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American company-Overseas job (tax?)

 
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RedLightning



Joined: 08 Aug 2015
Posts: 136
Location: United States

PostPosted: Fri Feb 28, 2020 4:45 am    Post subject: American company-Overseas job (tax?) Reply with quote

This post applies to U.S. citizens

For those who have worked for an American company at an overseas location, what was the tax situation?

To be more specific, I've heard a number of people claim that these jobs do not qualify for the foreign earned income exclusion as the company you work for is not a foreign body; others, however, have told me that it does not matter(although none of the latter reported their income anyway).

I'm midway through a doctoral program here in the states and am thinking about going back abroad to replenish my finances.

Thanks
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caliph



Joined: 05 Jun 2006
Posts: 214
Location: Iceland

PostPosted: Fri Feb 28, 2020 12:58 pm    Post subject: Reply with quote

Worked for US companies in Iran, Saudi Arabia and the UAE and qualified.
Must report income, but have a $75,000.00 tax free exclusion. These countries are considered “hardship” posts. Don’t know if this benefit would apply to Paris.
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RedLightning



Joined: 08 Aug 2015
Posts: 136
Location: United States

PostPosted: Fri Feb 28, 2020 6:04 pm    Post subject: Reply with quote

Thanks Caliph
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peripatetic_soul



Joined: 20 Oct 2013
Posts: 302

PostPosted: Fri Feb 28, 2020 9:45 pm    Post subject: American company-overseas job tax Reply with quote

Hi,
This is the current tax exclusion rule for Americans working in tax-free countries as of 2018 (doesn't specify US vs non-US owned companies, though):

"US citizens, as well as permanent residents, are required to file expatriate tax returns with the federal government every year regardless of where they reside. This exclusion allows one to exclude USD 104,100 (for 2018 taxes) in earned income derived from foreign sources."

I know when I was in the ME in 2009-2014, the exclusion was around $96k. Still, one has to file a Return but income is written in parentheses (i.e., is not taxable). Another rule to be eligible for the foreign exclusion tax is that the ex-pat must have resided outside of the States for 335 days each year. However, I learned that Uncle Sam would only be able to verify entry and not exit on your passport should one spend more than a month vacation back home. Their real concern is with AMERICAN COMPANIES based overseas that might be double-dipping, not paying any taxes anywhere, and padding offshore bank accounts. Of course, laws can change anytime.
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nimadecaomei



Joined: 22 Sep 2016
Posts: 578

PostPosted: Sat Feb 29, 2020 12:55 am    Post subject: Reply with quote

If you are paid directly from the company registered in the US you do not get the exclusion. Most American companies overseas register a partner company in the second country. If you are paid from the partner company it is excluded. This is what they mean by foreign sources. If it is being sent straight from the US to your bank it does not count as a foreign source. If it goes through a secondary non-US source to your bank it is a foreign source.
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arabiamark



Joined: 15 Dec 2006
Posts: 20
Location: Sand Station Zebra

PostPosted: Sun Mar 01, 2020 5:28 am    Post subject: Reply with quote

nimadecaomei wrote:
If you are paid directly from the company registered in the US you do not get the exclusion. Most American companies overseas register a partner company in the second country. If you are paid from the partner company it is excluded. This is what they mean by foreign sources. If it is being sent straight from the US to your bank it does not count as a foreign source. If it goes through a secondary non-US source to your bank it is a foreign source.


Not true. You can get the exclusion even if it's a US company paying into a US bank.
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nimadecaomei



Joined: 22 Sep 2016
Posts: 578

PostPosted: Sun Mar 01, 2020 9:01 am    Post subject: Reply with quote

Was not saying what bank it was paid into, but what bank is it paid out of is important.
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arabiamark



Joined: 15 Dec 2006
Posts: 20
Location: Sand Station Zebra

PostPosted: Sun Mar 01, 2020 9:17 am    Post subject: Reply with quote

nimadecaomei wrote:
Was not saying what bank it was paid into, but what bank is it paid out of is important.


Not sure where you're getting that.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-what-is-foreign-earned-income

Scroll down to where it says 'Source of Earned Income.' Look at the first paragraph.

Also, for the physical presence test you only need 330 days, not 335.
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peripatetic_soul



Joined: 20 Oct 2013
Posts: 302

PostPosted: Tue Mar 03, 2020 4:32 pm    Post subject: American company-overseas job (tax)? Reply with quote

Hi again,
Yes, sorry! I stand corrected. It's been a while since I worked overseas. It is 330 for physical presence.

As for foreign exclusion max allowed & eligibility: I indicated in parentheses that I wasn't sure how that worked with a US-registered company.

The IRS continually changes regs so it's probably best to verify for current year in question.
PS
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