Under an S corporation, can you deduct business expenses with respect to the foreign earned income exclusion? 

Answer by Wray Rives: Your earnings through the S Corp do not qualify for the Foreign Earned Income Exclusion.  The salary you receive from the S Corp may qualify, assuming you individually qualify otherwise.  S Corp pass through income is not earned income and does not qualify for the exclusion, so you can still deduct […]

US Tax: Does a non-US-resident, non-US-citizen individual which works in a foreign country and provides an intangible service to a compan… 

Answer by Wray Rives: Just having a US bank account and receiving payments into that account does not alone subject you to US taxation. US citizens and residents are subject to taxation on worldwide income; however, non-US residents are only subject to US tax on income that is considered US source income.  Providing services from […]

Is the housing allowance for American expatriates in the UK considered taxable income? 

Answer by Wray Rives: It is possible that some of your foreign housing allowance may be excluded from regular income tax.   You calculate your daily housing expense and deduct a base housing cost standard which is equal to 16% of the Foreign Earned Income Exclusion.  For 2014, you would add up your total foreign housing […]

If my corporation leases an apartment for one of my employees does the company get the tax deduction? 

Answer by Wray Rives: Yes if the corporation (employer) pays for the housing, then the employer gets to take a tax deduction for the cost.  The housing is additional compensation to the employee unless it meets all three of the following conditions: On the employer's business premises.   For this exclusion, your business premises is generally […]

If I e-file my taxes at the end of January (2015), when should I expect to receive my refund as a direct deposit? 

Answer by Wray Rives: You might actually receive your refund quicker if you wait and file after February 15.  80% of fraudulent refund claims are filed within the first 2 weeks that the IRS opens up e-filing each tax season.  As a result the services has implemented significant additional checks on early filed returns showing […]

Does a new vehicle under my personal name qualify for section 179 (considering it is 80% for business use)? I’m the sole owner of an S co… 

Answer by Wray Rives: An S corp owner can purchase an auto personally and if you use the vehicle more than 50% for business, then  you can take a Section 179 deduction; however, you will probably receive a larger deduction by having the corporation purchase the vehicle.  If you purchase the vehicle personally, then the […]

I am starting a b2b service company mainly servicing my state (Massachusetts) and then eventually going multistate. Is the best strategy … 

Answer by Wray Rives: First I would suggest you understand the "advantages" to Delaware incorporation, which are legal and not tax related.  If anything it is a tax disadvantage to incorporate in Delaware and operate in another state.  If legal protection and choice of venue in the event of you and your business being sued […]

My business partner and I have registered a LLC in Wyoming. We are a software startup and have not yet made any income. Neither of us is … 

Answer by Wray Rives: A partnership is a pass-through entity, meaning all the profits and/or losses will flow through to you the individual owners.  You do have to file a Form 1065 for the LLC if you are choosing to be a partnership.  Individual owners do not need an ITIN to file a 1065; however, […]

What are all the home office deductions that can be taken for telecommuting? Will deductions affect capital gains when selling down the r… 

Answer by Wray Rives: First to take a home office deduction you need to have an area of your home that is used regularly and exclusively for business.  It does not have to be a separate room, but does have to be used only for business purposes, so if you work at your dining room […]

How do you elect your existing single member LLC in Texas, USA to be taxed as an S corporation? 

Answer by Wray Rives: To make the election, you will need to complete a Form 2553 and mail it to the IRS.  Texas does not require anything and making the election will not impact your Texas franchise tax reporting. There are a few items you need to note. Because you are in Texas, a community […]