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ARAMCO
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SENTINEL33



Joined: 19 Jan 2014
Posts: 112
Location: Bahrain

PostPosted: Thu Feb 06, 2014 11:30 pm    Post subject: Reply with quote

Thanks for posting that summary, johnslat, and for confirming what I knew to be the case:

PART I

In summary (a very watered down summary):

1. US Govt. workers do not get the overseas tax deductions non-govt. US citizens do (although they get other benefits to compensate). That is to say, your local friendly vice-consul gets all his income taxed regardless of where he lives (or how long he lives there).

2. US citizens working for US companies overseas have to report their total world-wide income on their tax return but if they come under the provisions of the 365 rule or claim "residency" in a foreign country, they can deduct up to (approx) $95 thou of that income from taxation.

(This applies to US citizens working for FOREIGN companies too. I don't know why the distinction is made between a US company and a foreign company. Doesn't matter who you work for.....if you work overseas and meet certain requirements (365 days overseas in a taxable year or you claim residency in a foreign country), you can deduct approx. $95 thou from taxation......but in both cases, you still have to "file".

"Filing" does not mean "paying". The 2 are related but totally distinct actions. Everyone overseas must file and report his total income......very few (govt. workers) end up paying.

Yours truly.......Sentinel


Last edited by SENTINEL33 on Fri Feb 07, 2014 12:11 am; edited 1 time in total
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veiledsentiments



Joined: 20 Feb 2003
Posts: 15867
Location: USA

PostPosted: Fri Feb 07, 2014 2:55 am    Post subject: Reply with quote

Which follows my assumption that which compound they live on makes no difference... they are under the same rules that the rest of us are under. Even receiving a W-2 makes no difference... as one of my employers (in Egypt) took FICA from our pay and provided a W-2, but the income was still not taxable.

VS
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SENTINEL33



Joined: 19 Jan 2014
Posts: 112
Location: Bahrain

PostPosted: Fri Feb 07, 2014 8:49 am    Post subject: Reply with quote

Exactly, VS. It doesn't matter WHERE you live (or where you are "housed). It also doesn't matter WHO you work for - a USA company or Foreign company (entity) - the filing requirments and the taxing provisions are exactly the same (except for US Govt workers).

However, SICKLYMAN is not entirely wrong - there is a "housing" provision that is easy to understand (once you understand it), but incredibly difficult to explain. I'm working on a watered down version about this which I'll post later. I suspect it is this provision that has US Aramcons all a-twitter as reported by sicklyman. In a word: the housing allowance provided by Aramco IS taxable......the housing provided US teachers at KFUPM (a uni right next door to Aramco) ISN'T - and it's important to understand why this is so.

VS - Yes, if you worked for AUC (American University in Cairo) you were, in effect, working for a US "entity" since they were (are?) registered in NYC.

Your taxes were treated AS IF you were working in NYC itself....except....your salary was sheltered from taxes since you "earned" your wages overseas. But you still paid into Social Security (the best deal, actually and getting harder to find).
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BajaLaJaula



Joined: 25 Jan 2007
Posts: 73
Location: Jeddah

PostPosted: Fri Feb 07, 2014 9:36 am    Post subject: muddy the waters Reply with quote

BEWARE...
Some US companies have come up with a scheme in which they tax their employees overseas, hold this $$$ for the entire year then decide how they will reimburse the employee for this unnecessary tax...
It is called tax equalization and companies like Raytheon are now using it.
Only about 1/2 of this unnecessary and illegal tax was ever returned to me...I could never get a satisfactory response from HR as to why the company wanted to withold taxes when Uncle Sam didn't.
In my case this amounted to about 4K USD lost every year.
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SENTINEL33



Joined: 19 Jan 2014
Posts: 112
Location: Bahrain

PostPosted: Fri Feb 07, 2014 12:54 pm    Post subject: Re: muddy the waters Reply with quote

BajaLaJaula wrote:
BEWARE...
Some US companies have come up with a scheme in which they tax their employees overseas, hold this $$$ for the entire year then decide how they will reimburse the employee for this unnecessary tax....


For a mostly understandable explanation of the tax equalization law, see:

http://www.expatexchange.com/lib.cfm?articleID=718

Baja - most likely, the US$4000 you "lost" was probably your portion of the Social Security/Medicare taxes you were subject to. (The employer paid an equal amount into the system). The amount you got back was the amount Raytheon didn't need to pay your portion of these taxes.

