What are tax havens and offshore bank accounts?
1. Tax havens function somewhat differently than the country you probably live in. Places like the Cayman Islands, Seychelles, or Labuan in Malaysia are small jurisdictions with small populations. They may not have a lot of natural resources that can be exploited. That forces them to come up with other ways to make money. These countries allow you to start a corporation there and pay annual fees (and usually, pay lawyers there to help you, hence stimulating the economy) which go into their coffers. They also allow for "trading" at no or very low tax rates, which helps bring money through their economy. 2. Offshore bank accounts are bank accounts in a jurisdiction other than your own. While "offshore" tends to refer to international financial centers that specialize in attracting foreign money for banking purposes, it's somewhat nebulous. The term "offshore bank account" has taken on a somewhat shady implication because it has been associated with hiding money or evading taxes. But you can open a bank account in the Cayman Islands, Switzerland, Hong Kong, or anywhere else and be fully compliant with all laws. 3. In the United States and most other places, yes. At least for now. For US citizens/residents, you must complete as many as several IRS/US Treasury forms each year depending on the value of your accounts. There is no such think as bank secrecy for Americans; you must report basically any account you have, any you must report any interest earned from said account and pay tax on it. However, having such an account is not per se illegal. There are, however, restrictions that governments are imposing to make it more difficult to move money abroad. Look at what's happening in Cyprus and how people aren't allowed to take money out of their bank accounts or out of the country. I suspect these will serve as indirect deterrents to offshore banking going forward.
Did John Kerry have all the offshore accounts and tax havens that romney does?
John Kerry just got caught evading Massachusetts luxury taxes on his 7million dollar yacht he bought a few years back. How fast you liberals forget scandals when they are on your side of the isle. Anyway, he had it built in New Zeland for some reason, instead of employing an American boat builder for starters. But the best part is how he avoided almost half a million dollars in sales and excise taxes by having the boat "birthed" in Rhode Island, even though he usually kept it at his Nantucket mansion. When this all came to light he was such a punk about it, practically yelling at any press who dared address the issue. He finally was forced to do the right thing, pay the taxes and birth the boat in MA. Here's a link for those in denial... http://www.newsmax.com/InsideCover/US-Ke... http://www.huffingtonpost.com/2010/07/23... http://www.foxnews.com/politics/2010/07/... http://www.nypost.com/p/news/national/sen_john_kerry_admits_he_mishandled_3H2rbXbdLD9G6q7m8uVixN http://blogs.marketwatch.com/election/2010/07/28/kerry-to-pay-yacht-tax-in-effort-to-cast-off-controversy/
Can I reduce my tax by using offshore accounts?
Yes you can and no you should not. Especially if you're a United States Citizen, you will get away for a short while, then the IRS will get a court order to go after your account no matter where it is.This was in the news about a decade ago, massive offshore accounts in Switzerland and a few other countries got raided by the IRS and guess what, only US Citizens accounts were investigated. This is because citizenship from the US Government gives them inalienable rights to invade your privacy and look into any possible circumvention of tax and other laws. To get away from taxes, you would need to renounce your citizenship and only travel here on business, which would then allow you to fall into a completely different tax bracket.Alternatively, you could ask corporate accountants how to reduce your tax liability or how to offset it.
Why do the rich use offshore bank accounts?
If your trying to drive a stake in Mitt Romneys heart on this issue. Would you like to include the following right along with him. 1. John Kerry and Wife. 2. Bill Gates and Wife. 3. Warren Buffett 4, Rockefeller 5. Duponts 6. Chuck Schumer and Wife. 7. Charles Rangle 8. Nancy Pelosi and Husband 9. Darrell Issa, 10. And over 50 of the fortune 500 companies in the United States. Just to name a few.
What are the pros and cons of an offshore account?
