Taxes while working in other countries

[Deleted]

If anyone has thoughts, experiences, or confirmed data on this, I'd really appreciate them  

A company DH is working with in Saudi Arabia is trying to recruit him.  The recruiting company is actually twin companies; one based in the USA, the other in Saudi.


If DH took the position, we would live overseas 330+ days of the year, though probably not all in Saudi, since they do work in many countries.

1.  What I seem to be reading is that if we're married, filing joint, and are working for the Saudi company, we will not have to pay USA taxes on up to about $183,000?  (Foreign Earned Income Exclusion?)

2.  Would there be problems when we file our taxes, if the KSA company doesn't send data to the USA?

3.  If we're working for the USA company instead (not sure which yet), would we still pay full USA taxes (despite meeting the 330 day requirement) and factor that into compensation negotiations?  There does not appear to be income taxes in the KSA. 


Any thoughts or experiences would be appreciated.  We're very law abiding, and absolutely do not want to run afoul of the IRS or Saudi governments.  No one in either of our families have ever worked internationally (outside of the USA military), so we're trying to sort things out as rough bases for negotiations and expectations as best we can.  Thank you in advance!

[mwcpa]

See www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion

The exclusion is up to 97,600 per person....

so, if DH made 100,000 in Saudi Arabia, only 97,600 is excluded....

if you made 50,000 in Saudi Arabia, only 50,000 in excluded...

Also, look at the housing exclusion that may be available...

All other income though is subject to US tax if you are a US citizen, and depending how long you stay overseas, your state government may still deem you a resident and tax may be due to them.

If you do not file a tax return, then there would be a problem, reported income does not determine if it is or is not taxable.... most of my "gross income" is not reported, that does not mean it is tax free and I do not need to report it.

If you work for a US company overseas, the same rules would apply, the disclosures would be a little different....you would more than likely be given a W-2

[Bonny]

copperboxes,

Check to see if one of the perqs for working for this company is tax preparation by one of the big CPA firms.

I'm sooooooo grateful that we didn't have to pay someone to do it. Our tax returns were approaching 100 pages. We were complicated, that's for sure with 5 rental properties + investment income.

If you're leaning this route I would spend some time with a CPA who does a lot of international work for a planning session. Important questions to ask are if you have a house are you planning to sell or put into rental service. On a more personal level, I highly recommend that you visit and make sure that YOU want to live there given the restrictions and think long and hard about what YOU will do over there. Will you have a job? If not, what will you do? That's really, really important, especially if you don't have children. Make sure YOU visit even if it's one your own dime to check out the situation.

FWIW, I turned down a chance for DH to relocate to Brussels in 1996. I had finally got my dream job and our house the year before and did not want to spend my time going to the gym and going to lunch with the other ex-pat wives. The opportunity to work was very limited.That was a good decision for me. In 2009 I agreed to relocate to Bonn, Germany. I'm glad we went and we got in some great travels but again the opportunity to work was pretty limited and I still wasn't into the "lunch bunch" gig.

Make sure you get what YOU want in this arrangement. The money is great BUT as cliché as it sounds, money isn't everything.

ETA: I suggest also looking at a Plan B wherein DH works in Saudi Arabia and you man the fort at home and how that might work out. I'm sure you know that @patstab has this arrangement with her husband.

Good luck with your decision.

[Deleted]

Mar 11, 2014 3:47:55 GMT -5 mwcpa said:

See www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion

The exclusion is up to 97,600 per person....

so, if DH made 100,000 in Saudi Arabia, only 97,600 is excluded....

if you made 50,000 in Saudi Arabia, only 50,000 in excluded...

Also, look at the housing exclusion that may be available...

All other income though is subject to US tax if you are a US citizen, and depending how long you stay overseas, your state government may still deem you a resident and tax may be due to them.

If you do not file a tax return, then there would be a problem, reported income does not determine if it is or is not taxable.... most of my "gross income" is not reported, that does not mean it is tax free and I do not need to report it.

If you work for a US company overseas, the same rules would apply, the disclosures would be a little different....you would more than likely be given a W-2

For sure, we would always file a USA tax return!  Income is income and we're USA citizens, even if nothing is owed, we would need to show everything to applicable parties   

We just are scratching around for ideas of potential problems, if there's a salary bump/decreases while working overseas for either the USA branch or the Saudi branch from taxes (I wasn't sure if it made a difference which company officially hired, or if just being out of the states working for anyone and qualifying counted).  

