Paypal & Taxes & Offshore bank accounts

[DarkMaster]

A friend was telling me he gets most of his payments to his paypal account, although he's located in the US, his bank account is set up with paypal and is a secure account in Singapore (who doesnt charge taxes to foreigners unless you have more than 1.5 mil in the bank).

So my question is, what are the legalities to getting taxed by the US government for an internet business? Since the business is online is it legal to have your funds go to a another countries bank and not pay US taxes?

[Archbob]

You should report it on your income statement like anything else. But of course, many people don't and unless your making a large amount, they probably won't check. You can also claim home-based business and deduct things like rent, electric bill, etc, in the end you might end up positive.

[webmasterneo]

Disclaimer: The following is only an opinion and not legal advice.

From what I've seen from online tax forms required by some entities, as long as you have your physical business in the US, you are subject to taxes. Even international businesses may be subject to taxes when they have employees or servers in US soil. Third party servers (as in hosting) are not included in that clause.

But to be on the safe side, consult with a lawyer.

[Cameron]

It probably is illegal according to the tax department, But I don't think that they would really care, Unless you are making $$$.