Job Discussion Forums

[Dejvice]

[plumpy nut]

[veiledsentiments]

[SENTINEL33]

Sorry, I'm still confused.

I understand (as Paul in Saudi explained) that his US$7000/month was the total package. Fine.

What's still unclear is if he is a Direct Hire or not. In a related and recent posting someone said "they just got hired by Aramco" but again, this person failed to specify whether "they" were DH or contractees.

My question is: what's the difference between a DH with Saudi Aramco (there's no more "Aramco" anymore as I previously explained), and working for SAramco via a contractor?

Is there any advantage at all? What are the advantages of a DH? (A DH with the "old" and original Aramco was worth fighting for, but Saudi Aramco?)

[cnthaiksarok]

[jaffa]

Re. accommodation, I was in Abqaiq in 2003 during the invasion of Iraq and every Arab and his camel turned on westerners - guys getting shot on the streets, compound attacks, etc. As a contractor, Aramco couldn't have cared less about our safety. Most of the Aramco compounds were/are empty with a tiny number of western and Filipino Aramcons living there. Aramco wouldn't even consider letting us live there.

[sicklyman]

[Paul in Saudi]

Yes, I am a contractor, and am too old to become a DH.

I pay US$1,250 for a cabin in a compound with food, laundry and internet all included. I bought a (new) car when I arrived and charge other teachers for rides into work.

All in all, I make more in housing and transport allowances than I spend.

People who want to save more money get (or share) an apartment downtown.

[SENTINEL33]

[/quote]

Many thanks to Sicklyman for his detailed info re the situation vis a vis "Saudi" Aramco. A few points:

FYI no one at work calls Saudi Aramco Saudi Aramco, despite your explanation. We all say Aramco.

Well, yes, everybody says Aramco (even in Bahrain) but what they mean is Saudi Aramco, a Saudi company. All official documents, including contracts, signs and so forth make it very clear that Saudi Aramco is the name of the company. "Aramco" no longer exists (at least not under the "Aramco" name)....and when it did exist, it was an American company, not Saudi (and therein was and still is the crucial difference).

Bottom line: Whether direct hire or contractee, whether it is popularly and commonly "called" Aramco or Saudi Aramco, you are working for a Saudi company and not an American company. This has important implications (at least for US citizens) which I will not go into here.


You do get a generous housing allowance if you live off compound but direct hire US citizens do not get tax breaks unless they live on Aramco compounds I was told last week. [/quote]

I question this. Any "tax break" a US citizen gets is based on whether he lives and works overseas, not whether he lives "on a compound" or not. This is misleading or at least incomplete information.

Anway, thanks again.

[sicklyman]

I am told that US citizens currently living on compounds that Aramco are using for overflow in Dhahran/Khobar are finding that they are not exempt from US taxes and so there is a desperate panic to get on official Aramco compounds where they are exempt. This is one reason why US citizens are given priority for housing on official Aramco compounds and other nationalities get the housing scraps. This is info as of last week from long term Aramco employees who are US citizens.

I don't claim to provide complete information about any topic and misleading this certainly is not. Quite the contrary. It provides people with a lead to investigate what the tax situation is officially.

At the risk of raising your ire still further, may I suggest that saying there are important implications but failing to point them out when they would be very relevant to the discussion at hand risks providing incomplete information?

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.

[johnslat]

Dear sickleyman,

It would be odd if which compound a person lives in had any effect on tax exempt status. If a US citizen works abroad for a US company (or the US government) he/she is not exempt.
As far as I'm aware, that's how the IRS defines it.

Regards,
John

[sicklyman]

that's what I thought John having known lots of US citizens in the countries I've lived in overseas who have said the same. I have a feeling it must have something to do with Aramco's policies on pay/benefits rather than any US government ruling. I may see the sources of this info over the weekend and, if so, I'll be asking for more info.

[veiledsentiments]

[SENTINEL33]

delete

[johnslat]

From the horse's . . . . well, you know:

Rules for US government employees

"U.S. Government Civilian Employees Stationed Abroad

1. U.S. Government Civilian Employees Working Overseas

If you are a U. S. citizen working for the US Government, including the Foreign Service, and you are stationed abroad, your income tax filing requirements are generally the same as those for citizens and residents living in the United States. You are taxed on your worldwide income, even though you live and work abroad. However, you may receive certain allowances and have certain expenses that you generally do not have while living in the United States.

