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USTaxAdvising
USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1093
Experience:  US Taxation specialist.
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NM gross receipts tax + S corp + foreign income?

Resolved Question:

New Mexico gross receipts tax + S corp + expat foreign income: I'm living in New Zealand for a few years but still considered to be NM tax-resident due to primary residence, etc. Eventually I'll be able to change residency to NV or FL, but until then.. My NZ salary is of course considered self-employment income in the US which I am currently reporting on sch C. I try to reduce the double-taxation via the FEIE and FTC. Naturally there is no escaping the SE tax, so I'm considering an S corp (but I'm aware of the dangers of allocating salary vs income). The S corp question would be moot however if the 7% NM GRT applied to the S corp's foreign income. I'm a physician, so it's a question of whether the service is considered "provided" or "occurring" in-state. I can't seem to find a definitive answer to this. I pay GRT with an unrelated LLC so I'm generally familiar with the concept. Thanks!

Submitted: 1 year ago.
Category: Tax
Expert:  USTaxAdvising replied 1 year ago.

USTaxAdvising :

Hello, I am not familiar with the NM gross receipts tax but why don't you form the S-corp in Delaware or Wyoming?

USTaxAdvising :

I wouldn't think that the NM Gross receipts tax would apply to a corporation outside of the state.

USTaxAdvising :

You could use the S-corp to charge your NZ doctor services and still get the foreign tax credit benefit. Basically the S-corp would be sending you offshore to work. Your salary would be foreign based as it was earned outstide of the U.S. and any income tax withheld on by NZ should also be FTC creditable.

USTaxAdvising :

Food for thought. Let me know if you have any questions on this. I know I didn't really answer your question but perhaps I gave you an alternative method to escape the NM GR tax. Perhaps you have already thought of this and then my points are moot. Let me know if that is the case and I will opt out to let another expert assist you as I am not an expert with NM GR tax.

USTaxAdvising :

Looking forward to hearing from you.

USTaxAdvising :

Best regards,

Customer:

Hi UTA, thanks for the reply.

Customer:

Just now I found a thread on a forum from a few years ago addressing parts of this issue. If the buyer of my service is outside of NM then no GRT is due (unless there was a time when the buyer enjoyed use of the service in-state). But in the NM regs it also says I must obtain a "nontaxable transaction certificate", or some other documentation to prove this. That seems like a gigantic pain. But the forum also states that if I am outside of NM as the seller than no GRT is due either. But how these apply specifically to foreign physical presence was not addressed.

Customer:

Your idea of using a non-NM S corp is a good one. I want to hire professional help to administer the S corp anyway, so I can use a NM firm and hopefully they can answer the GRT questions as well. Thanks very much!

Customer:

John

USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1093
Experience: US Taxation specialist.
USTaxAdvising and 3 other Tax Specialists are ready to help you

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