OVERSEAS TAX FAQ #1: How can an offshore corporation be used to reduce U.S. taxation?
If you live in the United States while you do your work, you will pay U.S. tax on the income you earn. Using a foreign corporation while you are physically present in the U.S. does not affect your U.S. tax situation. If you retire to a foreign country and your only income is from a pension, investments, Social Security, etc., you will continue to pay tax in the States. There is no tax benefit to retiring abroad. If you live abroad, work for either a U.S. company or a foreign employer, and meet the foreign earned income exclusion requirements, up to US$91,400 in wage income (for 2009; the amount is adjusted upward each year) will be free of U.S. federal income tax. If you run a business or are self-employed, live and work abroad, meet the foreign earned income exclusion requirements, and operate through an offshore corporation, you could be able to reduce or even eliminate all U.S. tax on your ordinary income. If you operate a business from and reside in a country that does not tax fore
