Hello Everyone

If I were to make some money overseas in a cash deal (real estate, about 100K or so), how would I bring it back to the US and pay taxes on it? Would I just put the money in an account there and then wire it over, and claim the money as income on my return for that year? Is it as simple as that? Would there be a way to have that money sent to me as a "gift" or a "loan"? Is there some creative way to do this?

My friend is about to make some cash in europe and we have been arguing about the options he has to bring this cash over while paying the least amount of tax on it.

Thanks in advance.

If you live in the US, some European countries have tax treaties with the US, so you may not have to pay taxes depending on what European country it is coming from. If you don't want to say here what country, then Google 'tax treaties with the Unites States' and you will see a list of these countries.

You don't have to be creative if this is the case. Have the money wired to your bank and inform your bank they will be receiving a certain amount.

Tick

tickle,
Thank you- tax treaties meaning what- I would pay the tax in that country and then not pay it here because I have already paid it? Or are you saying I would not pay at all?

Thanks again!

Hi again, hamlet, this IRS website (and I hope you can access it, if not enter US tax treaties in google) will explain what you need to know.

http://www.irs.gov/businesses/intern...=96739,00.html

Tick

I just read about the treaties, and I don't think this applies to the situation I am asking about.

The deal will be done in cash in the other country, so that cash portion of the deal will not be reported. The cash will then be deposited into an account, but most likely one in panama or some other offshore account. From what I understand, this is a very common way of doing real estate deals in this particular country. The question is, how to you get the money from that account over to the US in a legitimate way?

Any suggestions would be helpful!

If you are asking about an underhanded deal, hamlet, I don't think anyone here will answer you directly. We have to be completely honest in telling you this. If you want to hang around to get an answer, and I hope you do, that would be great, but don't hold our breath. If you have a good attorney who can advise you on this, that would be a good way to go.

On the other hand, if the money is in a legitimate bank off shore, then there would be no problem transferring it to the US, but the IRS would be notified by the bank eventually if it is an amount far exceeding what they normal receive and the account holder has not informed them of the transfer.

Tick

Tick,
I had a feeling you might say that- but I appreciate your time! I will definitely stick around just in case someone has a suggestion. I told my friend that hiring a good tax attorney would be a good idea.

The money will be placed in a legitimate bank offshore- it is one that his family and some friends have used for years to keep their money. None of them live in the US, so he can't ask them how they go about bringing money here to the US.

Here is a question- If he were to just wire himself money from the account, what kind of information would the US bank be able to access regarding the transfer? For example if he sent himself 5,000 or so, would the US bank be able to see that it came from an offshore account, and then "alert" the IRS?

Sorry, you will have to report money coming into the US,

And "cash" in that size would be some check, or bank transfer, not physcial cash.

You bring it in by merely doing a wire transfer, or use of international bank that has banks in US and the other nations

Fr_Chuck,

Thanks for your... errrr... response.

I am well aware that the "cash" would have to come in as a check, wire transfer, etc. I was merely mentioning that the real estate DEAL would be DONE in CASH. Obviously that is an imortant component in the scenario.

I am also well aware that he will be paying tax- the question is what kind, and how to pay the least amount. I suppose you didn't notice in my first post that I asked how to bring the money in and pay taxes on it.

I also asked about him wiring the money to himself and asked what the tax implications are for that- ie- does he just report it as income to the US, will the US be able to access information about the offshore account?

Thanks, but I would love it if someone could give me an answer that is a little more productive as far as my questions go. You kind of answered things that I was not asking, and quite frankly pointed out the obvious.

hi hamlet. $5000 dollars coming into a US bank account would hardly constitute the bank alerting IRS. That is a moderate amount nowadays and no one will worry about that; I am thinking if 250,000 or so came in all at once, then that would put up red flags.

I guess you looked at the website for tax treaties and decided the country where this transaction was taking place was not one on the list. Yes, he would report as income, I don't think at this point he would have to declare the source, but he would have to pay taxes on it if it was in a regular bank account. I don't know how that could be avoided. The best defence is no defence I guess is what I am saying. Just make your transactions in small amounts over time if you can do that. I think that is a wise choice, or maybe he has more then one bank account at different banks?

I don't know what your deal is, realestate, I think you said. That is not important or pertinent to this thread.

I don't know how you value free advice, we are all volunteers here helping people with whatever they need, to the best of our ability. I would advise hiring an attorney or someone versed in the transaction there and over here that you want to accomplish.

tick

Tick,

Thanks so much- I think your responses are leading me in the right direction. I told him to hire a tax attorney, and I really think that would be the way to go.

I really appreciate you taking the time to send me the link for the treaties- I emailed him the link, and the list does have his country, so that is also a positive.

As long as he can report the money as regular income, I think that would be great. I think what would have been better would have been for him to report the money as capital gain in the other country, which it is, and then because of the tax treaty he would not be charged for US capital gain. I think it is something like 17% as opposed to income tax which will be closer to 33%. Since the deal is going to be done in cash though- he can't do it that way.

I see what you are saying about the deposits. I will show him what you wrote.

Thanks again!

I guess also, does he have to move it all right NOW, can he move some, a little at a time

Fr_Chuck,

He doesn't NEED it all now, no... He would just rather have it here in the US at his disposal than in another country where it is of no use to him now.

Thanks again!