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I am an English Lady who has just got her green card and I want to set up a web based Life Coaching business, with Worldwide retreats 2/3 times a year. I live in California and want to keep my Tax costs down. My clients will be from around the world as well as some from the USA I expect. Where should I file my taxes as much of my income will be generated outside of the USA. I expect to travel extensively outside of the USA each year too and want to know how that can help me keep my tax liability down. I know that in the UK there is a system whereby you are able to reduce your liability considerably. Is there a similar system in the USA. How much time would I have to be out of the USA to qualify..? Thank you for the help in advance. Jacqueline x

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    Unfortunately, just forget it. No matter what fancy structure you have, once the money comes to California you pay exactly the same income taxes as anyone else. If you want to move to somewhere other than California (or indeed the USA), do that. The USA is nothing like the UK or Europe. In the US everything you do (worldwide, in total) utterly and completely belongs to the USA. End of story. You belong to the USA. Note that any bank accounts, corporations, businesses, entities - anything whatsoever you have outside the USA you must report to the USA or straight to jail. – Fattie Nov 11 '16 at 23:43
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    Don't get upset about paying income taxes. The more you pay, the more money you made. Short of moving to another state, you're going to have to pay CA taxes – Rocky Nov 12 '16 at 1:56
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    "Short of moving to another state, you're going to have to pay CA taxes" Precisely. "In movies" you see people doing nonsense like having! a company! in a offshore!! location!!!! It means: utterly nothing. Zero. It doesn't matter who pays you, when the money lands in California, it's normal income like any other ordinary person working in California. If you dislike the tax system in the USA, m-o-v-e move. Unfortunately that's the reality! – Fattie Nov 12 '16 at 2:17
  • Related resource: rapidtax.com/blog/california-tax-income-earned-states/… as well as: rapidtax.com/blog/work-remotely-pay-taxes/#.WCdvl7IrLX4 So yeah, moving your residence out of California can save you some California income taxes, but it won't save you US federal taxes. I don't believe there is any UK-like system for reducing US taxes by arguing you earned it abroad, as even people living abroad have to pay US taxes on their income: irs.gov/individuals/international-taxpayers/… It's just the law. – BrianH Nov 12 '16 at 19:43
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    @BrianDHall: not entirely. As one of the links on that page explains, US individuals who live (at least 330 days of the year) and earn income (that is, from employment NOT investment or retirement) abroad can exclude it from US income tax up to an inflation-adjusted limit, currently $100,800. This is unimaginatively called the Foreign Earned Income Exclusion. And for other income IF the foreign government ALSO taxes it, you can take (with some limitations) a (nonrefundable) Foreign Tax Credit against US tax -- so you can reduce US tax, just not total tax :-( – dave_thompson_085 Nov 14 '16 at 1:14

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