Firstly, what is investing offshore? There are loads and loads of media myths and even lies about this.Investing offshore just means you are investing in a place which is different to your residency. The media narrative is very 1985. We have the CRS now and most of this tax evasion stuff is media myth. Information is shared now.Want an account with HSBC London? You need to provide your Tax Identification Number (TIN). Want an account in Cayman Islands, Dubai, Hong Kong, Singapore or Isle of Man? Guess what you need to provide your TIN! And your information will be shared. This secrecy stuff is media nonsense.If you are a British expat living in Dubai, and you carry on investing in the UK, you are investing offshore. If you open up an account in the US, you are investing offshore.The pros are this:If you are living in a country with weak financial regulation, and considerable social, economic and political risks, why would you invest there? If you are an American or British expat living in an emerging market, it makes no sense to invest in your country of residence. If you are a local Russian or Chinese living at home, it makes no sense to have 100% of your assets in your own country. Owning assets outside your own country makes sense.Some offshore centers protect 90% of accounts, or even have segregated accounts. In comparison, in the UK, the government only protects 85k or 170k as a coupleIf you are an expat, it is usually a no brainer, unless you are American. You have two choices. Invest in your home country or another one. Both are offshore as I explained earlier.The cons depends on your country of residence. If you are already living in a stable, low-tax country like Switzerland, then you are already living in a place where millions of people want to put their money.And also, for Americans, the IRS is much more strict on this kind of thing with FATCA. For Americans living in America, going offshore usually doesn't make sense. For American expats, investing back home in America (which is offshore as I explained earlier) makes sense due to tax laws.Some readingOffshore investing for dummiesOffshore investing for British expats and residents
How do someone open a offshore account at tax haven countries?
Actualy it is not very complicated, you may find a lot of information and people willing to help here OffshoreCorpTalk - Home of Offshore Company Formation you can even find links to agents and banks that want to work with you in order to setup your offshore company and bank account.
How easy is it to set up an offshore bank account to avoid tax in your home country?
There are many misunderstandings about the purpose and usage of offshore bank accounts mainly promoted by bad researched news article.An offshore bank account is simply a bank account in another country where the owner is not resident in. The ownership has nothing to do with tax avoidance. All banks are required to identify the owner of such bank account. The vast majority of countries are members of CRS (common reporting standards) sponsored by the OECD. That means that your offshore bank will report your bank account balance and interest income annually to your local tax authorities if your country of residence is also member of the club.In addition there are a lot of country to country agreements for tax data exchange. Tax avoidance is in most of the countries illegal so better pay your fair share and sleep well.Also legal tax planning became much more complicated with the implementation of BEPS standards. There are still option to reduce taxes by moving to more friendly countries like the UAE. Even here you have to be careful as many high tax countries have very strict and complex regulations to escape their global tax rulings.Another option is to move some of your business into low tax jurisdictions. Here you have to make sure that your new business venture has real business substance and make business sense.
Transferring Funds from an Offshore Banking Account?
It appears that your friend paid you for services rendered in generating the $50k income. That makes it fully taxable to your regardless of where you deposit the funds. Your friend erred when he paid the tax on the full amount. He should have deducted the payment to you as it is a legitimate business expense. That's his problem, though, but doesn't change the fact that it's taxable income to you as soon as you receive the funds. Income taxes are due when the money is earned so you'd need to make an estimated payment using Form 1040-ES at the next regular estimated payment due date following the receipt of the funds. If you received the funds in the first quarter of 2008, that would be April 15th, 2008. Interest on the off-shore account is taxable when it is made availble to you, i.e. credited to the account. This is true even if you cannot withdraw it yet, such as with a CD or other time restricted deposit. No additional taxes would be due when you transferred the funds to the US however there are additional reporting requirements for off-shore accounts. You need to file a Form TD F 90-22.1 report http://www.irs.gov/pub/irs-pdf/f90221.pd... if you have control over foreign bank, investment or deposit accounts that exceed $10,000 in total. That is required even if you never bring the funds into the US. You may also need to file a Form 3520 informational return http://www.irs.gov/pub/irs-pdf/f3520.pdf when you repatirate the funds if the source of the funds was a foreign trust or if you assert that it was a gift. (If you attempt to claim that it was a gift, be prepared to prove that fact, including the details of the donor of the gift. The IRS will be looking for a Gift Tax return from the donor if they are subject to US tax laws and if none is filed they'll presume that it is NOT a gift.)