Incorporating in the Caymans

[Alacrity]

Does anyone have any experience or contacts for incorporating in the Cayman's?

After the wife finally getting out of residency we were stunned by this years tax bill. I do IT consulting and have been incorporated in Delaware for about 12 years.
With the change in tax laws, moving my company (of one) to the Cayman's would save about $75,000 a year
I'm not into doing anything illegal and I've discussed this with tax lawyers. However looking for representing agents in the Cayman's is not something that they advertise. And those that do, I'm looking to avoid.

[diggitydot]

Sorry - I've got no info for you. We have a crazy high tax bill, but I'm cool with it. We've benefited from federal funds and I'm OK paying it now they we're in a position to do so.

[houseelf]

Nope. We formed a corporation here in the U.S. for DH's consulting work in order to benefit from the corporate tax rate. It sounds like you have enough income that this would make a big difference. Good luck!

[spotty_dog]

Nope. We formed a corporation here in the U.S. for DH's consulting work in order to benefit from the corporate tax rate. It sounds like you have enough income that this would make a big difference. Good luck!

How is he not a pass-through? I smell something new to learn about taxation. (Oh, wait, you mean he's an S-corp who's drawing less income than he's earning and electing the remainder of his business profit as a distribution...)

Alacrity, I feel your pain but you know what they say, it's overall a good problem to have. If your consulting alone is responsible for that amount of tax, then you are doing pretty darned well. Or working too much. Either way, I don't see how moving your business address offshore wouldn't be tax evasion since you are clearly physically located and doing business in this country, and particularly, in your state. But then, see also: so much to learn about taxation.

[Vanquisher]

We are a PLLC, but file taxes as an S-Corp.

[spotty_dog]

We are a PLLC, but file taxes as an S-Corp.

With employees and overhead and a practice to build, that makes perfect sense to my muddled little novice tax nerd brain.

[Alacrity]

Alacrity, I feel your pain but you know what they say, it's overall a good problem to have. If your consulting alone is responsible for that amount of tax, then you are doing pretty darned well. Or working too much. Either way, I don't see how moving your business address offshore wouldn't be tax evasion since you are clearly physically located and doing business in this country, and particularly, in your state. But then, see also: so much to learn about taxation.

It's tax evasion if they pay the check to me. Or, if I pull the money into the US from the Caymans. As long as it's paid to the Caymans and kept in the Caymans it's tax deferred. I pay taxes when I pull it out or pay myself. As soon as *I* touch it (instead of the company) it's taxable. It's like a big honking IRA. Sound familiar? (hint: Mitt Romney and I went to the same high school).
What is driving this is my participation in an 401K just got limited. Plus when you go past a certain point I cant participate in an IRA. All my IRA money was pulled out to pay for the wife's medical school. $6,000 a year is not going to make it for retirement.

[spotty_dog]

Ah, I think I see. It's like an S corp but instead of paying the corporate tax rate on the shareholder distributions you're paying a zero tax rate and not taking the distribution...at least, as you say, for now. But when the sole proprietor is an independent contractor without employees, I get so confused about how you determine your reasonable salary. If your clients are paying you what they feel your expertise is worth, how is that not the same as what your value would be if salaried? Ennyhoo, I'll save that question for the CPAs I guess.

What is driving this is my participation in an 401K just got limited. Plus when you go past a certain point I cant participate in an IRA.

If you're a sole proprietor you can put up to $51,000 pre-tax in a solo 401(k) this year ($17,500 salary deferral and an "employer match" of $33,500 or 20% of net business profits whichever is smaller). You can also put $5500 in a non-deductible traditional IRA. And convert it to a Roth if you so desire, although you need to be aware that all your previously deductible traditional IRA funds will be considered together for the conversion and you may pay pro-rated tax on their basis . Your spouse can also make a non-deductible contribution and backdoor Roth conversion. If she is working as an independent contractor she can also make a solo 401(k) contribution; if she isn't, won't her employer provide some sort of 401(k) or 403(b) to which she can contribute at least $17,500? You can each buy $10,000 per year of I-bonds, which dividends are tax-deferred until maturity. And of course there's always taxable investing. I don't see how the Caymans are going to be the difference between retiring and not retiring.