If you are american but getting paid by an company from outside of america do you have to pay american taxes on the money?
By law all Americans must pay taxes on all world-wide income earned, although the reality is many do not because it is not on a a w-2 or 1099 tax form. The exception is for an american who lives outside the us for 335 days a year, then they are intitled to an estimated $80,000 tax exemption.
You could try creating a holding company in a place like bermuda or panama or the caymans and fiddle around with cash flow to make the taxes more favorable but if you hide it outright thats taking a pretty big risk if the money is anything significant.
This is a great thread but my Q is gonna take someone who really knows something about this stuff.... I am pretty much just starting out (6 mo.)... have incurred quite a bit of expenses... have no income to show for any of the expenses.... have not yet set up a biz or LLC yet.... when tax time rolls around, what do I do? Feel free to PM me if this is gonna get indepth or personal/confidential. This whole topic has really got me flumoxxed. Thnx, D.
The main question was about paying taxes. Yes, you have to pay your taxes. That's pretty simple. As to WHAT you have to pay, that's another matter. You can claim business losses on your taxes for a few years, before the IRS considers it a hobby. Since you are a small business, you have two choices come tax time. 1. Hire an accountant. I don't mean some firm. Just a guy that knows his stuff. or 2. Buy business tax software. It will cost you about $50. Come tax time you will find Quicken Tax and others all over the place at any office supply chain or software chain like Best Buy, Office Depot, Office Max and so on. Software might be a good way to go at first. It's all question based.
I'm sure if you were making millions a year then it might be cheaper to just toss the auditor a few bucks * legal note: don't do that *
Make sure you note the $84,000 exemption for people out of the country most of the year. That's a very important loophole that contravenes the general wisdom that "you have to pay your taxes." If you weren't in the country you don't, though you actually have to look into what kind of income qualifies as what depending on how you earned it as situations can get pretty crosswired in the world of being paid in one place by another place while holding another place's passport. Incidentally, we're the only major, developed Western country that taxes our citizens abroad for what they earn abroad (from abroad while abroad, not from home while abroad. There was an article about it recently: http://www.iht.com/articles/2006/12/17/news/expat.php The recent legislation really is a bit of a crock, though the tint of the article is a tad sensationalistic as well. Anyway, welcome to being beaten up because you're a minority interest group. Who cries for the expats? No one, heh.
I just quit my job as an auditor to be a full time DP stalker. If you want to save a lot of money, I recommend spending a good amount of money on a quality tax accountant. They will save you more money by finding loopholes you would have never known about from turbotax
Another tax question - What is the most you can make WITHOUT having to file taxes? Also where do the tax breaks fall between what salary ranges? Thanks
The tax table below will show in detail the Virginia state income tax rates by income tax bracket(s). There are 4 income tax brackets for Virginia. If your income range is between $0 and $3,000, your tax rate on every dollar of income earned is 2%. If your income range is between $3,001 and $5,000, your tax rate on every dollar of income earned is 3%. If your income range is between $5,001 and $17,000, your tax rate on every dollar of income earned is 5%. If your income range is $17,001 and over, your tax rate on every dollar of income earned is 5.75%.