The Saudi paperwork system seems very different, so if it was all the same, we were wondering if we could get hired by the USA branch and get a W-2, as you said.
Thank you for your information, I really appreciate it and will be looking at over your link soon 

[resolution]

Please take to heart what Bonny is saying and carefully consider the legal codes there and how they apply to women. 

I believe that Saudi Arabia is the most restrictive place in the world for women, including being unable to leave the house alone or drive. Occasionally I read news articles about western women who have been imprisoned for years in Dubai (I know Dubai is in another country but similar culture) because they reported a rape, and since rape is sex they were imprisoned for having sex. Make sure you thoroughly understand the laws and their repercussions.

[Deleted]

Mar 11, 2014 10:37:33 GMT -5 Bonny said:

copperboxes,

Check to see if one of the perqs for working for this company is tax preparation by one of the big CPA firms.

I'm sooooooo grateful that we didn't have to pay someone to do it. Our tax returns were approaching 100 pages. We were complicated, that's for sure with 5 rental properties + investment income.

If you're leaning this route I would spend some time with a CPA who does a lot of international work for a planning session. Important questions to ask are if you have a house are you planning to sell or put into rental service. On a more personal level, I highly recommend that you visit and make sure that YOU want to live there given the restrictions and think long and hard about what YOU will do over there. Will you have a job? If not, what will you do? That's really, really important, especially if you don't have children. Make sure YOU visit even if it's one your own dime to check out the situation.

FWIW, I turned down a chance for DH to relocate to Brussels in 1996. I had finally got my dream job and our house the year before and did not want to spend my time going to the gym and going to lunch with the other ex-pat wives. The opportunity to work was very limited.That was a good decision for me. In 2009 I agreed to relocate to Bonn, Germany. I'm glad we went and we got in some great travels but again the opportunity to work was pretty limited and I still wasn't into the "lunch bunch" gig.

Make sure you get what YOU want in this arrangement. The money is great BUT as cliché as it sounds, money isn't everything.

ETA: I suggest also looking at a Plan B wherein DH works in Saudi Arabia and you man the fort at home and how that might work out. I'm sure you know that @patstab has this arrangement with her husband.

Good luck with your decision.

That's definitely something to ask, we'll do that, thank you!  I think you're right too, we should plunk down some money for a planning session.  

We were on the fence, but he keeps sweetening the deal.  He's pushing for a fast answer though, only a couple weeks at most    I think he's trying to head off a bidding war with his current company, and lock in DH, especially now that he's found that DH can do way more security wise than just fire design and programming.

It's not a huge company, but they find people to subcontract for many massive companies like ARAMCO.  DH was offered his own department and double his current base salary, a 10% profit share on the department, and free housing and his own car.  He's sending DH to Brussels one way or another this year for specialized training, so even if DH stays at his current company, they guy can sell those services and send for DH anyway.

As to cultural stuff:

We're still mulling that over.  DH won't go unless I do, since we're looking at basically 11 month stretches at a time instead of 1 to 2 month bounces.  It'll be a lot of consistent pressure, so having a support team/stabilizer on site would significantly improve the odds of everything flowing well.  Both of us value support teams a lot, I loved it when DH was mine and I was supporting him financially for a while.

I dunno.  It is an offer that's hard to turn down.  Given the rate we save, we could both potentially flat out retire when DH turns 40.  That's a massive bump in security and insulation from the knocks of the life even if we only stay a couple years.   We do avidly seek financial security, given the state of our launch into the work world.  My parent's rough credo growing up was "pragmatism and flexibility" as well, so I've done many things not to my core nature, like speaking in front of full auditoriums, training groups on rock climbing safety, combat sports, etc.  If the trade off is legal and worth it, I've always just flexed as needed to make something happen.  Overall, it seems that if I have plants around me and a quiet space to settle back to my original mental shape, adaptation to a new scenario is probable.  There's always the odds that it won't work out though, and I'll run scenarios for that. 

We'll keep mulling it over and considering.   Thanks for your input Bonny, I appreciate it a lot   

[Deleted]

Mar 11, 2014 11:56:28 GMT -5 resolution said:

Please take to heart what Bonny is saying and carefully consider the legal codes there and how they apply to women. 

I believe that Saudi Arabia is the most restrictive place in the world for women, including being unable to leave the house alone or drive. Occasionally I read news articles about western women who have been imprisoned for years in Dubai (I know Dubai is in another country but similar culture) because they reported a rape, and since rape is sex they were imprisoned for having sex. Make sure you thoroughly understand the laws and their repercussions.

Absolutely!  I bought books on Saudi when DH first was prepping to go over and read a bunch of blogs, to help make sure he didn't get into trouble.  It's a different culture, that's for sure!  

