Job Discussion Forums

[SENTINEL33]

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

[veiledsentiments]

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

[SENTINEL33]

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).

[BajaLaJaula]

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.

[SENTINEL33]

[BajaLaJaula]

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.

[johnslat]

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

[SENTINEL33]

[scot47]

Rumours and fantasies - the life blood of KSA !

[sicklyman]

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.

[billings]

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.

[desertdawg]

Any updates on Aramco and the contracting company JATCO in particular?

Are salaries still in the $7K area all in?

How difficult is it to find accommodation?

Thanks

[sicklyman]

[desertdawg]

JATCO is the company I've been told I would be contracted to if I pass the interview.

Sorry. The accommodation question was vague. Will have to wait and see if I get an offer. Apparently then they will give me the location.

I have over ten years experience in the Middle East. Distance diploma. What figure should I be negotiating to?

[scot47]

Negotiating ? I think that most places make an offer and you take it or leave it. Haggling, as one does with a carpet salesman, is not the mode - at least not the one I experienced.

I will now step back and await incoming fire from all directions.,