I'm moving to Ireland in a month, where I will be in a much higher tax bracket than I will be when I leave Ireland in about 5-10 years (40% income tax in Ireland vs. 24% when I return to the US). I will be working for an employer as well as doing some contract work that I'm considering making corp-to-corp to reduce my overall tax burden.
Here's the idea:
1. Do my contracting work corp-to-corp, but don't pay myself any salary or dividends while in Ireland. I'm anticipating this protecting me from exceeding the foreign earned income exclusion as well as not having the contracting income be taxed at 40% Irish income tax +15.3% US self employment tax (i.e. for the c-corp, I'll just have to pay the corporate income tax while abroad).
2. Let the money accumulate in the c-corp until I return to the US (moving back from a 40% bracket to a 24% bracket).
3. Pay myself (60% salary, 40% dividends) a little more than the company is earning, so I gradually drain the income I accumulated while in Ireland. Keep doing this for several years until I've drained it, then just pay myself the same amount as the c-corp makes each year.
4. Set up a 401k with maximum matching, so I can reduce personal income tax and corporate income tax.
Does this approach make sense, or would it be better to just set up an LLC, pass the income through, and take the 40% hit (at least I can deduct business expenses and 401k)?