Hi Experts,
I will be relocating to Texas on a L-1 Visa with my wife.
I will have 162K Yearly so I guess my Tax declaration will be extremely high.
Is there any legal way to minimize the taxes considering the Company is a multinational and they can pay me from any place to any place? (They have offices in many countries).
They might even pay me to a Tax Heaven from an office outside U.S. but I guess this would invalidate my visa since as far as I know you need an Employment contract in the U.S. to work there.

Basically the question is:

With L-1 Is Income from other sources than U.S. not taxable?
If yes, could I split my Income between 2 contracts one in a Tax Heaven Country and another one in U.S. and Legally pay only the amount of the U.S. Employment Contract?

Thanks a LOT.

Sorry, your questions denote a level of sophistication not normally seen on this forum.

How long are you going to be in the U.S. If it's less than 183 days, and your pay originates from a location other than the U.S. then you might be able to avoid taxation by the U.S.

However, holders of the L-1 visa who stay longer than 183 days are taxed as resident aliens, which means you are taxed on your world-wide income, so it does not matter from which country you are being paid.

Thanks AtlantaTaxExpert for your prompt answer (by the way I was convinced to post here only after having seen your knowledgeable answer you have given to others).

That means even splitting the income will be useless (since I will be taxed on a worldwide basis).

I will spend more than 183 days in the U.S.

This is the calculation I have got from our U.S. office:

Salary $162240.00
Taxes 7.65% (12411.36)
Total $149,828.64
Fed (2) (46,301.14) - this would be your federal taxes based on being
Married with 2 allowance
Net Income $103,527.50

Based on a worst case scenario.

Is there any way I can pay less taxes? I would be happy keeping my taxes around 30K yearly.. Bear in mind the company I work for is willing to do anything to make me happy (obviously keeping the gross salary the same). This could include.. making my salary less but including in the contract expenses (are they taxable?) etc..

If this answer does involves too much research I am happy to know just if you believe it's possible to bring down the taxes to 30K or less (we can then continue the discussion privately, under the right retribution).

Thanks again.

You are correct! SPlitting the income will not help!

The 7.65% taxes are the Social Security (6.2%) and Medicare (1.45%) taxes. The federal tax withholding looks about right.

DId you pay for moving expenses for yourself and your wife without reimbursement? If so, the cost of the move (to include your wife's airline ticket) can be deducted as a moving expense.

If you properly account for your expenses (submit receipts and an expense report, the the reimbursement is NOT taxable. If, however, you are merely paid a per diem amount with no accounting on your part, then the per diem will be considered taxable income.

If you work and live in a high tax locale (like New York City), it is likely the local and state income taxes will exceed your $10,300 standard deduction. Texas, however, as no such high-tax locale..

If you are going to be in the U.S. for less than a year, you can make the argument that the work in the U.S. is a temporary work assignment and your daily costs (but NOT your wife's) can be deducted. This includes rent, daily transportation costs, food and utilities. If you are not reimbursed, you can deduct them as a employer business expense using Form 2106 and reported uinder Miscellaneous Deduction on Schedule A. However, once the expenses hits a certain level (normally 10% of AGI), the Alternative Minimum Tax kicks in and offset the deduction dollar-for-dollar.

It's too late for 2006, but in 2007, your wife could attend college or graduate school, and you MAY be able to deduct at least part of the tuition (if done in conjunction with the program of getting your taxable salary reduced by using expense reimbursement.

Feel fortunate that you are locating in Texas, which has no state income tax. If you were in NY, California or Massachusetts, you could count on paying anoth 8 - 12% for state income taxes.

Hello AtalantaTaxExpert!
My contract is for two years (with Golden Parachute if it's not renewed, I am fired or my visa expires for any reason). Basically I might be employed for the whole 7 years my visa allows me to stay.

The relocation expense is a good advice although is a "one-off" deduction that does not give me a more "permanent" solution for the subsequent years.

My objective would be to reduce the taxes eventually deducting services I need (for instance rent or may be a LOAN, fuel, whatever.. ). College and graduation school is nice but probably not what my wife would like to do (being already graduated).
I will probably do an English course for both of us (I hope this is deductable) but again those are one-off solutions and most probably not much of an impact on 60K taxes yearly.

Since my wife is entitled to work with her L2.. could it be a solution to split my wage among us two? (don't know if I am taxed so much due to the level of my salary?)
Is my wife revenue also worldwide taxed? (if not this might lead to another solution...
I am thinking to have her employed from another office like Cyprus so that she would be Tax Exempt on both countries)

Any other thought is welcome :-)

I believe your comments about feeling myself fortunate means you don't see many options to go much lower than the present "forecasted net amount".. :-(

P.S.: What happens to my social security amount once I leave the U.S. (for an Italian?)

Your wife's world-wide income is also subject to tax, so splitting the income between the two of you will have little effect.

As for the Social Security, your contribution may get credited to the Italian equivalent of our Social Security.

I believe I have taken already too much of your time.

Thank you for your assistance

Glad to help!