U.S. Foreign Service Employees

If you are an employee of the US Foreign Service and your position requires you to establish and maintain favorable relations in foreign countries, you may receive a nontaxable allowance for representation expenses. If your expenses are more than the allowance you receive, you can deduct the excess expenses as an itemized deduction if you meet certain. For more information, refer to U.S. Foreign Service Employees.

Foreign Earned Income Exclusion, and Foreign Housing Exclusion and Deduction

Certain taxpayers can exclude or deduct income earned in foreign countries. However, the foreign earned income and housing exclusions and the foreign housing deduction do not apply to the income you receive as an employee of the US Government.

For more information on the foreign earned income and housing exclusions and foreign housing deduction, see Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad.

Allowances, Differentials, and Other Special Pay

Most payments received by US Government civilian employees for working abroad, including pay differentials, are taxable. However, certain foreign areas allowances, cost of living allowances, and travel allowances are tax free. For more information, refer to Allowances, Differentials, and Other Pay.

U.S. Agency Reimbursed By Foreign Country

If you are a US Government employee paid by a US agency to perform services in a foreign country, your pay is from the US Government and does not qualify for the exclusions or the deduction. This is true even if the US agency is reimbursed by the foreign government.

Employees of Post Exchanges, etc.

If you are an employee of an Armed Forces post exchange, officers' and enlisted personnel club, embassy commissary, or similar instrumentality of the US Government, the earnings you receive are paid by the US Government. This is true whether they are paid from appropriated or non-appropriated funds. These earnings are not eligible for the foreign earned income and housing exclusions or the foreign housing deduction.

Travel and Entertainment Expenses

You may be able to deduct the ordinary and necessary business-related expenses you have for travel, entertainment, or transportation expenses while stationed abroad. To deduct such expenses, including those certified by the Secretary of State, you must meet the rules for recordkeeping and accounting to your employer. These rules are explained in Publication 463, Travel, Entertainment, Gift, and Car Expenses.

Miscellaneous Deductions

You may also be able to deduct unreimbursed employee expenses as miscellaneous itemized deductions, including certain employee business expenses. For more information about miscellaneous deductions, refer to Publication 529, Miscellaneous Deductions.

2. U.S. Territories/Possessions

This page does not cover the rules that apply if you are stationed in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or Puerto Rico. That information may be found in Individuals Living in U.S. Possessions.

3. Foreign Income

If you are a US citizen or resident alien with income from sources outside the United States, you must report all that income on your U.S. tax return unless it is exempt by US law. This applies to earned income (such as wages) as well as unearned income (such as interest, dividends, and capital gains).

4. Other Employment

If you are a US citizen or resident employed abroad by the US Government and you also receive income from a private employer or self-employment, you may qualify to claim the exclusions or the deduction applicable to this other income. To qualify, you must meet either the bona fide residence test or the physical presence test. Your spouse who is a US citizen or resident alien may also qualify if he or she earns income in a foreign country that is paid by a private employer or is from self-employment. If you are not a U.S. government employee, amounts paid by the United States or its agencies to you may also qualify for the exclusions or the deduction. Refer to Foreign Earned Income Exclusion."

Rules for employees working abroad for US companies

"U.S. citizens and green-card holders who work abroad for U.S. companies remain subject to U.S. payroll taxes and Form W-2 income reporting. Substantially present residents remain subject to these rules if they are not away long enough to become nonresident aliens."

7. I am a U.S. citizen working for a U.S. firm in a foreign country. Are any of my wages or expenses tax deductible?

In preparing your U.S. income tax return, U.S. citizens and residents working abroad must correctly report their income and calculate their deductions and credits.

U.S. citizens and resident aliens are taxed on their worldwide income.
•You must report your wages and other earned income on the correct lines of your Form 1040.


Some taxpayers may qualify to exclude a limited amount of their foreign earned income and either claim the housing exclusion or deduction. To qualify:
•Their tax home must be in a foreign country, and either: •They must be U.S. citizens who are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year;
•They must be U.S. resident aliens who are a citizen or national of a country with which the United States has an income tax treaty and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year; or
•They must be U.S. citizens and resident aliens who are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.


Taxpayers may be able to claim a foreign tax credit if required to pay a foreign income tax to the foreign country, if he or she has not elected the foreign earned income exclusion with respect to that income.

Taxpayers may also qualify to deduct away from home expenses (for travel, meals, and lodging), but not against excluded income.

For more details, please refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, Publication 463, Travel, Entertainment, Gift and Car Expenses, Publication 514, Foreign Tax Credit for Individuals, and Tax Topic 514, Employee Business Expenses."

Regards,
John