Tax Shelter overseas

[TrunkMonkey]

Hi,

I have about 400K saved in non retirement accounts. I wanted to know, is it possible to move the money overseas to avoid taxes? I am wondering because the capital gains rate on dividends is changing and other taxes are increasing.

Any info on this?

Thanks

[GrimJack]

No one goes broke paying capital gains taxes but people go to jail trying to avoid taxes. Keep jail in mind when considering tax shelters. Read the 'jurat' statement at the end of your tax form and understand what you are signing

“[U]nder the penalties of perjury, I declare that I [the taxpayer] have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.”

Let me emphasize that for you: I declare that I [the taxpayer] have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.

It does not matter where you stand on taxes, when you sign your 1040 form you are signing a legally binding document so if you find someone who makes a tax shelter for you that ends up being illegal, you are liable. They might defend you in tax court, but you could go to jail (though most avoid jail time on the 'best of my knowledge') and/or pay penalties, fines, and interest

The IRS has recently forced the Swiss banks to release the names of US citizens who have been 'hiding' money in secret accounts. IRS has declared a limited "all ye, all ye out's in free" (ollie ollie oxen free?) for US citizens to declare those funds. There might not be any place to hide it, if that is what you were thinking.

[MonkeyMama]

No one goes broke paying capital gains taxes but people go to jail trying to avoid taxes. Keep jail in mind when considering tax shelters.

Agreed.

IRS is coming down on these shetlers very heavily right now.

In general, "tax shelters" are for billionaires. For middle class folk? More hassle (& expensive) than its worth.

[TrunkMonkey]

Thats too bad. Yes no one goes broke paying taxes but they will end up paying quite a bit.

For example if dividends are taxed at 35% personal income, and "selling" in the mutual fund is also taxed it isnt an exaggeration to expect that 2% of your earnings go to taxes.

Over just 25 years assuming 8% returns this will result in

400K * 1.08^25 = 1.7 Million

vs.

400K * (1.08 - 0..02)^25 = 2.4 Million

~800K or a decrease of about 38%.

Unfortunately this really hurts savings for retirement

[jaine]

So this is retirement savings? And you're already maxing out the 401K / traditional IRA / SEP-IRA / etc, to the point where you have to use a taxable account for retirement savings?? If so that's a pretty impressive amount that you're saving each year.

If you're not already maxing out the tax-deferred retirement contributions, then you could start now. It would help a little... effectively moving your savings slowly into tax-deferred accounts.

If you don't like the tax rate on dividends, then use your taxable account for investments that don't earn dividends.

[GrimJack]

35% implies an income of more than $372,950 per year - get a better financial adviser ffs.