Defer Income Taxes and other “Earned Income Streams
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Originally engineered for “Nat King Cole.” Mr. Cole said to the IRS, “it’s extremely unfair that you take 84% of my money.” (70% Federal, 14% California piggy-back)
Affluent brokers, investors, entertainers, personalities, physicians, entrepreneurs, industrialists, key employees, senior executives…Deferred Compensation Planning is under the jurisdiction of an International Tax Treaty. The only thing higher than an International Tax Treaty, is the Constitution of the United States.
This deferred compensation planning is strictly for U.S. Citizens who spend less money than they make. It’s extremely attractive to affluent brokers, investors, entertainers, personalities, physicians, entrepreneurs, industrialists, key employees, senior executives, …any highly compensated individuals or with commercial rights to income streams such as patents, royalties, rents, day trading, etc. any income stream.
The downside is that, you must have surplus income, greater than US$150,000 over your living expenses.
The objective is to defer Income Taxes on your “earned excess cash” over your requirements to live on. This planning when properly implemented by a qualified competent professional, will reduce your tax burden from 50% down to less than 10%. Once implemented, your plan will be able to utilize it’s strategic tax treaty position to achieve certain other financial goals, all under the (legal) jurisdiction of the International Tax Treaty.
This Deferred Compensation Planning may be equated to your self directed IRA (Individual Retirement Account) or Self Employment Plan (SEP) or (KEOGH):
- Contributions are Tax-Deferred (postponed)
- Investment earnings are Tax-Deferred (postponed)
- Withdrawals are Taxable
- There are NO legal requirements for withdrawals thus, deferred
The objective of your Foreign Deferred Compensation Program is to defer Income Taxes on your “earned excess cash” over your requirements to live on.Depending on your life expectancy tables supplied by the IRS and your financial goals, this money may be Tax-Deferred over your life-time. If your “Income-Stream” qualifies, contact us directly. It requires careful drafting, attention and professional implementation. It’s a legitimate, logical, and suitable method of tax deferral. Ultimately, these transactions are complex – one size does not fit all, not done over the internet, telephone, fax, Email, or snail-mail.
Helpful resources: For added perspective, readers often compare QPRT Trust Guide, BDIT Trust Guide, and official IRS estate and gift tax guidance when comparing planning options.
What readers usually compare next
Readers looking at Defer Income Taxes: Deferred Compensation Planning usually compare timing, control, and exposure before deciding what to do next.
Three practical points to keep in mind
- Timing matters because tax planning usually works best before a crisis or audit pressure appears.
- Control matters because retained powers can change how the IRS views a trust or transfer.
- Funding matters because moving the right asset, in the right way, often matters more than the label on the document.
Helpful next steps
Readers often continue with Irrevocable Trust, Asset Protection Trust, and What Is a Grantor. When government rules shape the decision, many readers also review official IRS estate and gift tax guidance.
