Job Discussion Forums

[run-jp]

I just read a single message on another ESL BB that Bush's new tax plan entails messing with our tax exemption for income earned abroad
(up to $ 70,000). anyone else hear this vicious rumour?
If so, its time for a "surgical strike" on Dubya... or at least writing some letters.

[xiaoyu]

hey haven't heard anything like that.... but do know that due to irs tax laws it is impossible for them to tax you if your income is already taxed by the host country or if there are certain treaties with the host country.... you can probablyfind more information by visiting the irs website.

believe that if in china the us can no longer tax your income because of a recent tax levied by the chinese gov't on foreign experts.... if it is not currently in effect it should be soon. of course you can always disappear and not mention where you were or what money you earned!

[isabel]

Yes, I saw a report in either the Herald Tribune or the Korea Herald, but now I can't find the article. I hope that you are right about the double taxation thing, as I won't be making much if I have to pay my fair share for Bush's perma-war.

[veiledsentiments]

I just heard today on CNBC that in the version coming out of the committee in the Senate, the Foreign Income Exclusion is killed and all foreign income will be fully taxable.

That said, it still has to go through the whole senate, and then be reconciled to the house version. They didn't mention if it was also removed in that version.

The double taxation situation will only work for those countries that have a tax agreement with the US. I never had to deal with this question, as I never worked in a country that had taxation.

I suggest that it is time for everyone to get in touch with their congressperson - tell all your friends and family back home to do the same.

[mwalcoff]

Below is a link to a story about the proposed elimination of the foreign income tax exclusion:

http://www.washingtonpost.com/wp-dyn/articles/A32536-2003May8.html

Please write your senators to let them know you oppose this provision.

Here is what I wrote to my senators:

Dear Sen. DeWine:

I am writing to urge you to oppose the elimination of the foreign earned-income exclusion, which is part of the tax bill passed by the Finance Committee yesterday.

I am planning to go overseas to teach English. English as a Second Language teachers help improve the image of the United States in Third World countries. ESL teachers often work long hours for low pay with little in the way of benefits or job security. ESL teachers forego Social Security credits and other benefits of living at home. They pay taxes to foreign governments but usually are ineligible for their social-welfare benefits. They put themselves through this to help others and learn about their cultures.

It is mind-boggling that Congress would consider increasing taxes on such poorly paid workers to offset tax cuts for wealthy investors.

If you must alter the tax exclusion, you could consider lowering the income limit rather than scrapping it entirely. However, I believe any such tax increase is immoral and unjustified.

Thank you for taking the time to read about my concerns.



Matt

[Joe C.]

Unfortunately, you are supposed to declare all income earned abroad and pay taxes on that income. Yes, some have already paid income tax to the Chinese government on this income, but the way it works is that you declare the income to the IRS and then the tax you paid to the Chinese government is a tax deduction.

But the interesting thing is why you would even declare this income to the US government? It's not like the Chinese government gives you a W-2 form, right? At this point in time, there is no way the Chinese government is going to share tax data with the US government.

On the other hand, even if you do declare it, the declaration of $6,000 in income is more laughable than taxable from an IRS point of view. You'd probably have no tax liability at all. Who working at a university in China "officially" earns more than $6 k per year?

Some have mentioned a tax treaty before. This applies only to income earned in China from a government sponsored college or university. It does not apply to a private university or any of the run-of-the-mill ESL schools around.

[bnix]

Thanks to the posters for informing the rest of us.If this bill actually gets through the whole Senate,the House and is made into law...well,guys,we willhave major problems.Don't know about the rest of you.If they mess with that tax exclusion(one of the few real incentives to work overseas)...well,I am hanging it up and going back to the US to get a "regular" job.If they are going to tax me...what the hell...might as well go home.

IF they pass it,not only could they tax the salary...but probably the fringies like free housing,paid plane fare(for those people who got it)...any fringies.Plus if you wind up paying fed income tax...chances are almost certain you would also wind up paying STATE income tax...most states have a state income tax...only two or three don't.GOOD LORD!!


YESwirite your congressmanand tell him or her to oppose this thing!On the positive side,there are also other expats besides TESOL teachers who would be affected....so maybe they are mounting some sort of campaign against this bill.In the meantime...do all you can! Write those letters!

[Joe C.]

Can't figure out how this will have any influence on the vast majority of ESL teachers. Housing in lieu of cash is almost a non-item. Air fare is also a non-item since it is only reimbursed. Unless you have an official salary of over, approximately, $12,000 a year, the proposed tax bill has nothing to do with you. And even then, whatever tax you have paid to the foreign government comes off of whatever you might owe the IRS.

The vast majority of foreign companys that employ expats have provisions in their salary packages to cover tax liabilities of their employees.