How do I not get double taxed on money I make in a foreign corporation?

Question

If I have a corporation in another country making money through internet advertising, could I then pay myself (in the US) most of the income as a salary and then deduct that as a business expense so that the only tax I'd be paying would be US income tax?

Answer 1

That would depend upon the tax laws of the foreign country. The income you paid yourself would most likely be taxed there anyway, even if you zeroed out the profit by paying yourself a salary so that the corporation didn't pay any taxes.

You will get a credit on your US return for foreign income taxes paid. File Form 1116 to claim that.