How is a relocation fee of more than 40k taxed?
It is ordinary income to you. You should probably talk to a California licensed CRTP/EA/CPA, but I doubt they'll say anything different. You would probably ask them whether you can treat some of it as a refund of rent paid, but I personally wouldn't feel comfortable with that. With a $40,000 payment there is a 100% chance that the owner will be claiming this as a business expense on their taxes.  The IRS and the state will definitely know about it, and the risk of interest and penalties if it is not claimed as income make the best course of action to see a tax adviser. Because taxes will not be taken out by the property owner, the tax payer should also make sure that the estimated $10,000 in federal taxes, if they are in the 25% tax bracket, doesn't trigger other tax issues that could result in penalties, or the need to file quarterly taxes next year. This kind of extra income could also result in a change or an elimination of a health care subsidy. A unexpected mid-year  change could trigger the need to refund the subsidy received this year via the tax form next April.
This is tax fraud, plain and simple. I recently wrote an article The Step Transaction Doctrine, in which I explain that a series of events may each be legal, but aggregate to one transaction and the individual steps are ignored.  In this case, it goes beyond that, by accepting $5/mo you are already outside the tax code. As littleadv noted, you can't work for a legitimate business for free and not expect to have some kind of issue. The $14K/yr gift isn't a bona fide gift, but ties to that work. The trickiest thing is the federal tax. It's typical to withhold 25% federal on this type of event. If your federal marginal rate was already towards the top of that bracket, you'll owe the missing 3% as you enter the 28% bracket. Nothing awful, just be aware. First, contact the new employer's HR or payroll dept, whoever handles this. You might be able to warn them that your wife deposited x$ already. If they can tell their system to stop deposits at ($16500 - x$), that would work. If not, she will need to arrange to withdraw the excess, and pay the tax that wasn't withheld. No penalty, though. "I think the 60 days/year come from the IRS tax residency determination, which isn't a Florida law but applies to all the states. Have a look at the ""substantial presence"" paragraph to see where the 60 days are coming from." In the US, mortgage payments are not deductible. What is deductible is the mortgage interest (to a limit). That, as well, is not deductible unconditionally, but rather as part of your itemized deductions on Schedule A of your yearly tax return. So if you're married and have a standard deduction of $12600 a year, live in a state with no state income tax, and your property tax and the mortgage interest are less than your standard deduction - you will not be getting any tax benefit whatsoever. That is, in fact, the case for many, if not majority, of the US mortgage payers. So in order to get a proper estimate, you need to take into account all the aspects of your tax calculations, which are by nature quite personal, and simulate the changes with the mortgage interest deduction. Most tax preparation software will allow you creating multiple files, so you can run the numbers for different scenarios. "If you're making $80k, and you're consulting for an extra $400/wk or $20,800/yr, you're earning a total of $100,800.  That's assuming you do it for a full calendar year of course.  Either way, assuming you can deduct/exclude at least $11k of income (as almost everyone can), you're paying 25% on your marginal dollars.  (This also assumes you're single; if you're married/filing jointly, this may not be true.)  Note, you're right at the edge of the 25% bracket if you earn this in a full calendar year - but if you have a 401k, health insurance, or other reductions you'll be fine.  Additionally, for this year you'll be under (again assuming single and no other income) because you aren't earning a full year's worth. Assuming your $80k is precisely taken care of by your regular withholding, then, you will literally pay 25%*$400/week in additional taxes - $100 per week.  So if you are paid biweekly, you need to add $200/week in withholding on your W-4.  If you expect to overpay taxes (if you own a house with a mortgage for example, you often do), you can reduce it some, but adding $200/biweekly paycheck should bring you right to where you were before the extra income. The general rule is to calculate your marginal (not effective) tax rate before the new income, assuming default withholding takes care of that, and then withhold the marginal rate for the new income [checking that the new income doesn't push the marginal rate up - if so, calculate in two parts, the part in the lower marginal rate and the part in the higher marginal rate]. You can google ""2014 tax brackets"", or look at the IRS tax tables for detailed information about marginal rates." 