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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1408
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I am an American Citizen who has been working on various Expatriate

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I am an American Citizen who has been working on various Expatriate assignment in Russia for the last 16 years. I pay both Russian (13%) and USA (33%) income taxes. Although I visit the USA from time to time, it is not practical for me to run a business in the USA and take many of the typical "pay no tax" strategies often touted. However I would like to lower my U.S. taxes. I am aware of some banks who can set up trusts in London and/or offer services such as: Private Investment Companies (PIC); Revocable Trusts; Discretionary Trusts; or Private Trust Companies. I want to do everything properly, but would love to lower my taxation using one of these vehicles if recommended?
Submitted: 4 years ago.
Category: Tax
Expert:  Jax Tax replied 4 years ago.

Jax Tax : Unfortunately, in order to create any of the above accounts you mist first earn the money. You cannot simply pass the funds from earnings directly to such accounts bypassing yourself and tax.
Jax Tax : You should however be getting credit for taxes paid on foreign earnings when filing your US return preventing double taxation.
Jax Tax : Regardless of any investment account created, you will have the obligation to report earning on your US return again receiving credit for foreign paid taxes.
Jax Tax : If you own your own business, you may take advantage of a SEP IRA putting away up to $49k tax defferred per year.
Jax Tax : You also have the option of establishing what is called a Rabbi Trust which is another method of differing tax on your income. Both options allow for a current reduction in taxable income, tax differed growth, bit eventually tax when the money is withdrawn.
Jax Tax : A foreign earned income exclusion exists but phases out based on earnings which is likely why you have not mentioned such. It also requires you be out of the US 330 days per year.
Jax Tax : If by chance you have been completing your own returns and not including the foreign tax credit, you need to go back and amend your returns to include form 1116.
Jax Tax : If you establish trusts other than those I have mentioned, you will not see any tax savings. You will increase FBAR requirements and could possibly find yourself with an account that could not be transferred to the US in the future and retain any tax benefit it may have.
Jax Tax : The best option is a Rabbi Trust and SEP IRA.
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Expert:  Jax Tax replied 4 years ago.
Please let me know if I can clarify.