I dunno.  As bizarre as it sounds, on the face of it, my habits sound like an okay fit by coincidence   

I don't drive, even though I have a license (terrible eyesight and quick response times, safer for everyone), DH and I chat and agree before either of us do things, and even though I've learned how to fake it to a high level, I prefer to go out in public with DH as my wingman, since he's actually social and I'm not.  I even enjoy armor-like, full coverage clothing by preference.  Usually canvas or fleece work clothes, but armor like.  Neither of us smoke, drink, or are religious, so those aspects aren't impacted.

If we took it, it'd be a gamble for sure, since there's no way to actually tell whether something is acceptable until you're in the frying pan, so to speak.  But weirdly enough, it doesn't sound like as big a stretch as would be expected for me personally.  I estimate that I'd have a much harder time adapting in a wildly social culture where people are supposed to host each other frequently    I could probably do it, but I'd be spazzing in a corner afterwards a good amount of time, like when I have to suit up mentally and do huge group tasks for jobs.


ETA:
As to rape:  This is maybe weird, but I did calculate danger scenarios like that back when I was in high school.  I always knew that I wanted to travel at some point, but didn't have a partner at the time.  I took wrestling as a cheap self defense course.  Since I'm 5'9" and broad built in the shoulders and hips, all the people I wrestled were guys, generally over 6' tall.  It turns out I'm actually pretty good at it, (guys reaaaaallly don't want to lose to a girl).  I have a lot of trainable strength, endurance, and pain tolerance, just not speed or reflexes, which most female sports solely rely on.  

I am trained in grappling, breaking locks, and crunching joints.  Being wrapped up is not a panic situation.  If someone wanted to attack me, big as I am, I have visualized and prepped to attempt to blind, castrate, or kill the other person.  Targeting someone as big as me, it would be likely that they had done things like that before.  I don't have group fighting experience, but if it's one man, 6' tall or so in the 200 pound range, I can generally hold my own or win, depending on muscle masses and training.


Wah, I sound really bizarre.  I just... plan for problems      I appreciate your thoughts, because it is easy to get shiney eyed by prospective wages, and lessen danger concerns.  I guess I could start training seriously again before we go.  I never look particularly strong, just large and vaguely mom-ish, and then scary apparently if I start moving items.  
Thank you for your thoughts 

[Deleted]

Mar 11, 2014 13:40:10 GMT -5 @patstab said:

My husbands company has seminars he was required to attend when he went overseas about taxes. There are several different ways to handle it and you need to know for SURE. You can get in a mess. Some of the guys decided to have people do theirs, not good.

For  his company its called hypotax, he travels back and forth every 6 to 8 weeks and is not penalized for not being gone so many days.

They have an uplift on wages, when he is here he is paid the rate he would get if he was working in the US. We pay taxes on what would be his regular salary if working in the US. The company pays on anything he earns overseas. But travel and things are handled in various ways. They also pay all taxes in other countries on his salary and some of them are high.

Now if I went with him it would be a whole different ballgame. Most of the places are not somewhere I could live very easily. In many he would still be in a camp and me see him only once a month. Just decided its not worth it. This works well for us money wise and tax wise and yes with the rentals we were filing 60 to 100 page tax returns too. As I'm selling them that is simplifying things. Just be sure you know all the tax implications before accepting. They should provide you with that information.

His plane fares are paid, gets a perdiem plus housing and we both have BUPA insurance good anywhere in the world. They DO NOT deduct SS on his wages but he was full paid in years and dollars wise before the went, so not an issue for us. They supply all drugs for malaria pay for shots and everything. And pay $3k a year for our taxes to be prepared. Some countries like Algeria are now not letting expats come in to work if they are over 60, this is becoming more common.

Cover all your bases so you are making money. As hubby says the only reason he is there is to make sure we have enough in our old age.

These jobs can be very lucrative.

Let me tell you about one horror story.  I knew a lady in Texas, her husband worked in Saudi for years and she went with him for years.  She had something happen with her arm, an infection I think.  She was in the hospital there, she said in retrospect she should have flown home to the US and they amputated most of her arm, she had no idea that as going to happen.  It sounds like the whole thing was handled very badly, remember women there are not treated like we are here.  In many countries we are less then 3rd class citizens.  Just be careful.

Thank you for the information Pat!  

And    on the horror story.  I'll definitely be taking that under consideration.  We should be based near a very large expat community, but I'll be looking further into health scenarios for sure before we make a decision.  

