{"id":8261,"date":"2016-12-15T09:00:09","date_gmt":"2016-12-15T14:00:09","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=8261"},"modified":"2020-06-05T22:48:30","modified_gmt":"2020-06-06T02:48:30","slug":"invest-offshore-retained-earnings-united-states","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/invest-offshore-retained-earnings-united-states\/","title":{"rendered":"How to Invest Offshore Retained Earnings in the United States"},"content":{"rendered":"
You\u2019ve been running your offshore business for awhile and have some accumulated earnings and profits. You want to invest these retained earnings in the United States and prefer they be in dollars and U.S. products. Here\u2019s how to invest offshore profits in the United States by following Apple\u2019s example. <\/span><\/p>\n Over the years, Apple Inc. has been the poster child for U.S. multinationals sheltering profits overseas to avoid the IRS. Some point to Apple as an <\/span>evil tax avoider<\/span><\/a>. I say Apple is the leader in compliant and legal offshore tax planning. We should <\/span>learn from their example<\/span><\/a> and benefit from their experience.<\/span><\/p>\n Keep in mind that retained earnings in this case are the deferred profits held in your offshore corporation. They\u2019re from an active business run outside of the United States. They\u2019re foreign source income, not <\/span>U.S. source income<\/span><\/a>. <\/span><\/p>\n So, offshore retained earnings should be net profits in excess of the $100,000 to $200,000 FEIE. This is because the FEIE allows you to take out the cash tax free while retained earnings are tax deferred. They may be tax deferred for years or decades, but the bill will come due someday. <\/span><\/p>\n Let\u2019s say your business nets $1 million in 2016. You and your spouse take out $200,000 combined tax free using the FEIE reported on Form 2555. You now have $800,000 in retained earnings inside the corporation. <\/span><\/p>\n
\n<\/span>Also, offshore retained earnings should be profits after you take the maximum <\/span>Foreign Earned Income Exclusion<\/span><\/a>. If you are living abroad, and qualify for the FEIE, your first $101,300 in salary is free from Federal income tax. A husband and wife working in the business can take out over $200,000 tax free. <\/span><\/p>\n