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Expatriate taxes in KSA (for U.S. citizens)
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ntriolo8



Joined: 06 Jun 2012
Posts: 15
Location: Washington DC

PostPosted: Sun Jun 24, 2012 4:17 pm    Post subject: Expatriate taxes in KSA (for U.S. citizens) Reply with quote

Greetings everyone. I am new to Dave's ESL Cafe. I'm an ESL teacher with a year of experience abroad, and a couple years' experience at home in the United States.

I am considering taking a job in KSA, and one of the attractions obviously is the tax-free salary. However, I have been reading about Americans having to pay taxes on their salaries even when they live and work abroad, and having to declare foreign bank accounts in excess of a certain amount of money.

For those Americans who have experience teaching in KSA or UAE or Qatar, what do you do with your tax-free salaries? Do you deposit them in American banks, banks local to the countries you work in, European banks, or elsewhere? Do you pay taxes on them?

Any info would be greatly appreciated, as this will strongly impact whether or not I decide to take this position.
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johnslat



Joined: 21 Jan 2003
Posts: 13859
Location: Santa Fe, New Mexico, USA

PostPosted: Sun Jun 24, 2012 4:30 pm    Post subject: Reply with quote

Dear ntriolo8,

As an EFL teacher, you won't be paying any US taxes - unless you plan on making more than $95,000 a year Very Happy

http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html

For your first year, you may want to read this:

Extension to Claim Foreign Earned Income Exclusion

http://www.irs.gov/businesses/small/international/article/0,,id=96782,00.html

You need to FILE every year, but you won't be paying any taxes, to either the US or to Saudi.

Heck, that's usually ONE of the reasons we're EFLers Very Happy

I always used to use my bank ATM to send money back to the States. Remember, though, that in Saudi, you need to be on a legitimate employment visa (and have an iqama - Saudi I.D. card) to open a bank account there. You can't do so on a "business visa" - in fact, you'd be working there illegally on such a visa. There ARE other ways to send money back, however.

I'd never keep my money in a Saudi bank; I saw too many teachers with bank accounts in Iran in 1979 have their life savings wiped out.

Regards,
John
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ntriolo8



Joined: 06 Jun 2012
Posts: 15
Location: Washington DC

PostPosted: Sun Jun 24, 2012 5:20 pm    Post subject: Reply with quote

Great, thanks for the helpful response, John. In that case, I will continue using my current bank account.

This was never a concern for me in my last teaching job, because I was making a pittance and was paid with made-to-cash checks. Laughing
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spiral78



Joined: 05 Apr 2004
Posts: 11433
Location: On a Short Leash

PostPosted: Sun Jun 24, 2012 5:30 pm    Post subject: Reply with quote

You are required to report foreign bank accounts that hold over 10,000 at any point in a given year. Google FBAR. Doesn't mean you have to pay anything, but they want to know about it.

If you have your salary deposited into a US bank, not applicable.
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johnslat



Joined: 21 Jan 2003
Posts: 13859
Location: Santa Fe, New Mexico, USA

PostPosted: Sun Jun 24, 2012 5:51 pm    Post subject: Reply with quote

Dear spiral78,

That's true -

Who Must File an FBAR?

"Each US person with a financial interest in or signature or other authority over any financial account in a foreign country must file an FBAR if the aggregate value of all such accounts exceed $10,000 at any time during the calendar year. The FBAR must be filed on or before the June 30 after the calendar year in which the relationship existed. The FBAR is required in addition to the reporting obligations with respect to foreign accounts on Form 1040, Schedule B."

On the other hand, anyone who'd keep over $10,000 in a Saudi Bank would be someone in serious need of financial and/or psychological counseling Very Happy.


Regards,
John
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al-Californian



Joined: 27 Jan 2008
Posts: 96

PostPosted: Fri Jun 29, 2012 5:18 am    Post subject: Reply with quote

johnslat wrote:

I always used to use my bank ATM to send money back to the States.


