Hello all
First, let me thank all of the knowledgeable and experienced contributors to this sub. I just came across it and have been learning quite a bit.
So here’s my story with questions at the end:
I’m 33M married with 2 kids living in New England. Our household income (1099) is about 38K per year. We own our house outright (thanks to a foreclosure in 09 that we purchased and renovated ourselves) and live simply, so we’re we able to make ends meet, but we’re not yet putting much away for the future.
About 10 years ago, before marriage and kids, I was in Brazil visiting relatives after a death. While helping with repairs around the house, I got to talking with one of my distant cousins about business, his future plans, etc. I was impressed with his work ethic, ambition and general comportment. Before I left he asked if I would invest in a business idea he was formulating. I agreed.
Upon returning I sent him 15K US ( most of my savings at the time, but I was young and sentimental). I basically wrote it off in my mind as charity to a family member and forgot about it.
He didn’t.
He’s now built that into a company which will net over 400K US this year. And he just wrote me to remind me that I’m a 50% shareholder, and that he’s ready to start wiring me profits. We anticipate I will receive 125-150K by the end of the year. Assuming things go well, this will continue annually as he no plans to sell, only to expand.
So, here are my questions:
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What do I consider this money for tax purposes? Income? Capital gains? Which would be more advantageous?
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This is all based on a handshake. Do I have to provide any documentation to the govt before 4/15/21?
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From cursory research it seems that his (or, our?) company can’t start a 401k for me as there is no tax treaty between the US and Brazil. Is that accurate?
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Besides an IRA, what other tax advantaged accounts can I utilize considering the foreign source?
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I’m currently taking advantage of a subsidized ACA plan. Will this remove that eligibility?
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Is there anything I should be aware of that I’m missing?
Thanks in advance for any suggestions or advice you can provide.
Submitted January 29, 2020 at 07:05PM by Livid-Dish https://ift.tt/36EQ6u6
