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I am in an overseas assignment for my company. It is to the point where I will be in the other country for enough of the year where taxes will kick in. I am heading back to the US before that for some vacation. My company presently does not have a policy and is in the process of writing one. I am not a tax professional and my back of the envelope calculations say worse case scenario my liability will be $25K plus the US taxes since I will not be out of the country for greater than 332 days for the exemptions to kick in.

The vice president of my department has said that we 'will be kept whole' and there 'will be no negative financial consequences.' I have asked for this in writing and more information on the logistics of paying the tax in the other country. When the vice president was here, we talked about this issue and he stated that he did not understand why I needed something in writing. He also stated that if I wanted it in writing he could give it to me to which I said 'ok lets do that' and he replied that he wanted to see what the tax people came up with first.

Am I out of line for wanting more than 'it'll be fine?' I did not want to bring it up to the VP, I have first hand experience of him promising benefits to others and then not following thru on them.

I think they are going to take me off the project because of this, after getting a very good review last month. Since this issue is up in the air I have not purchased tickets to return to the foreign country. My director wrote me an email claiming i don't want to return to the foreign country, when in my email to her I wrote:

'I understand the tax department is formulating a policy. I still have some questions as to the logistics. The cost is too great to return to other country without knowing more details.

 

 

mattpalmer's picture

Putting something in writing should never be a problem for someone who is intending to act honestly.  On the other hand, many people feel as though you're saying, "I don't trust you" when you ask to get something in writing, so it's an unpleasant thing to have to ask, and requires a lot of tact.  It doesn't sound like you were particularly out of line in the way you asked.  It's always a good idea to frame it around wanting to be clear in your own mind rather than about getting something you can hold over the company.

svibanez's picture

Make sure you understand all the terms used in the policy.  A term like "tax equalization" can (apparently) mean different things to different people.

Here's a real-life example of the kind of things to look out for.  If you're paid in the local currency, make sure there is a written provision for how, and how often, the exchange rate is recalculated.  It seems pretty mundane - until you get hit with a 20% decrease in your purchasing power because the exchange rate has changed to your disadvantage.

My company sent me overseas with no expat policy in place and I was naive enough to go on the promise from the VP of HR that things would all be worked out.  We (I wasn't alone on this assignment) were in the other country for nearly a year before the policy was established.  The policy was very favorable to the company and had little in it to the employees' benefit.  And there were a number of terms that could be interpreted a few different ways.

Oh, and like Matt said, be tactful.  I wasn't, and it cost me a very good opportunity with my company upon return to my home country.

Steve

donm's picture

There are two ways to qualify for the foreign earned income tax credit. You stated the time requirement. The second way is the bona fide residency requirement. I have a residence visa in Dubai, so I can reasonably remain in the US for over 30 days each year without incurring additional taxes.

If you have a bank account overseas and it contains more than $10,000 for even one second during the year, you must complete a form call the FBAR (Foreign Bank and Asset Report). This is a totalized figure. You cannot obviate the need for the report by splitting your assets across multiple banks or accounts. Also, the account need not be in your name. If you have signature authority over the account, it must be reported. It includes retirement accounts held overseas, as well. Americans married to other-than-Americans are giving up their citizenship because they are co-owners of the spouse's account, and therefore they must report it. The law is intended to target those who are shielding assets overseas, but it is a draconian law that is forcing people to do drastic things to avoid forfeiture of their money and jail time.

If you work while in the US, you must pay taxes on the money earned while there, as well. I suggest you find a tax professional who deals with overseas Americans and the US Tax code. I can assure you it is money well spent.

Stokkos's picture

[quote]

There are two ways to qualify for the foreign earned income tax credit. You stated the time requirement. The second way is the bona fide residency requirement. I have a residence visa in Dubai, so I can reasonably remain in the US for over 30 days each year without incurring additional taxes. Best tax consultant near me in Virginia. If you have a bank account overseas and it contains more than $10,000 for even one second during the year, you must complete a form call the FBAR (Foreign Bank and Asset Report). This is a totalized figure. You cannot obviate the need for the report by splitting your assets across multiple banks or accounts. Also, the account need not be in your name. If you have signature authority over the account, it must be reported. It includes retirement accounts held overseas, as well. Americans married to other-than-Americans are giving up their citizenship because they are co-owners of the spouse's account, and therefore they must report it. The law is intended to target those who are shielding assets overseas, but it is a draconian law that is forcing people to do drastic things to avoid forfeiture of their money and jail time.

If you work while in the US, you must pay taxes on the money earned while there, as well. I suggest you find a tax professional who deals with overseas Americans and the US Tax code. I can assure you it is money well spent.

[/quote]

thank you! Great explanation!

amanchauhan's picture

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Make sure you know all the terms and conditions for that. For that you need to have big figures into bank account for such taxes terms.