united-states tax-law
Is it legal to work for a foreign company you own that has no entity in the USA
<p>As the question stipulates.
If a US citizen living in the USA wants to work for a foreign company he owns and that has no US entity. Is this legal? </p>

<p>He would basically be in a situation where he's doing everything as if he were residing in that foreign country but simply residing in the USA.</p>

<p>I know that the US consider taxable income to be income generated on american soil. So filing taxes in the US would be a requirement. But is the setup even legal? Or is it an obligation for the foreign entity to open a US entity and pay through it?</p>

<p>You are mistaken: The U.S. governments (both federal, and states that impose income tax) assert a right to tax <em>both</em>:</p>

<ol>
<li>Income earned within their jurisdiction (e.g., "on their soil"), and</li>
<li>Income earned by citizens (or residents, in the case of states).</li>
</ol>

<p>So it is perfectly legal for a resident U.S. citizen to operate a foreign business entity, earn profit, pay himself, and even bank the money overseas.</p>

<p>However, a resident in such a situation would be in violation of tax law if he failed to report his interest in the foreign entity and his earnings, as prescribed by the IRS, on his tax filings.</p>
