US entrepreneurs abroad, as well as foreign entrepreneurs and investors in the US, have to file US tax returns.
Fortunately, there are many opportunities for individuals and businesses to tax optimize. The way a business or a compensation plan is structured has a significant impact on the tax burden in the US.
We understand the US tax system for expats and global/virtual small businesses like few other tax accountants do.
At Global Expat Advisors, we don’t just prepare tax filings and ensure compliance with filing requirements. We proactively develop a tax plan with you that optimizes US taxes for your business, investment, or expat assignment strategy.
Through our sister company, Online Taxman, we have extensive experience filing individual, trust and business tax returns, all done securely online.
For our corporate clients, we also offer preparing individual US tax returns for expat employees.
A US citizen who runs a global or virtual small business can leverage specific tax-saving strategies.
Entrepreneurs often start out with an LLC as business structure to protect against liability. At a certain income level though, an S Corporation is more beneficial. It saves on self-employment tax and offers better retirement saving options through a solo 401k.
We can help open these structures as well as set up payroll and 401k services for them and assist in all tax filings.
Foreign business owners will find an LLC in the US helpful for opening a US bank account and receiving payments in the US.
Many foreigners however are concerned about the US tax obligations this may create. Fortunately, LLC income can be tax-free in the US if certain requirements are met.
Effectively, a foreign entrepreneur with no US presence is not subject to US tax. For example, a foreign software company without US office or representative could benefit. Similarly, a non-US entrepreneur, who sells into the US using Amazon’s “Fulfillment by Amazon” service, could also qualify.
We can help set up this structure to ensure it is done properly and free from US tax. Furthermore we can advise and assist on the annual filings and compliance.
For example, foreigners investing in US real estate can purchase the property with an LLC. The owner of the LLC however should be a foreign company or trust in order to avoid estate tax for the owner’s heirs.
Foreign owners of real estate and other investments need to be aware of many filing requirements. In addition there are potential tax treaty implications if the investor is a resident of a treaty country.
Global businesses with US citizens employed abroad can help their employees minimize US tax through creative assignment planning and compensation structuring.
Expat employees can take advantage of special exclusions and deductions such as the Foreign Earned Income Exclusion or Housing Deduction.
It is important to educate both expat employees and HR of these obligations and advantages, as well as ensure the policies reflect these obligations and are clearly outlined to all staff.
