as they have so few people in Belize who actually pay tax, so they devote a lot of time to those that do.

Seriously, I'd get some professional tax advice pronto.

--Lan Sluder

i plan to talk to many professionals. thank you for your advice/comments though. i really do appreciate it.

AC

I am/did deal with the same thing. I have an internet-based business as you do. Be really careful. If you claim this it can make your life more difficult than the actual benefit's are worth. For instance - you can't contribute to your IRA etc. The US has tax treaties with just about every nation out there protecting against this kind of thing, so tread lightly my friend. I myself play it safe - it's far too easy for the little guy to lose in this one.

lan, i know youre not a tax guy, but just curious - why EITHER bz or us taxes? if someone works while residing in bz and the funds go to the US (as in internet based work), wouldn't they be subject to BOTH US & BZ taxes? i know it a hot issue...

I 'think' that if you keep your company based in the US, and your money stays there as well. even though said person maybe working in a foriegn country thier company is still in the states. Imagine if you are the owner of a large car dealer ship. And you have to do emails, manage board members etc. But you travel a lot just cause you like to. 11 months out of the year, the countries you travel to have nothing to do with your business as it is still US based, yet you are doing YOUR work abroad, they still cant expect you to claim that money as income made in (country name here). But thats just what I think. i will know more when i talk to someone that knows something.

AC

Hi AC

I can point you to a local guy Trevor at Georgetown Trust in the new Caye Bank building across from Exotic Caye Resort who can explain it very clearly and show you how to play the game legally. You may decide to open an IBC and you may need a work permit also depending upon what Trevor tells. It's real easy actually to understand this and safe.

AC - with regards to your last point. There is a residency calculation that you must do for both your US and "X" country (in your case Belize). Every country that I have heard about has this. In some cases (as in mine) you may be subject to "double residency". In my case this means that I still pay taxes within the country that I reside in the most (not the US), but on a reduced scale. If I choose to claim the "ex pat exemption", anything under the 91k is not taxable by the US and anything over is. But if this is claimed, certain benefit's are lost (funding IRA's, local deductions etc).

Tax laws are always decades behind business innovations, which is why this comes up all the time regarding internet businesses. Between accountants and lawyers in both countries (not Belize), I still have not received a real hard answer. But I do know the check-list and formula the IRS uses to determine where/if you "do" business in the US and you should really check into that. It's too long to post.

AC you seem like a good guy and here is some free advice (probably worth what your going to pay for it) Look at all possiblities but when it comes to taxes, don't get too cute. Everyone I know that has, did have a day of reckoning so to speak. Best to keep it simple. Good luck

But you still have to file taxes in the US. You can check current laws with the US Embassy, who in the past, have had a tax person in country prior to April filings.

Question.....if I have a Belize bank account that I have earned interest on, but I live in the US, do I have to file a Belize income tax return?

Loansum, good question, I tried to look it up but my head is spinning from trying to find an answer. Hopefully some one has it. I do know that I intend to check the box on my US 1040 that says I have a foreign bank account. I carry a relatively small sum for expenses but don't want to get tripped up in the USA.

Oops, haven't reported the interest on my US returns at all, since they don't issue a 1098....

Oops, now I have to report you. The IRS knows I saw this site and so I'm an accomplice if I don't -- sorry

Well played sir lol

I am told that you must be a bona fide resident and live outside the country for a full year . Jan- January (1 calender year), if you start in April you must wait til jan comes around to start your year to QUALIFY . Not sure if state or fed taxes sy you may not occupy any property you own while vacationing,or visiting states,soooo; Sammy wants you to get a hotel or room with your neighbor.
this information should be handled with your cpa, OOOOh i mean your tax lawyer. Almost forgot with int. law they squeeze cpa's , to give up your info . And from what they tell me your info. is confidential with a lawyer . Please speak to a professional tax person , these are issues our clients have dealt with .
We all have to keep in mind all that $ goes to great causes and people .My question ,Is a pay off earned income or unearned income ,hmmmm wonder if the polyies got that figured .Its just paper and they are printing more so we should have plenty .

Don't miss Lan's point that it must be earned income as an employee. You can not own the company, the IRS has stated to me directly when refusing my deduction.
Speaking of offshore accounts, this week in the paper the Prime Minister said he will begin giving out offshore accounts info to the IRS of any country who asks.He doesn't want to kick the legs out of the illegal money biz but says he has no choice.
Well spoke ragman

Tim, I believe what you say is correct. If you have a CPA who is also an attorney then any conversation between you including paperwork is privledged. That is not so if your accountant/CPA is not an attorney. Of course I'm talking US Law.

PS On top of everything else your accountant has to be careful what he tells you because he can be censured or fined or at least that is what my accountant who just retired informed me.

Thanks Otter.......and all this time I thought you were a really nice guy , but then again, I hear you're running for a political office......I guess that explains it

FYI, US residents with Belize accounts, there is more to it then just checking the box at the bottom of Schedule "B"

You must also file a TD F 90-22.3 (is the form # I think)

There is a de-minimus amount that if your account(s) did not exceed during that year then do not have to file the form.

The penalty for failing to do so if you get caught is SEVERE

actually I guess I should have said US Citizens, residency is not the determinant.

"I am not a lawyer nor a CPA, I just play one on the internet."