Won the stars $500+$30...

[yt_]

If you were English you wouldn't pay a penny in tax on that win. never mind eh, I'm sure the rest of the money will make you more than happy, well done!

[fnurt]

[ QUOTE ]
Have it paid to your S-corp (300 to create one), and then you can pay yourself a 1-time dividen at the end of the year of 80k. Of that, you will only pay dividen taxes of 15%.

-VI

[/ QUOTE ]

This is very bad advice. You should speak to a tax authority if you are considering setting up anything of the sort.

[juris]

This is not sound advice. You are obligated to pay taxes on gross income for the calendar year. Guess what? That money is all gross income-yours.

Transferring it to anyone or anything does not mean you do not have to report it. It's creative advice, but leaves you wide open to an audit and penalties.

[JARID]

[ QUOTE ]
Have it paid to your S-corp (300 to create one), and then you can pay yourself a 1-time dividen at the end of the year of 80k. Of that, you will only pay dividen taxes of 15%.



[/ QUOTE ]

Vandalay, with all due respect this advice is quite reckless.

First, S-corporations do not pay dividends because they do not have any accumulated earnings and profits from which to pay dividends. (The exceptions are S-corporations that were C-corporations or S-corporations that formed prior to 1983. But this is not the case here.) By contrast, in an S corporation, all business profits "pass through" on a K-1 to the owners, who report them on their personal tax returns. You can take a "distribution" prior to the completion of your K-1, but it still listed on your k-1 and is still taxed as ordinary income. Some owners take funds as needed and report them as distributions, thus avoiding Social Security taxes . However, the owner is the company’s employee and payments of profits are like wages.
Second, an s-corp that doesn't pay a reasonable salary could be a red-flag for an audit.

Third, many people can file Articles of Incorporation, pay the fees, and think that is all that is necessary to complete the formation of a corporation. If they do not issue stock certificates, create minutes of the organizational meeting, elect or appoint directors and officers, authorize banking, adopt bylaws, and generally tending to setting up corporate housekeeping, the IRS will be able to disregard the corporation and go after the owner individually. All of the benefits of being incorporated will be lost. If the principals of a corporation do all this correctly, then fail to hold annual meetings, file annual registrations, and generally treat the business as a business, again they could lose the corp.

I think better advice here is for our hero to consult a good CPA or tax attorney which it seems he is ready to do. If I came off sounding like a dick here, it was unintended, your advice just seems different from what I know to be true.

Regards,
Jarid

[USCUNC]

Jarid,

You sound like a tax accountant - or one with experience. Your answer couldnt be more accurate.

The service will also look at the "real" business aspect of the tax haven - and if its a crock - then your a crook. So best thing to remember -

"Uncle sam may not be your friend but he is definitely your business partner - if you don't pay him - he gets pretty steamed."

Regards

[SenorBeef]

Anyone have a rough estimate of how much I'd be looking to pay after getting whatever tax breaks I could? Like 30k?

[JARID]

USCUNC,

[ QUOTE ]
You sound like a tax accountant

[/ QUOTE ]

Hey, whats with the insults? I don't even know you. [img]/images/graemlins/wink.gif[/img]
Just playin', I do work in the financial industry and accountants sometimes end up as hurdles for us to overcome.

[ QUOTE ]
The service will also look at the "real" business aspect of the tax haven

[/ QUOTE ]

Very true, but I am not even speculating on the validity of a "poker corp" it just needed to be said that it is not as easy as paying a little fee and it would be a shame for a bunch of 2+2ers to run out and set up S-Corps so they can pay themselves "dividends" at 15% tax, lol ahhahha...ah thats a good one.

Anyway, thanks for lending some credence to my points. You a Trojan or a Tarheel, or am I missing the purpose of your name?

-Jarid

[gcDanno]

He is a Gamecock first and formeost, and then a TarHeel (oh the shame of it all).


btw; congrats to SenorBeef. Awesome take. We are all envious, except for the Fossilman of course.
gc

[USCUNC]

Well Jarid, you talk about acct's like i do lawyers.... necessary evils...

Thanks for helping this dude out. Also, since this isnt "work" related but misc. income there will be no self-employment tax - so that will save him 15% - the tax bite will be at his marginal tax rate - and may screw up some phased out deductions if his other "real" income is too high - ie his AGI - is in excess of about 150K.

its the price of sucess - also - unless he will face state taxes as well.

And gc is correct - im a gamecock! first and foremost.

Regards

[gergery]

The rules on US citizens paying taxes on income are highly dependent on your residency. If you live outside the US for the majority of the year (~11+ months) then you do not pay taxes in the US. Actual tax due depends on the particular country and the number of days you reside in the US in a tax year.

On the S-corp, you can clearly set one up and adjust the type of payments you distribute to yourself to reduce taxes significantly (ie. shift payments from salary to dividends). But the key question is what IRS say about this and what they will allow.

You really need to talk to an accountant for details with this much money at risk, and you could also talk to the IRS for free and anonymously.

Out of curiosity, do you plan to ask your accountant for advice on how to play poker?

--Greg