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Relocation Package Review

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CAtoSing
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Relocation Package Review

Post by CAtoSing » Fri, 12 Sep 2014 7:57 am

Hi all

I've seen similar posts in the past, but haven't seen one recently with up to date cost figures, so I wanted to seek the wisdom of the masses on this one.

I will be relocated to Singapore from the US (southern California) and I'm negotiating a relocation package with my company. Please feel free to offer any comments. One of my main concerns is with personal taxes, as the US-Singapore do not have a Double Taxation Treaty, so I'm afraid I may end up paying way more taxes than I do now.

Here's the summary (all values in USD):

FAMILY
2 adults, 2 children (ages 6 and 9)

PACKAGE
Gross Salary $120,000
Temporary Housing Upon Arrival $5,000 (up to this amount)
Long term housing $5,000 (per month)
School $18,500 (per child, per year)
Health Insurance $10,000 (per year for entire family)
Relocation (move + airfare for 4) $12,000 (one time cost)

OUR EXPECTED EXPENSES (per year)
Tax $7,000 (am I even close?)
Food/Groceries $14,500 ($1,200/month)
Utilities $7,000 ($580/month)
Transportation $4,200 ($350/month; mostly public; includes school bus)
Travel/Entertainment $9,000 ($750/month)
Misc/Clothing/Gym/Other $9,000 ($750/month)

I have heard that my company's allowance for housing, school and health insurance) would be added and considered as part of my "total income". Is this true? If so, it could increase my tax burden from my estimated $7,000 above to much more.

Also, does any one have any insights on Double Taxation issues with US?

Thank you all!

 



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zzm9980
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Post by zzm9980 » Fri, 12 Sep 2014 8:51 am

Yes, your gross salary, housing allowance, school allowance, health insurance allowance, and relocation bonus will all be taxed as income by both Singapore and the US.

There is no double taxation treaty. That said, you can get tax credits for the US on what you pay in Singapore (not much, at your total income it'll be less than you pay to just CA for state tax). There is also an *earned* income exemption. Earned is keyword, as it only applies to money on your paycheck. Any kind of stocks granted and such do not count. This amount changes every year, but is somewhere around $100k USD now. You will not pay income tax on this in the US. It's an exclusion, not a deduction, so every dollar above this amount (and everything that is *not* earned such as stock) will be taxed at the full amount. So the ~$20k over that amount will pay tax at the full income tax bracket, not as if you only made $20k. You'll get Singapore tax credits on the taxs you pay on that $20k only.

Google for IRS Form 2555. Read that form, and read the instructions for that form. It will tell you everything you need to know about the Earned Income Exclusion. Also talk to a tax accountant. I had a good experience with someone called "Artio Partners" , they specialize in Expat tax preparation for the US and used to advertise on this forum.

I'm not sure what your health insurance allowance is for. Is this Singapore based health insurance and that's the amount you get for outpatient? If so, that's a normal amount and it actually wouldn't be taxed. If you're getting that much money to buy your own it will be taxed.

Your "temporary housing upon arrival"is a bit low, as a normal two bedroom Service Apartment (what most people use for their arrival) would cost about double that for a month.

Your "taxes" of 7k, is that Singaporean amount or US Amount? Add up all of your allowances to your tax, and google "IRAX Tax calculator". It's a real simple task to calculate. Just eyeballing it, I'm guessing you'll be at about $220k/yr and that will be around 10%.

Your relocation allowance is really low IMO. Is this a US based MNC? That;s going to buy you one-way coach tickets and ship some small boxes. That's about it.

Your other expenses seem about right, assuming you only use the A/C at night while sleeping. Add another $200-300 (ballpark, depends on size of the unit) if you plan to never turn it off.

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Post by CAtoSing » Fri, 12 Sep 2014 2:06 pm

Thanks for the feedback, ZZM. Much appreciated.

I've just downloaded Form 2555 and the instructions and will start combing through that soon. Thanks for the tip.

For the health insurance, that is to cover "typical" health insurance for the entire family, similar to what most people have in the US, including dental, outpatient, emergency, etc. Here in the US my company picks up about 80% of the premium while employees pick up the remaining 20%. In Singapore we will have a one-man (me) Branch Office and our original plan would be for me to get the allowance and get the health insurance on my own. If this is not the best approach, please do offer suggestions, as I'm just going by minimal research on this particular part.

Good to know that the temp housing is low. But I'm already working with some agents and have a good idea of areas to live from previous trips there, so I hope to keep that at a minimum.

For the Taxes (and all other amounts), that's all USD and I'm including Singapore and US tax, if any. I'll look up the IRAX calculator. Thanks again for the tip.

As far as the Relocation, we already have an estimate from Allied for the move of all our household goods at $7K (we don't have much stuff), so yes, all that we would add to this be the airfare. Recommendations for adding anything else?

Thanks again for all the input!

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Post by JR8 » Fri, 12 Sep 2014 6:04 pm

CAtoSing wrote: Recommendations for adding anything else?

'Home leave'.

Reimbursement for an annual trip home for you and the family.

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Post by jk21 » Fri, 12 Sep 2014 9:12 pm

My first reaction to education is that company is only paying part of the cost. Now I think in terms of SGD rather than USD, so maybe I am not taking into account the currency exchange. As a reference, check tuition on Stamford American International School and Singapore American School. That will show how big the gap may be. Will company pay $1000s for the application and registration fees? Will they wrap school bus into school cost? It is possible for annual school bus to cost $4000/child/year. Not all are that high, but expect to exceed $2000 each. Then a few hundred for school uniforms. This will help you to budget full school cost.

