If there is a foreign country where you spend your non-working time, that would probably be your country of residence. A ship is not a country and there have been cases denying the foreign earned income exclusion for those working on ships because they do not have a foreign country of residence. [an error occurred while processing this directive] The Tax Prophet's Section on Foreign Taxation [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] We live in a community property state and I have substantial separate property. Should the tax generated from separate property income be paid from the separate property income if a joint return is used? [an error occurred while processing this directive] It is not necessary to pay the tax arising from the income generated by separate property with separate property funds, although there could be non-tax community property issues that arise if community or marital property assets are used to pay taxes on separate property income.

A joint return can be filed regardless of whether the couple's income is considered separate property or community property under state law concepts. Filing a joint return does not transmute separate property into community property. [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] What are the U.S tax benefits of forming an offshore company? [an error occurred while processing this directive] This can be a complicated issue. For a U.S. taxpayer with income from U.S. sources, an offshore company is usually and expensive waste of time. For a non-U.S. taxpayer, a properly structured offshore company could have certain tax advantages, especially to eliminate estate taxes.

For a person engaged in business with partly U.S. source and partly non-U.S. source income, there could be advantages to an offshore company if non-U.S. taxpayers own a majority of the company, measured by vote and value. [an error occurred while processing this directive] The Tax Prophet's Section on Foreign Taxation [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] My husband owns a cleaning company that has been set up as an S Corporation (taxed as a "flow-through entity). When he takes draws out of the company, how are they classified? Are they owner draws or dividends or something else? [an error occurred while processing this directive] Technically, they are "something else" although people often refer to distributions as "dividends." Your husband is either paid a salary or he receives a salary, plus taxable income at the end of the year which he takes into income. His "draws" from the business during the year are not decisive from a tax standpoint. He must report his pro-rata share of the income from the business, whether or not he actually receives draws throughout the year on this amount. The S corporation reports a shareholder's pro-rata share of income and losses on a K-1 form. [an error occurred while processing this directive] The Tax Prophet's Tax Class on Small Business taxation[an error occurred while processing this directive][an error occurred while processing this directive][an error occurred while processing this directive]