We'll get some guides in to assess our specific tax situation further.  From your guys' experiences this sounds far more intricate than I'd estimated.  I was hoping (naively it seems) that we could possibly do taxes mostly as normal and just put a large deduction in if we qualified.  $3000 for taxes oof.  That'll be factored in to talks.

We'll definitely continue to be careful as we go forward.  I generally feel that the one time a person doesn't plan and set ground work for things going wrong, that's when it happens    DH is pretty zen, he has me do the worry thing, and we merge somewhere in the middle.

[saveinla]

copperboxes - Dubai/Kuwait are completely different from Saudi in that women can go out alone and can dress in Western clothing. Some places, you can drive cars too.

Saudi is where you have to be completely covered if you step out. Even there, once you get into your office, you can remove the covering and relax. If you are good with staying home and being with your DH, I would suggest accompanying him at least for some time. GOod luck on whatever you decide.

[Bonny]

@copperpouches,

I think there's a lot more to your decision than just a tax consideration. You might want to start a thread over on YM or YM-OT perhaps titled What to Consider when Moving Overseas? There are several posters who have or are living overseas.

I moved 5 times for DH's job (only turned down the Brussels opportunity). We did well financially and I enjoyed most of it. BUT there were real trade-offs to my career. The experiences make me feel I could probably live almost anywhere for two years but I always had a Plan B if I hated it.

LOL, looking back I think my "scariest" move was from the SF Bay Area to the greater Phoenix Area since the summer temps were almost double (60 degrees vs 115 degrees).

If you're not in love with your job and DH has a good opportunity I would probably try it. But find out how long he has to make a commitment and what are the penalties if you break them. And get a commitment from your DH that if you are unhappy after 6 months (you really need that much time to get to know a place) that he will agree to move back or to another place.

Good luck

[Deleted]

Hey you guys! 

Sorry for dropping off the radar; lots of stuff going on, it's all developing pretty rapidly, and there's a bunch of factors in the gearworks.

Well, a brief run down of our situation:

~No kids

~I am currently a SAH person, very happy with my yard.  

~I do not seek out interactions with people face to face.  DH has been gone for over 2 months on this last bounce, and I've called my family, chatted with DH daily on skype, and talked with you guys, emailed friends, but have not seen another human face to face in that time.  We stocked the kitchen, and I get occasional snacks from Amazon.  It feels relaxing and peaceful, me the cat and the yard.  My family trends towards hermit like, we just force ourselves to be social with people for pragmatic reasons.  DH is my best friend.  

~We do well in really stressful situations and when it's just the two of us.  I've supported him 100% financially, vice versa, and everything in between.  We've done repairs together, moved from CA to OK sight unseen (broke at the time), lots of "trial" style stuff.  In a funny way we shine best as "foul weather" partners.  We sync up best when there's a problem to be addressed.  He cares a lot, I'm calm and cooling when I talk, so we move forward rather efficiently in tight spots without snapping or snarling given our dynamics.

~DH is still currently paid domestic plug 'n chug design wages as his base salary.

~In the year and change he's been at his current company, he's gotten employee of the month, done multi-million dollar designs, and is rocking his Saudi projects, which he initially volunteered for because no one else would do it.  Those are pure profit, and he's earned multiples his salary with them for the company. 

~Despite that, his current company is going on 3 months late with his yearly review (the time for salary bumps), there's been an exec/personnel shuffle up, and they may try to offer a piss raise

~If DH stayed at his current company he would still work in Saudi, and likely be sent to Libya too, to fix another disaster project there    

~His current boss wants us to move to Houston this year anyway, so I'd likely give up my yard in either situation

~DH should be getting a written offer for the move to Houston from his current boss today, but he's been late so many times...

~The Saudi offer is evolving too fast, the guy is telling everyone DH has already accepted, when that is NOT the case, and DH put that in writing the day before, that he needed time.  

~The fellow at the new company really wants DH because their cred in the region was tanked with the their projects, until they subcontracted DH and he got them all flowing and being finished.  DH's current company wants him, because part of his stated job is to make positive contacts in the region, along with doing the design and installation management work.  He's been doing that, now we need to see if they'll actually pay him for meeting and far exceeding all goals   

~DH doesn't really like guy making the new offer, but the Saudi job sounds really good on the face of things financially, so we need to weigh exactly how much value is being discussed.


TL;DR:  There is a crud load factors floating around.  It looks like a bidding war is going to happen.  For now we just want to get our ducks in a row tax wise, to figure out what offers are roughly comparable, or how much better an offer is than another.

Urg.  We're going to get DH's current boss off his duff I guess, since the other fellow is trying to strongarm Chris and misrepresent the situation as though he already work for them.  This all developed in the past two days