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Post by CAtoSing » Sat, 13 Sep 2014 12:22 am

JR - Thanks for the reminder. "Home" is a relative term for us and we have relocated before and our family is scattered around the globe, but I'll look into this.

JK - Thanks for the tips. But SAS/SAIS are probably the top two on the island in terms of prices. I've researched other options and have found other great schools that are not nearly as expensive. In any case, yes, they will cover the application fees and I'll see about the bus too.

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Post by jk21 » Sat, 13 Sep 2014 7:49 am

Glad to see that you have identified school options. Some people coming from the States insist on sticking with the American curriculum.

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Post by x9200 » Sat, 13 Sep 2014 8:37 am

CAtoSing wrote:JR - Thanks for the reminder. "Home" is a relative term for us and we have relocated before and our family is scattered around the globe, but I'll look into this.
It doesn't matter how it is called. Mine was something similar to a return ticket to a country of origin once a year by economy class. It is or used to be pretty standard thing.
You may also want to increase slightly (to US12-13k) your medical insurance unless you also want to be still covered in the States. In this case, better double it.

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Post by zzm9980 » Sat, 13 Sep 2014 9:17 am

CAtoSing wrote: JK - Thanks for the tips. But SAS/SAIS are probably the top two on the island in terms of prices. I've researched other options and have found other great schools that are not nearly as expensive. In any case, yes, they will cover the application fees and I'll see about the bus too.
Curious, what are your findings?

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Post by CAtoSing » Fri, 19 Sep 2014 2:46 am

zzm9980 wrote:
CAtoSing wrote: JK - Thanks for the tips. But SAS/SAIS are probably the top two on the island in terms of prices. I've researched other options and have found other great schools that are not nearly as expensive. In any case, yes, they will cover the application fees and I'll see about the bus too.
Curious, what are your findings?
This is one of them: http://www.ics.edu.sg/

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Post by zzm9980 » Fri, 19 Sep 2014 5:06 am

CAtoSing wrote:
zzm9980 wrote:
CAtoSing wrote: JK - Thanks for the tips. But SAS/SAIS are probably the top two on the island in terms of prices. I've researched other options and have found other great schools that are not nearly as expensive. In any case, yes, they will cover the application fees and I'll see about the bus too.
Curious, what are your findings?
This is one of them: http://www.ics.edu.sg/
Looked promising until I saw:
ICS is a Christian school founded upon the belief that God is the source of all truth, and true education is based on His revealed word, the Bible
I have no problem with a religiously sponsored school, but this sounds like they'll be deferring to such dangerously ill-informed topics such as intelligent design.

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Post by PNGMK » Fri, 19 Sep 2014 8:00 am

Well I'm a Christian and biased but there are plenty of non Christian kids at ICS who seem to be surviving. It has a good academic success record as well and the teachers are far, far better than the maple leaf brand IMO.

(I have a daughter and partner teaching at ICS).

OP - I think you'll not be able to save much at all on that package.

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Post by CAtoSing » Fri, 19 Sep 2014 8:07 am

PNGMK wrote: OP - I think you'll not be able to save much at all on that package.
Thanks for the feedback, and glad to know you like ICS. But would you be able to clarify where you think I could change things with the package? Am I underestimating something in your opinion or is it a matter of fighting for a higher salary?

Note I excluded quarterly/annual bonuses just for simplicity sake.

Thanks.

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Post by PNGMK » Fri, 19 Sep 2014 8:21 am

I just realized this is USD maybe ok.

PACKAGE
Gross Salary $120,000 - a bit light but I don't know your job?
Temporary Housing Upon Arrival $5,000 (up to this amount) - ask for min 6 weeks allowance - you'll need enough for serviced apart - ring Frasers and get a quote.
Long term housing $5,000 (per month) - OK
School $18,500 (per child, per year) - ICS is SGD24,000 per year I think.
Health Insurance $10,000 (per year for entire family) - OK
Relocation (move + airfare for 4) $12,000 (one time cost) - once per year.

OUR EXPECTED EXPENSES (per year)
Tax $7,000 (am I even close?) - look up IRAS table
Food/Groceries $14,500 ($1,200/month) ok
Utilities $7,000 ($580/month) ok
Transportation $4,200 ($350/month; mostly public; includes school bus). Renting a car costs a lot - with kids you may need one. About SGD1800 per month for a lease.
Travel/Entertainment $9,000 ($750/month) a bit light if you drink / travel with 4.
Misc/Clothing/Gym/Other $9,000 ($750/month) ok

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Post by zzm9980 » Fri, 19 Sep 2014 9:01 am

PNGMK wrote:Well I'm a Christian and biased but there are plenty of non Christian kids at ICS who seem to be surviving. It has a good academic success record as well and the teachers are far, far better than the maple leaf brand IMO.

(I have a daughter and partner teaching at ICS).

OP - I think you'll not be able to save much at all on that package.
I'd be interested to see their science and history curriculum. Do they teach evolution? Or is it based on the bible?

I have no problem with a religious school (I went to a Catholic school myself), but was a bit skeptical based on how thick they lay it on with "We teach the BIBLE"

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