S-Corp in spouse's name: Bad idea?

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S-Corp in spouse's name: Bad idea?

Post by Dassie »


I'm married to a US citizen but am a nonresident alien, and we are currently living in my home country, South Africa. I am self-employed and have my primary bank accounts in the US. We have been filing taxes jointly, but from this year onwards I can suspend the election.

I am due to receive a significant payment in USD that will almost certainly push me into a higher tax bracket in South Africa. An adviser suggested that my spouse opens an S-Corp in the US (I am not eligible, as a nonresident) and pays a salary into our shared checking account -- she would then be liable for tax on this income in South Africa, but less than if the full sum was paid to me. (And I would obviously cover this payment, between the two of us.)

My gut feeling is that this is a complicated and potentially shady solution, but I wanted to check if anyone has opinions? I am completely inexpert in this stuff.

Thanks very much --
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