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U.S. expat taxation

Discuss about getting a well paid job or career advancement. Ask about salaries, expat packages, CPF & taxes for expatriate.

PNGMK
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Postby PNGMK » Wed, 01 Jan 2014 11:48 am

Beeroclock wrote:
PNGMK wrote:
Beeroclock wrote:
zzm9980 wrote:
GSM8 wrote:I was moved to Singapore by an international company, but it is nowadays less common to provide tax equalization


And to add to that, tax equalization is yet another taxable benefit which makes it cost even MORE to the company providing it. Ultimately it is less compensation you receive and a larger burden on your employer for employing you as an American.


Indeed, when I used to work for a big MNC at the UK headquarters, it was observed that for the equivalent total cost of a youngish US expatriate (maybe 5 years experience), you could get an Oz/Kiwi/Safr with 15-20 years experience, after considering all the tax equalization, ongoing healthcare payments in US, etc. Was a clear headwind for receiving US expats.

Ultimately, US still seems a very favourable citizenship for many people to retain despite these constraints.


I now work for the worlds 3rd or 5th largest company (I can't keep track of it). HR's stated position on expat benefits is 'there should be NO financial benefit to working overseas'. What this translates to is that expats are levied hypo tax at their home country tax rate (Canadians, Australians etc are really annoyed) and their salary is negotiated and paid in their home currency (i.e. AUD, CND, USD) at the rate commensurate for their skill level in their home country. They are then 'topped' up with a local living allowance depending on the hardship/economic rating of the country and of course some housing and vehicle allowances etc. As you can imagine it's not a popular system! I, fortunately, fell through the cracks as a Singapore PR - I pay tax in Singapore of course, I'm paid in SGD and my salary level is a little high for a local salary but has been left alone. I predict - because everyone seems to follow this companies trends - is that this will become more common.

I thought that was already the norm, I was on that approach through 2003-9. The hypo tax is a definite downside here, but personally I found the allowances made up for it a lot. Especially for those expats with big families, having International School fees, return home flights etc etc. Maybe companies have been trimming back on these allowances though.

The HR policy is naive, how dare you expect to financially benefit from an international career?! They must like it to be overly complicated to keep themselves occupied. All these allowances and adjustments needing to be continually reviewed and indexed, keeping at least a few HR advisors in a job.


It's naive and it loses us people.

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zzm9980
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Postby zzm9980 » Wed, 01 Jan 2014 2:28 pm

PNGMK wrote:
Beeroclock wrote:
PNGMK wrote:
Beeroclock wrote:
zzm9980 wrote:
GSM8 wrote:I was moved to Singapore by an international company, but it is nowadays less common to provide tax equalization


And to add to that, tax equalization is yet another taxable benefit which makes it cost even MORE to the company providing it. Ultimately it is less compensation you receive and a larger burden on your employer for employing you as an American.


Indeed, when I used to work for a big MNC at the UK headquarters, it was observed that for the equivalent total cost of a youngish US expatriate (maybe 5 years experience), you could get an Oz/Kiwi/Safr with 15-20 years experience, after considering all the tax equalization, ongoing healthcare payments in US, etc. Was a clear headwind for receiving US expats.

Ultimately, US still seems a very favourable citizenship for many people to retain despite these constraints.


I now work for the worlds 3rd or 5th largest company (I can't keep track of it). HR's stated position on expat benefits is 'there should be NO financial benefit to working overseas'. What this translates to is that expats are levied hypo tax at their home country tax rate (Canadians, Australians etc are really annoyed) and their salary is negotiated and paid in their home currency (i.e. AUD, CND, USD) at the rate commensurate for their skill level in their home country. They are then 'topped' up with a local living allowance depending on the hardship/economic rating of the country and of course some housing and vehicle allowances etc. As you can imagine it's not a popular system! I, fortunately, fell through the cracks as a Singapore PR - I pay tax in Singapore of course, I'm paid in SGD and my salary level is a little high for a local salary but has been left alone. I predict - because everyone seems to follow this companies trends - is that this will become more common.