75k is short of the 'highly compensated' category.  Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense.  Tax shelters usually don't come into play for this level of income.  However, there are certain things which provide deductions. Some things that make it better to pay someone:   Use the free online tax forms to sandbox your returns.  If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA.  Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding.   Tax treaties likely make sure that you get credit on each side for the money paid in the other.  For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US.  If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero.  By the same token, if I have not paid up to my US burden, then I owe the balance to the US.  But this is way better than paying taxes to your home country and to the host country where you earned the money. "I'm being taxed at a 40% rate, then I can give $500,000 to charity, write it off, and save $200,000 on my taxes. That's a net loss of $300,000. I may have paid less taxes, but it cost me 300 grand. Your logic is correct. However, here's another way to think about it. Suppose you are being taxed at a 40% rate. You wish to purchase $500,000 worth of diamonds.  How much do you have to make in income to do so?  You need to make $833,333 in income, pay 40% of that ($333,333) in taxes, and then spend the $500,000 on the diamonds.  But to spend that $500,000 on a charitable donation, you only need to make an income of $500,000, taxed at a rate of 0%, because donations to charity count against your taxable income. Or, yet another way to think about it, is that if you make $833,333 in income, you can spend it on $500,000 worth of diamonds, or $833,333 worth of charitable contributions; effectively you get to purchase $333,333 worth of charitable contributions ""for free"" over the equivalent purchase that is not a charitable donation." "This is a fascinating question.  I am posting here only a partial answer because I haven't found official sources.  The upshot appears to be that a Puerto Rico IRA is a wholly different thing from a US IRA, and different rules apply.  This is said most succinctly in this post on the Boglehead forums: US federal tax code and Puerto Rican tax codes are separate. By contributing to a U.S. IRA, you defer US taxes. You need to pay these deferred US taxes, and take an early withdrawal penalty too, if you want to move the asset to PR. Other web pages give similar information, for instance, this post from ""Accountant Forums"": The Puerto Rico (PR) Internal Revenue Code (IRC) defines a Puerto   Rico IRA (I am assuming that this taxpayer has a PR IRA.). It is   unfortunate that they chose to use the same name as the US IRC   uses. A PR IRA is not a US IRA. It has different tax rules. In   addition, the US IRC defines an IRA as being ""a trust created or   organized in the United States."" The US IRC (Sec. 7701) defines   the United States as being the 50 states and the District of   Columbia. The Bogleheads thread also contains a link to a document from a Puerto Rican CPA school which appears to be a FAQ, and says (translated here from Spanish): Thus, any distribution from an IRA established in Puerto Rico does not qualify to be transferred to an IRA established outside Puerto Rico without the imposition of penalty and/or payment of corresponding income tax.  In the same way, the transfer of an IRA established outside Puerto Rico to one established in Puerto Rico also does not qualify as a transfer. It is not clear whether the exact meaning of ""transfer"" (given as either ""transferencia"" or ""traspaso"" in the document) corresponds to the US usage of IRA transfers (i.e., nontaxable events); some information I found indicates that the end of the quote above might be translated as ""does not qualify as a rollover"".  In any case, it seems that moving an IRA to or from Puerto Rico at least potentially has tax consequences.  There is also a previous question on this site which likewise says ""You cannot transfer or rollover an IRA that was established in PR to USA and vice versa"". These are not exactly authoritative sources, but they all seem to point towards the same conclusion, namely that you won't be able to avoid taxation on your IRA by moving to Puerto Rico.  Of course, I am no expert.  To be sure, you would have to talk to an accountant versed in the tax laws of both Puerto Rico and the incorporated US (and probably also whatever state you'd be moving from, to be on the safe side.)" Yeah it just got bumped up to 11.25 and they're going to be increasing it over the next couple of years before capping at 15. Rent is already rising to adjust to this development. Doesn't help that income tax here is insane. "First, I'm not a CPA or international tax accountant; my entire understanding of the French tax system is entirely from what I've read in places like the WSJ, Barrons, WaPo, etc.   