Please help, I messed up badly - will the IRS go after me?
DougWebb: I'm not too familiar with C corporations, but years ago I did consulting work as an S corporation, and one of the rules was that if the corporation doesn't show a profit in 3 of the past 5 years the S corporation status is revoked and the activity is treated as a hobby instead. That means expenses can't be deducted from earnings. There might be a similar rule for C corporations, where you can have non-profitable years without losing the C corporation status but if that goes on for too long your expense deduction might become limited.One thing I do know about C corporations was that it's not enough to just establish one; you also have to run it like a real corporation. A single non-paid CEO is not sufficient; you need a board of directors with regular meetings and proper paperwork evidence of the meetings and business operations. If you haven't got that and the IRS does come investigating, they're much more likely to disallow the C corporation status and treat you as an individual instead. Then it comes down to the tax law treaties between the US and your country to determine whether or not your US-derived income is taxable to the US. In most cases, you have to pay taxes to whichever jurisdiction wants more money, and you get a credit in the other jurisdiction for the amount they would have taxed you on the same income.