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I am an English Lady who has just got her card and I want to

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I am an English Lady...
I am an English Lady who has just got her green card and I want to set up a web based Life Coaching business, with Worldwide retreats 2/3 times a year. I live in California and want to keep my Tax costs down. My clients will be from around the world as well as some from the USA I expect. Where should I file my taxes as much of my income will be generated outside of the USA. I expect to travel extensively outside of the USA each year too and want to know how that can help me keep my tax liability down. I know that in the UK there is a system whereby you are able to reduce your liability considerably. Is there a similar system in the USA. How much time would I have to be out of the USA to qualify..? Thank you for the help in advance. Jacqueline x
Submitted: 1 year ago.Category: Tax
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11/14/2016
Tax Professional: Stephen G., Sr Income Tax Expert replied 1 year ago
Stephen G.
Stephen G., Sr Income Tax Expert
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Tax Professional: Stephen G., Sr Income Tax Expert replied 1 year ago

Well, to start with, if you are a "green card" holder, as you probably know, you are taxed in the same manner as a US Citizen. If you are a resident of California, you will be taxed on your worldwide income, no matter where the work is performed.

If you were to be subject to income tax in another country, then in most cases you would be able to use any tax paid to a foreign country as a credit against your US taxes, up to the amount of US Tax due on the same foreign work. That prevents you from being taxed twice on the same income.

Steve G.

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Tax Professional: Stephen G., Sr Income Tax Expert replied 10 months ago

Just checking in.....................

Do you have any follow-up questions?

Steve G.

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Customer reply replied 10 months ago
As a lot of my work will be overseas and I don't expect to bring it in to the USA maybe I can just bank it in Grand Bahamas or Grand caymans..! Or put it in Monaco/Lichtenstein..! Or create my company based in the Uk instead..?
Customer reply replied 10 months ago
Just been back to Uk and they seem to have much better opportunities to bring down Tax liabilities. If I only have 90 days in Uk per year, huge benefits. Sure there must be a international schemes to benefit me...? J xxx
Tax Professional: Stephen G., Sr Income Tax Expert replied 10 months ago

Hi Jacqueline:

Well, not really if you are a California resident & green card holder. As I said, you would be taxed in the same manner as a US Citizen, which means you are taxed on your worldwide income no matter where it is performed.

We do have what is called a "foreign income exclusion", but that only applies if you are working overseas and out of the country or if not working, away from the US for 330 full days out of 1 12 month period. I didn't get into the additional qualifying details since your description of your plans indicated that you would be working overseas for a series of 2 or 3 retreats a year overseas, but that you would be living in California.

Perhaps you would want to explore moving your residence back to the UK if the tax consequences are too ominous here in the US? The only other possible credits available to you, as I previously mentioned, isn't really a tax savings as you would be taxed on your worldwide income, but receive a credit against your US taxes for any tax paid to most foreign governments (except terrorist states).

I wish I had better news for you, but unfortunately the rules are pretty straightforward and as a green card holder you are taxed in the same manner as US citizens are taxed.

(Please don't shoot the messenger).

Thanks very much,

Steve G.

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