I'd have to see some kind of official Raytheon document or contract to comment more at length about your specific situation (but I don't think they were "illegal" as such).

PS Your username is somewhat unusual. It is <bajalajaula>. I don't know where you got it, but do you know it's a phrase in Spanish?

Baja la jaula = Lower the cage.............Were you aware of this oddity?


Last edited by SENTINEL33 on Fri Feb 07, 2014 1:49 pm; edited 1 time in total
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BajaLaJaula



Joined: 25 Jan 2007
Posts: 73
Location: Jeddah

PostPosted: Fri Feb 07, 2014 1:39 pm    Post subject: Reply with quote

Perhaps you should apply for a job with Raytheon HR.....each company has their own spin on their own plan. It is barely legal since it is witholding monies that are not required by federal law.
Thanks for taking a stab at it.
BTW....Lower the cage....appropriate for anyone contemplating living in Saudi.
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johnslat



Joined: 21 Jan 2003
Posts: 12302
Location: Santa Fe, New Mexico, USA

PostPosted: Fri Feb 07, 2014 1:42 pm    Post subject: Reply with quote

The main difference, I believe, is if you work abroad for the US government or for a US company, you will have FICA deducted from your salary - which , I'd say, is actually a GOOD thing, especially if you're abroad for a long time.

If you are employed by a "foreign entity." you cannot "voluntarily" pay into SS and/or Medicare:

"Can I voluntarily pay Social Security while working for a foreign employer abroad?

No. This is an employer administered tax. You cannot pay this tax yourself. Your wages cannot be reported as self-employment income on your tax return. The earnings will not count towards your retirement benefits under Social Security.
Will I have state unemployment benefits if I don't pay FICA?

Probably not. While FICA and FUTA are totally separate taxes, the laws that governs each are very similar. Unemployment taxes can only be paid by the employer."

So, if you're a long-tern expat, you'd likely be well-advised to set up your own "retirement" account(s).

Regards,
John
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SENTINEL33



Joined: 19 Jan 2014
Posts: 112
Location: Bahrain

PostPosted: Sat Feb 08, 2014 5:11 am    Post subject: Reply with quote

sicklyman wrote:


No one ever claimed that Aramco wasn't a Saudi company. It's just moot to bother insisting on the full name when no one else does.


I disagree. Most Saudi Aramco employees I have met and the native population at large in KSA have never thought at all about the " legal status" of Saudi Aramco.

But if you question them about it, you'll discover that the vast majority
assume it continues to be an American company with Saudi participation "of some kind".

This would be particularly true of people who are "direct hire". Once they reach this exalted position, many assume they're only a step away from obtaining the magical "Green Card" for legal US residency. I'm sure you're aware how much "fantasizing" is a pastime in KSA.
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scot47



Joined: 10 Jan 2003
Posts: 12098
Location: Ultima Thule

PostPosted: Sun Feb 09, 2014 2:37 pm    Post subject: Reply with quote

Rumours and fantasies - the life blood of KSA !
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sicklyman



Joined: 02 Feb 2013
Posts: 421

PostPosted: Tue Feb 11, 2014 3:06 pm    Post subject: Reply with quote

ok here's the deal...

it's not the individuals who are liable to taxation, it's Aramco itself. Individuals are worried that this might be passed on to them by the company in some way, hence the desire to get 'normal' accommodation.

It seems that the Raka compound in northern Khobar is leased by Aramco from Northrop Grumman who still own it. Because this is a US company, the IRS is well aware how much the housing there is worth. And this figure is significantly higher than the figure that Aramcons are being charged by their company. The difference is thus significant when it comes to taxation.

It's highly likely that this will have absolutely no impact on anyone living in the compound but it's a great excuse to demand priority on the main camp for the time being, hence the rumours.
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billings



Joined: 20 Sep 2010
Posts: 50

PostPosted: Sun Mar 02, 2014 4:37 pm    Post subject: Saudi salaries Reply with quote

There are definitely some EFL teachers clearing well over 10 or $11,000 per month.
Out of that will come rent and transport, equalling about $1,000 per month - depends how you want to live.
Contractors do NOT live on Aramco camp.
If you have kids (as a contractor) school fees are expensive!!!!!
Extras would be flights, health insurance etc.
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