I thought that was already the norm, I was on that approach through 2003-9. The hypo tax is a definite downside here, but personally I found the allowances made up for it a lot. Especially for those expats with big families, having International School fees, return home flights etc etc. Maybe companies have been trimming back on these allowances though.

The HR policy is naive, how dare you expect to financially benefit from an international career?! They must like it to be overly complicated to keep themselves occupied. All these allowances and adjustments needing to be continually reviewed and indexed, keeping at least a few HR advisors in a job.


It's naive and it loses us people.


They want to prevent nepotism from playing a role in assigning these roles. Of course, the nepotism still happens because there is always a VP somewhere who has the authority to go outside policy and hook-up his favorites.
It's just one more example of overly-PC HR trying to eradicate problems that are better dealt with as one-offs.

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Postby Beeroclock » Wed, 01 Jan 2014 4:22 pm

Yes there always seems an expat mafia in big MNC where they recommend each other for plum postings on full packages. It's in no-ones interest to change the system, top mgmt , middle mgmt, HR... They all benefit. Some guys seem to manage to stay on this merry go round for 15-20years. It's a special skill in itself. But the best cases I saw a few times where expats took residence and then soon after got posted to their home town on a full expat package. Amazing!

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Postby GSM8 » Wed, 01 Jan 2014 7:55 pm

Staying on the original topic of US expat taxation, we have to make our problems and issues known - the vast majority of us are not fat cat tax scamming expats. It probably wont result in any immediate changes, but we have to repose some faith at least in the democratic process, that it still might at some politically correct juncture in the future.

Towards this end, I did 3 things so far:
1. Submitted a testimonial to Americans Citizens Abroad (ACA) which they will consolidate and submit next month to Senate (submitted one to House last year): http://americansabroad.org
2. Wrote directly to Senate Finance Committee as on the ACA website (before 17-Jan)
3. Will be writing to 3 congresspersons who are on the Americans Abroad Caucus: Co-Chairs of the Caucus; Carolyn Maloney (D-NY) and Mick Mulvaney (R-SC); and, Rep from the last place that I lived in Bay area, Mike Honda (D-CA), who has also voiced support for these issues. All these lawmakers have links on their personal .gov websites for constituents to contact them via online message (some need a zip code for you to proceed) or fax.

I just learned today that I may not be allowed to open something as simple as a brokerage account in Singapore as they are afraid here of falling afoul of the extra-territorial reach of US law - again this is something that expats of no other country have to deal with.

I urge any and all of you who are affected and/or concerned to reach out to our lawmakers and make your opinions known (like I already have), rather than just assuming that "someone else" will take care of it. That "someone else" is YOU.

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Postby sundaymorningstaple » Wed, 01 Jan 2014 8:23 pm

tic...toc...tic...toc....

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Postby GSM8 » Tue, 14 Jan 2014 11:42 pm

Folks,

I just wanted to keep this topic "alive" (even if it amounts to bleating to myself or incurring the ire of co-forummers).

In addition to past articles on this issue in WSJ, Fox, NYT, Forbes, FT, Economist and more (not to mention my own eloquent exhortation to action earlier in this thread) here is a recent article on Harvard University's blog that hits the nail on the head.

http://hir.harvard.edu/blog/jessica-dor ... hip-abroad

As Gavin Newsom (former SF mayor and current CA lieutenant gov) once said to my project team on his reluctance to let us pilot a low-risk albeit experimental waste treatment project in a residential part of SF, for every 1 complaint he actually receives, he assumes that 1000 people have that complaint but are being silent. Staying on the point, for every letter we write to our lawmakers voicing our views against citizenship-based-taxation, they will probably also assume that a 1000 others feel the same way (see my earlier posts in this thread for what we can do.) Nothing may happen immediately, but we just need to have confidence that our views do get recorded in a democracy and eventually may get taken into consideration years later.

So, lets keep this cause moving, and let us then fellow expats unite (with due credit to Thomas Jefferson for the quote.)

Feel free to PM me if that's more appropriate. Peace.

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Postby ohmz52 » Wed, 15 Jan 2014 4:45 am

Apparently, US expats don't have to pay tax if they're unemployed.
The grass is greener on the other side.

