ladislav wrote:

Last year my legal residency was in Kuwait but I moved to the Philippines later on and was working for Chinese and Russian companies online. I also worked for one California company. The last one issued a W-9 form. But it was for some $2500. I declared my residency as Kuwaiti and even my visa stipulated that. I also declared my Ca income and filed a non resident tax form with California tax board.
Now, if you are a US citizen/resident and you make money off a US source but live overseas, this may not be considered foreign earned income.
Winston had better consult an expat tax accountant

IMO there is probably no US tax liablity (except SE) even if earned from US source
IF
you have a US tax ID,
AND IF
you are an individual earning wages and self-employment income.

The $91,500 exclusion does not help with dividends, or with Schedule C earnings made using capital (like trading).

I think the US source thing WILL screw you
IF you do NOT have a US tax ID
OR are a foreign corporation (including an offshore corp) earning from US source.
Then it's 30 percent off the top.

It gets more complicated if you get cute and try to game it with an offshore corp or other entity. IRS has very smart guys. Yes Winston should consult someone. Or just retain a CPA who does expat taxes and pay up.

I have guesstimated the math and don't think it pays to try an offshore structure of any kind until AGI hits $100,000.

AmericanInMexico wrote:

This is one of the main reasons why people renounce their U.S. citizenship.

Of course (as you well know I'm sure), smart folks say that one would never want that particular reason to be on the record anywhere.

Renata wrote:

Question; What if you're like me, neither an american/ british/aussie citizen but your e-commerce site, domain, server everything is american hosted... what then? does it matter?

Hosting alone won't make your biz into a U.S.-resident under international treaty law (OECD), but active ecommerce hosting just MAY. This is disputed between big countries (US) and little countries of OECD. Three guesses who eventually wins.

If you actually own or lease a server, however, and do e-commerce, and your server is in US, then you are in their jurisdiction by their interpretation. Suggest you make other arrangements. They are only after the big fish right now - online casinos and stuff I think. No need to wait till they extend their net.

http://www.hcat.co/art.asp?art_id=125
"the OECD model convention and commentary do. According to the OECD, a permanent establishment does NOT include an Internet site, ISP hosting, providing a communication link, advertising of goods and services, relaying information through a mirror server, gathering marketing data and supplying information over the Internet. But a permanent establishment does include an unmanned server engaged in e-tailing sales and commerce over the Internet."

Solution:

Panama works for hosting - low latency time to US customers, plus great Mips..

.BZ website might work at least for b-to-b biz. If so but it from the university in Belize, not from GoDaddy so that your registrar is also non-US. Here's a link:

http://www.belizenic.bz/

eurobrat wrote:

I know papal will let you collect 20k without filing and tax free. Winston should just get s papal account and have the money dumped in there.

Not sure about this, perhaps it's as you say. But even if PayPal doesn't actually withhold, they will report on a 1099 to the IRS. So Winston will have to declare all income even if he does get to exclude the first 91,500. (PayPal and credit card reporting to IRS is brand new I think).

Also be advised that PayPal does track what ip address you log in from and will want to be kept apprised of travel arrangements - in advance.

US bank account should be fine to link with PayPal from a Taiwanese physical address, though. Or with a Taiwanese account. Either one.

Question for Winston or others:
I'd be interested to know if PayPal actually works for merchant card service in Taiwan, or just for remittances.

Why?

There are quite a few countries, like Taiwan/Thailand/Phil's, that don't get listed as getting top-tier service from Paypal for merchant accounts, but I'm not clear what functionality you lose, if any, versus top-tier service countries like China, Japan, Hong Kong.

oh thanks Jester; valuable info there
what would we do without you


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