Since FL does not tax personal income (and never has) it will not make any difference at a state tax level. I have no idea what effect it will have on S-Corp taxes at the state or federal level however. @CRitter3 can you chime in here please?
Critter3 will need more information too.
-Are you a U.S. Citizen or legally registered alien with an SSN?
- Is FL your state of legal residence? (that is to say, your "Tax home" for income tax purposes.) If not, what state?
Thanks for the reply! Yes, US citizen. I lived in FL until 2004, set up sub s in FL in 1993, still maintain a UPS box and mother has a residence, so consider FL my base even though I haven't been back there in 16 years. Since my work is virtual, I didn't want to upset the system by saying I was overseas. I alerted IRS/SSA/FBAR five years ago that I had an address in Thailand. I am not a Thai resident or citizen. I did, however, setup my company in Thailand as an LLP (dormant) just to put my land in that name. Last year I paid $3900 in tax on my 1040. Each year it asks if I worked outside of FL and I say no.
Regardless, Florida does not impose an income tax on most, typical, S corporations. The only S corporations that need to file a Florida Corporate income tax return are those that pay federal income tax on Line 22c of Federal Form 1120-S
The only thing you MAY BE leaving out by not indicating you work out of the country and being able to use the foreign earned income exclusion.
Usually an S-corp pays no income taxes as a rule since the profit is passed thru to the owner who should also be taking a paycheck. All the corp needs to pay in FL is the annual corp fee of $150.
Thanks, Critter! So if I check that I am working outside of FL in a foreign country, I can claim the foreign earned income exclusion and pay no tax (salary $1600/yr on net profit from subs of around $15k)? If so, can I amend previous returns or would that trigger an audit? I want to avoid an audit as I have no intention of returning to the US.
No ... it is not that simple since you work for yourself and not a foreign employer ... you will need to do some more research on this matter. This is where talking to a professional would be much better than getting tax advice from a nameless/faceless public forum.
Thanks again, Critter. I will check the box that I am working outside of FL and see what Turbotax does. Is their system saavy enough (CPA-wise) to guide me in the right direction or should I hire an international CPA (expensive)?
You don't need an international CPA ... what you need is a tax pro savy in international matters and they don't need to be in the country you are in ... returns can be done virtually. Maybe all you need is a phone call to get the answers you need. Or do some reading in the next couple of months.
Thanks, Critter! I read your sited publications. I think that once I tick the box for working outside of FL, Turboxtax will ask questions to determine if I meet the earned income exclusion. If not, I will look more on the internet.
If you used the downloaded program you can run some test returns to practice ...
This is my mini version of a tutorial that should be in the downloaded program:
Always remember to shut off the auto update function once you have filed your returns and do not do any updates unless you have safeguarded the PDF & .taxfiles to a removable storage unit for safekeeping.
What is Forms Mode?
Forms Mode lets you view and make changes to your tax forms "behind the scenes."
If you're adventurous, you can even prepare your return in Forms Mode, but we don't recommend it. You may miss obscure credits and deductions you qualify for, and you may forget to report things that will come back and haunt you later.
Forms Mode is exclusively available in the TurboTax CD/Download software. It is not available in TurboTax Online.
- Why would I use Forms Mode?
- How do I switch to Forms Mode in the TurboTax for Windows software?
- How do I switch to Forms Mode in the TurboTax for Mac software?
If you want to play around with different figures and tax scenarios without affecting your original return you can ….
- >>>In the TurboTax CD/Download software by creating a test copy:
- 1. Open your return in TurboTax.
- 2. From the File menu, choose Save As.
- 3. Give the copy a new name to distinguish it from the original (for example, by adding "Test" or "Example" to the file name).
- 4. Click Save. You are now safely working in the test copy and anything you do here will not affect the original.
- >> use the WHAT IF tool:
- - Click Forms Icon (upper right of screen) or Ctrl 2 (forms view)
- - Click on the Open Form Icon
- - In the “Type a form name.” area type What-If (with the dash), click on the name of the worksheet - click on Open Form
- - You will see the worksheet on the right side of the screen; enter the information right into the form
- - To get back to interview mode - click on the Step-by-Step Icon (upper right of screen) or Ctrl 1
It's always a good idea to make a backup copy of your tax data file, in case your original gets lost or corrupted. Here's how:
- From the File menu in the upper-left corner of TurboTax, choose Save As (Windows) or Save (Mac).
- Browse to where you want to save your backup.
- Tip: If you're saving to a portable device, save it to your computer first to prevent data corruption. Then, after completing Step 4, copy or move the backup file to your device.
- In the File name field, enter a name that will distinguish it from the original tax file (for example, add "Backup" or "Copy" to the file name)
- Click Save and then close TurboTax.
- Restart TurboTax and open the backup copy to make sure it's not corrupted. If you get an error, delete the backup and repeat these steps.
If you make changes to your original tax return file, repeat these steps to ensure your original and backup copies are in-synch.
- Retrieve a Tax File from a Portable Device
- What's the difference between the tax data file and the PDF file?
AND save it as a PDF so you have access to a copy even if you don’t have the program still installed and operational :
- How do I save my return as a PDF in the TurboTax software for Windows?
- How do I save my return as a PDF in the TurboTax software for Mac?
AND protect the files :