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Postby GSM8 » Wed, 15 Jan 2014 7:23 am

The grass may be greener on the other side, ohmz52. But their water bill is likely higher.

The problem with US citizenship based taxation is that the grass is no greener, but the water bill is still higher..

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Postby zzm9980 » Wed, 15 Jan 2014 8:53 am

ohmz52 wrote:Apparently, US expats don't have to pay tax if they're unemployed.


No sh1t?

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Postby Beeroclock » Wed, 15 Jan 2014 9:30 am

zzm9980 wrote:
ohmz52 wrote:Apparently, US expats don't have to pay tax if they're unemployed.


No sh1t?
haha, yes I thought the same, then I wondered if it's a kind of cryptic advice to structure one's affairs using companies etc and realize your income somehow as a capital gain...... but then I went back to the first thought

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Postby Beeroclock » Wed, 15 Jan 2014 9:41 am

GSM8 wrote:The grass may be greener on the other side, ohmz52. But their water bill is likely higher.

The problem with US citizenship based taxation is that the grass is no greener, but the water bill is still higher..

Maybe the grass is no greener TODAY... but citizenship and taxation policies are long-term / life-time based matters, so there is an argument that even while you are overseas resident you have the comfort and peace of mind that anytime now or in the future you can head back to the USA and enjoy the benefits and right to live there. It is still one of the most prized/sought after citizenships (not by me personally but lots of others), so from this perspective you can count yourself lucky to have it, despite this CBT policy not suiting your personal situation now.

Have you ever thought the other way round that maybe the US have is right and all the other countries accepting RBT are actually on the wrong policy, whereby the citizens who stay at home are subsidizing all the expats who work and play abroad, contributing to other economies and paying taxes there in their peak earning/contribution years, only to return home later to retire, wind down and enjoy the benefits?

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zzm9980
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Postby zzm9980 » Wed, 15 Jan 2014 9:57 am

Beeroclock wrote:
zzm9980 wrote:
ohmz52 wrote:Apparently, US expats don't have to pay tax if they're unemployed.


No sh1t?
haha, yes I thought the same, then I wondered if it's a kind of cryptic advice to structure one's affairs using companies etc and realize your income somehow as a capital gain...... but then I went back to the first thought


Nope, you still pay tax on capital gains. IF anything, that's worse. Employment income is "earned income" and you'd be able to use the earned income exclusion of ~$98k (somewhere around there, goes up a bit every year).

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zzm9980
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Postby zzm9980 » Wed, 15 Jan 2014 10:00 am

Beeroclock wrote:
GSM8 wrote:The grass may be greener on the other side, ohmz52. But their water bill is likely higher.

The problem with US citizenship based taxation is that the grass is no greener, but the water bill is still higher..

Maybe the grass is no greener TODAY... but citizenship and taxation policies are long-term / life-time based matters, so there is an argument that even while you are overseas resident you have the comfort and peace of mind that anytime now or in the future you can head back to the USA and enjoy the benefits and right to live there. It is still one of the most prized/sought after citizenships (not by me personally but lots of others), so from this perspective you can count yourself lucky to have it, despite this CBT policy not suiting your personal situation now.

Have you ever thought the other way round that maybe the US have is right and all the other countries accepting RBT are actually on the wrong policy, whereby the citizens who stay at home are subsidizing all the expats who work and play abroad, contributing to other economies and paying taxes there in their peak earning/contribution years, only to return home later to retire, wind down and enjoy the benefits?


Maybe, but then it's a global economy. You need overseas expat employees to help build business for US firms overseas. I've seen strong arguments that (smaller) US firms' business overseas has been hurt due to these policies as people are less willing to become expats and move and work overseas.

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zzm9980
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Postby zzm9980 » Wed, 15 Jan 2014 10:17 am

http://www.thelocal.se/20120306/39522

http://www.economist.com/news/united-st ... over-there

Just two of the first hits from Google. Tons and tons of stories about this.

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Postby FaeLLe » Fri, 17 Jan 2014 5:21 pm

Apply for an OCI, travel to India, Feel free to turn in your blue passport at the nearest embassy and obtain your Indian citizenship back after 15 years of residence.

Easy solution to not wanting to pay taxes on foreign income :evil:


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