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PITFALLS OF SHORT-TERM CONTRACTS

 
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hash



Joined: 17 Dec 2014
Posts: 456
Location: Wadi Jinn

PostPosted: Fri Mar 23, 2018 7:57 pm    Post subject: PITFALLS OF SHORT-TERM CONTRACTS Reply with quote

It appears that short-term contracts for ESL teachers in KSA are becoming more and more common as programs are getting reduced and cut back to “just basics”.

Teachers subject to the USA income tax rules should be aware that 3, 4,or 6 month KSA contracts will not render their income tax exempt because to qualify for the exemption, you have to be overseas for a minimum amount of time (about 11 months-PHYSICAL PRESENCE TEST) and a 6 month and under contract simply won’t let you fulfill that condition.

>>> In other words, if you accept a less than a year’s contract overseas, it's very likely your income would be taxed by the Internal Revenue Service as if you had earned it in the USA.

New teachers unfamiliar with all this, can refer to
the BONA FIDE RESIDENCY TEST at

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-bona-fide-residence-test

and the PHYSICAL PRESENCE TEST at

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-physical-presence-test

New teachers to KSA should also be aware that in the past, KSA taxes were unheard of….but within the last few months or so, various kinds of “levies” have been established which can be onerous especially for families with dependents.


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sicklyman



Joined: 02 Feb 2013
Posts: 930

PostPosted: Sun Mar 25, 2018 9:12 am    Post subject: Reply with quote

I'll piggy back on this to warn UK-based expats of the same issue. Unless you leave the UK on a contract of at least 12 months AND remain outside the UK for a full tax year (i.e. start counting the year from the first April 5th you are abroad) you will be liable for tax on your Saudi income in the UK if you return.

If you have ties to the UK you may even remain liable despite that.
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scot47



Joined: 10 Jan 2003
Posts: 15343

PostPosted: Sun Mar 25, 2018 8:39 pm    Post subject: Reply with quote

Inland Revenue in UK will get you if you break the rules. Some years ago a friend from the UK went to Riyadh to work for a sizeable tax-free salary. He could not stand it and was shipped home after a psychotic episode. He had only been there for a few months. The taxman got him for tax on all the money that he had earned. Be warned
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