Big Mike 

I'd like to start a new subject on Tax Avoidance (legal). As many of you know, I am looking to move out of the country soon and "retire". Retirement is more a state of mind and financial independence, as I plan to continue to trade and would never imagine not trading. I've been trying to do homework on how to minimize taxes as a US Citizen but living in, and trading from, another country. I am hitting a lot of roadblocks. There has to be a lot of people here in a similar situation, so I'm looking for some suggestions to point me in the right direction before I hire a professional. Mike

Might be relevant to your post @Big Mike
(Apologies if it's been mentioned already)
hth

"The Ex-PATRIOT Act lies like a coiled snake on a table in the U.S. Senate. The longer title of this unenacted bill from 2012 is the Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act. Its self-description is, "A bill to amend the Internal Revenue Code of 1986 to provide that persons renouncing citizenship for a substantial tax avoidance purpose shall be subject to tax and withholding on capital gains, to provide that such persons shall not be admissible to the United States, and for other purposes."

The Ex-PATRIOT Act seeks to impose a perpetual exit tax and a re-entry ban on “specified expatriates.” A specified expat is anyone with a net worth of at least $2 million or a tax liability averaging at least $148,000 over the last 5 years. A renunciation of citizenship would be automatically viewed as a tax dodge. The person would need to prove his innocence to the IRS to become exempt from a permanent and annual 30% tax on all earnings from U.S. investments. The net worth level at which the tax triggered would undoubtedly sink over time and, perhaps, quickly so...

...As it is currently written, the Ex-PATRIOT Act would not be retroactive in its tax provisions. But 2013 may be the last year to use the old tax code....

The Act was introduced in May 2012 by Senator Charles Schumer (D-NY), read twice, and referred to the Senate Committee on Finance. It is likely to pass in 2013.. "

2014: TOO LATE TO LEAVE THE U.S.?

Thanks, but I don't want to renounce citizenship.

Mike

If you are old enough, you could trade from a Roth (of course it needs to be funded somehow)

Another alternative is to double up your size and pay your taxes :-)

Since we are in The Tax Thread:

Does anyone know the tax treatment of accounts lost as a result of the PFG bankruptcy. Are these loses claimed as capital lose, stolen property, or what?

Please don't say talk to your lawyer or accountant, some don't have one.

Cheers!

aslan 

If you are old enough, you could trade from a Roth (of course it needs to be funded somehow) Another alternative is to double up your size and pay your taxes :-)

And I do trade from a Roth but I also have other accounts which I can actually make withdraws out of

Mike

Big Mike 

And I do trade from a Roth but I also have other accounts which I can actually make withdraws out of

Then you are not old enough!

I am curious where you would want to move to?

aslan 

Then you are not old enough! I am curious where you would want to move to?

I recently turned 35.

See this thread on retirement locations:

Best Caribbean or Central America location to retire? (Now with South America!) I'm planning to retire to the Caribbean. Since futures.io (formerly BMT) has a lot of people from all over, I thought I could ask input from you guys on the advantages/disadvantages of certain locations (specifically if you live there or near by …

Leaning towards Panama for now.

Mike

Big Mike 

Yes, not willing to renounce citizenship. I agree it will involve an entity but haven't figured out the details yet. Possibilities include an entity not owned by a US citizen perhaps. Sent from my Nexus 4

@Big Mike

Your options are very limited no matter what some "creative accountants" may say. Some will advise the establishment of a corporation in the BVI citing privacy of the identity of individuals etc.

The problem as the controlling shareholder any income from the corporation is treated as individual income in the eyes of the IRS and must be declared as part of worldwide income. If you do not declare the income you are evading tax pure and simple. It's also difficult to defend significant business expenses to reduce income if you are a sole proprietor.

If you gift the funds to a non US based person/entity this would take years and could be subject to specific gifting provisions. That person would need to be trustworthy and be required to declare the income as worldwide income unless he or she lives in the BVI, Malaysia or another country that doesn't tax their residents on offshore sourced income. Having said that, if they are not US citizens those people will lose the tax residency of their old country once they have been out of the country for 183 days meaning they won't need to declare offshore based income.

Unfortunately being a US citizen is a "tax ripoff" pure and simple.

In any case, your best bet would be to talk to a highly experienced international tax expert from a reputable firm (that doesn't sell offshore structures) asap as this is a complex area and is individual specific. The sooner the better as many tax planning initiatives are best put in place many years prior to a planned departure.

Cheers
DJ

Thanks DJ. I've talked to a couple of expert tax advisors but they both said basically I was SOL so I was hoping for a different answer, or someone with more international experience that knew a way around it.

I am not trying to evade, just avoid. The potential savings as you know is quite large so I wanted to keep exploring options. I was hoping that living outside of the US would open up new options not available to others living inside the US.

Ugh.

Mike

IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year

IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year