However, ***my understanding*** is that French tax law works something like this. Let's say France has a tax rate of 35%. First, it must be assessed where the controlling entity is. In this case, if the majority of production and labor, or if the corporation is primarily based in France, it would proceed as follows. Taxes are initially paid based on transfer pricing to the original local entity (this avoids ""double taxation""). So in the example above, you would pay 10% to India on the $3,000,000 in profits ($300,000). You would then reduce the 35% French tax rate by the 10% already paid. This means you would pay an additional 25% to France ($750,000). The premise is that you have an effective ""minimum"" tax threshold for being in France. In the case above, companies like GE would have to pay the difference (this doesn't get into tax breaks/shelters on previously recorded losses, etc.).   Again, ***I AM NOT SURE ON THIS***. This is my basic understanding and am by no means a tax accountant/lawyer/etc. From what I understand; however, this hasn't necessarily been a good thing for France either (California is likely a similar case study with the Unitary return requirement). The fact is the world is very global nowadays. Its easier and cheaper for the companies to just leave instead of being forced to pay higher taxes...  IMO, Germany hit it right on the head. Low corporate tax rates with high personal tax rates. This maintains a very business friendly environment (business move there because of the skilled labor and low corporate taxes), but they effectively pass the burden on to individuals (who also benefit from the pro-business environment). You'd be hard pressed to find an economist that doesn't think Germany's economy has been very strong over the past decade (very good Soros speech that was recently posted about his analysis of the Euro and Germany's unfair benefits, but that's a whole different gear).   What I find the issue to be is the whole concept is complex enough that's difficult to explain to the average person with a 2 second attention span. That's why I like writing posts like this, to try to help people understand how finance and businesses operate behind the scenes!" "Wait, are you sure you've got that right? What you're describing is a tax credit that counts against your total owed.   In normal operations, companies get to ""write off"" all of their expenses and they only pay taxes on the net profit of the operation. So I guess you could say that if it cost me $100M to move a factory off shore, and my marginal tax rate was 35%, then I would ""save"" $35M in taxes ( it still cost me the $100M, but it only felt like it cost $65M).   This is true of any business expense. I (not Romney, apparently) don't know of any special treatment that offshoring activities get one way or the other." "While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do   I quantify the travel expenses? Generally, ""necessary and ordinary"" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say ""no"" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000   miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (""pleasure"") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is ""business"" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the   property? Although, again, the ""necessary and ordinary"" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA)." "The $100,000 is taxed separately as ""ordinary income"". The $350,000 is taxed at long-term capital gains of 15%. Capital gains is not taxed at 20% until $415,050. Even though $100,000 + 350,000 = $450,000, only $350,000 can be taxed at capital gains. The total ordinary income tax burden will be $31,986 if single, in California. Caveat: By creating a holdings corporation (C-corp), you can section 351 that $100,000 into the C-corp for tax deferment, which won't be taxed until you take money from the corporation. Since you will hold 100% of the voting stock, all distributions will be considered pro rata. Additionally, you can issue yourself a dividend under the rules of 26 USC §§243-246 (a greather-than-80% shareholder who receives a dividend can write-off 100% of said dividend). As long as that dividend doesn't trigger §§1.243-246 of The Regulations by keeping the distribution just under 10% of E&P i.e. $10,000. Wages are deductible against basis so pay yourself $35,000 and keep $55,000 in the corporation and you can decrease the total liabilities down to $22,000 from $31,000, which includes the CA franchise tax. You don't have to pay yourself any money out a corporation to use the money." For providing financing assistance to the clients, Invoice Finance and Factoring Services are provided by some recognized professional financial services providers in London. They can help in improving cash flows and credit control. Before applying for loans, a business has to undergo the lengthy processes and legal formalities. To simplify these procedures, Forfaiting Financial Services in London are provided to many organizations.