Hi John,

How'd you do that?
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EnglishDoYouSpeakIt



Joined: 19 May 2009
Posts: 151
Location: Saudi Arabia

PostPosted: Sat Jun 30, 2012 2:59 pm    Post subject: Reply with quote

Requirements to be exempt are the following:

A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,

A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or

A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.


So if you vacation to america for even six days you have to pay? Or does the first one apply in that I am a resident of a foreign country? If on iqama you are a resident, yes?[/list]
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veiledsentiments



Joined: 20 Feb 2003
Posts: 17517
Location: USA

PostPosted: Sat Jun 30, 2012 3:55 pm    Post subject: Reply with quote

EnglishDoYouSpeakIt wrote:
A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

So if you vacation to america for even six days you have to pay? Or does the first one apply in that I am a resident of a foreign country? If on iqama you are a resident, yes?

Are you saying that there are only 335 days in a year? Laughing

First year abroad, be sure to research the form 2350. After the first year, teachers will all be a bona fide resident and one need not bother to keep track of your days back home.

VS
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johnslat



Joined: 21 Jan 2003
Posts: 13859
Location: Santa Fe, New Mexico, USA

PostPosted: Sat Jun 30, 2012 4:39 pm    Post subject: Reply with quote

Dear EnglishDoYouSpeakIt,

For the first year - mentioned above:

Extension to Claim Foreign Earned Income Exclusion

http://www.irs.gov/businesses/small/international/article/0,,id=96782,00.html
http://www.irs.gov/pub/irs-pdf/f2350.pdf

Dear al-Californian,

You arrange it with your bank there - you'll need account number and routing number, bank name, address - and use your Saudi bank's ATM.

Regards,
John
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PeterParvo



Joined: 18 Dec 2011
Posts: 103

PostPosted: Sun Mar 24, 2013 11:38 am    Post subject: Reply with quote

Does anybody have any experience with their LAST year in KSA and then returning to the States? I am in a a bit of a sticky situation with my end-of-contract bonus and with passing the physical presence test.

I am trying to avoid paying tax on the income of my final year.
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veiledsentiments



Joined: 20 Feb 2003
Posts: 17517
Location: USA

PostPosted: Sun Mar 24, 2013 3:39 pm    Post subject: Reply with quote

How long have you been overseas? If you have been out of the country for a few years, you are a bonafide resident. You only need to worry about number of days the first year. After that, you are bonafide and it is good until the day you return home... at any time in the year.

I have returned to the US a couple times after stints overseas... never paid taxes on any of the overseas stuff.

PM me about the bonus...

VS
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stardust39



Joined: 07 Mar 2013
Posts: 2

PostPosted: Thu Mar 28, 2013 4:58 am    Post subject: Reply with quote

Never worked in Saudi, but did live overseas for four years (Japan). I think that it's basically the same thing (except that Saudi's a much sweeter deal financially, lol). But when I came back from Japan I didn't pay taxes on anything that I earned in Japan. The amount you earn does need to be reported, and it will technically count toward your tax bracket; however, it's excluded tax-wise. I remember paying absolutely nothing on my taxes overseas, despite coming back before the end of the year. Just file.
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lotuseater



Joined: 08 Dec 2010
Posts: 23

PostPosted: Mon Apr 01, 2013 11:38 am    Post subject: Reply with quote

What about just not filing? Are we legally obligated to file?
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johnslat



Joined: 21 Jan 2003
Posts: 13859
Location: Santa Fe, New Mexico, USA

PostPosted: Mon Apr 01, 2013 12:24 pm    Post subject: Reply with quote

Dear lotuseater,

In a word, yes.

You might get away with it - but why take the chance. It could come back to haunt you later on.

Just file - you won't be paying anything (and, of course, keep copies Very Happy)

Regards,
John
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fladude



Joined: 02 Feb 2009
Posts: 432

PostPosted: Mon Apr 01, 2013 5:59 pm    Post subject: Reply with quote

You have to report having money in a bank account it IF it is your bank account. Of course if it were an account owned by a foreign corporation..........

As for filing taxes, some years I do, others I forget about it. There really is no penalty unless you actually owed taxes. Although having said that it is easier and less stressful to simply file.
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