Income earned by a offshore corporation but deposited into personal US bank account. Need to pay taxes to IRS?
Lets say I have an offshore corporation that made $100 through its website in 2007 which was deposited into a personal US bank account. Then $50 of the funds deposited into the US account was transferred into the offshore business account to pay off business expenses so that there is $0 in the offshore account after spending the $50 that was transferred and there is $50 still left in the US personal account. Would I need to pay personal income tax on the $50 that is left after the transfer or on the full $100 that was initially deposited? Can the US personal account be considered a holding account for the offshore corporation so that I do not have to pay any taxes to the US and only taxes to the offshore govt if I end up transferring teh full $100 to the offshore account? The funds were deposited by clients into a PayPal account for services rendered to the client.
Public Comments
- You need to pay taxes on all $100 because you brought all of it onshore into the United States. As soon as you bring it onshore it is considered income even though you sent half of that money back offshore without using it. It would be better to pay directly out of your offshore account next time and only bring the balance remaining onshore.
