# USA: How to minimize tax



## debbie790 (Dec 28, 2010)

Hi,

I am a USA citizen residing in UAE (married to a non-USA individual, no dependants) having employment income, real estate loss (have investment property outside of USA) and K-1 (loss every year, I'm a limited partner), filing "Married filing separately"

1. How to minimize my tax bill, apart from availing form-2555 (foreign earned income & housing exclusion)?

2. My spouse is self-employed and owns a freezone company. Any tips/suggestions in convincing my employer to give part of my salary to my spouse or to his freezone company as consulting/mgmt fee or some other structure. Also, there will be VAT involved when paying to his freezone company

3. Please suggest an accountant or tax consultant having expertise in this subject for assistance.

4. I'm open to suggestions/tips/ideas

Thanks
Debbie


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## Bevdeforges (Nov 16, 2007)

You probably already know this, but your spouse can also take a full FEIE by filing a separate 2555. Ideally the company should be set up so as to pay your spouse a "salary" rather than just passing through the income of the business to your tax returns - but either way, you each get your own FEIE. But be very careful about any "income sharing" arrangements to pay part of your salary to your spouse. The IRS is very aware of that sort of thing and may very well be looking for such an arrangement. 

I suspect there are tons of tax advisers available there in the UAE and possibly some of our members will have specific recommendations. (I do my own taxes so can't really help you on that score.)
Cheers,
Bev


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## debbie790 (Dec 28, 2010)

Bevdeforges said:


> You probably already know this, but your spouse can also take a full FEIE by filing a separate 2555. Ideally the company should be set up so as to pay your spouse a "salary" rather than just passing through the income of the business to your tax returns - but either way, you each get your own FEIE. But be very careful about any "income sharing" arrangements to pay part of your salary to your spouse. The IRS is very aware of that sort of thing and may very well be looking for such an arrangement.
> 
> I suspect there are tons of tax advisers available there in the UAE and possibly some of our members will have specific recommendations. (I do my own taxes so can't really help you on that score.)
> Cheers,
> Bev


1. Like you I file my own USA tax returns (hence my limited tax knowledge)

2. I have yet to find someone in UAE with reasonable expertise in this subject, who can go beyond what I already know. Do you know anyone or suggestions?

3. My spouse is a non-USA person (i.e. he has never been a USA citizen nor greencard-holder nor resident-alien) and does not file USA tax return (unless he needs to file since I am a USA citizen), and therefore he cannot claim FEIE

4. I am not sure how receptive my employer would be in passing through my salary to my spouse's company. May be I can convince my employer to hire my spouse's company and I then work for spouse's company

5. I suspect some members on this forum might be in the same situation and I would love to hear how are they tackling the tax bill

Thanks
Debbie


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## Bevdeforges (Nov 16, 2007)

In theory your spouse has the option to file with you as though he were US resident for the complete tax year. (In which case he would need a TIN.) And in that case, he could take his own FEIE. But for lots of reasons I really wouldn't recommend that approach.

Being employed by your spouse's company doesn't really resolve your tax issue (I'm assuming that your salary exceeds the FEIE limit. None of your other income is subject to the FEIE anyhow as it only applies to earned income.) 

But let's see what some of the other expats have to say on this. Your situation applies not only to folks working in the UAE and other non-tax countries, abut also to those working for NGOs in countries where NGO salaries are not subject to local income taxes.
Cheers,
Bev


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## Nononymous (Jul 12, 2011)

There's always the nuclear option: acquire another citizenship and either renounce or cease filing.


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## Bevdeforges (Nov 16, 2007)

Nononymous said:


> There's always the nuclear option: acquire another citizenship and either renounce or cease filing.


Difficult while you're in the UAE. Though they have one of the highest proportions in the world of foreigners living and working there, it is next to impossible to take nationality there. Then again, if you have an Irish grandmother.... <g>
Cheers,
Bev


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## Nononymous (Jul 12, 2011)

Bevdeforges said:


> Difficult while you're in the UAE. Though they have one of the highest proportions in the world of foreigners living and working there, it is next to impossible to take nationality there. Then again, if you have an Irish grandmother.... <g>
> Cheers,
> Bev


I didn't suggest UAE citizenship, but anything else. (If you can't swing it with ancestry or marriage, just buy one if you have the money.)


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