Job Discussion Forums

[stumptowny]

Thanks guys. Wondering…

1.
How many years do you get in KSA as non-resident citizen before you become a resident foreigner (permanent resident)?

2.
Does KSA tax “worldwide assets” after becoming a resident foreigner (permanent resident)? Before?

I live in Japan. Here you get 5 years of hassle free living. The day after the 5 year mark, you become a permanent resident and tax authorities then attempt to tax income on all “worldwide assets” (all foreign accounts, property, trusts, inheritance, property... everything).

It’s warped. I am already taxed for my income in Japan, which I send home, and then taxed again by the IRS on my capital gains (brokerage account). The third tax comes then, from japan on these same capital gains in my brokerage account. 20%!!! Japan and the IRS share tax documents if requested.

Naturally I want to leave before I get to 5 years and am asked to retroactively pay massive late fees, penalty’s ect. Looking for a new home for a longish stay.

Thanks in advance for your advice…

[hash]

1. There is no income tax AT ALL in KSA. Therefore, whether you're a resident of KSA or not is of no consequence. Assuming you were hired on a job leading to an Iqama (a resident permit), you'd probably get your Iqama (and thereby become a resident of KSA) within a month or two after you arrive in KSA. (certainly not "years").

2. I can't answer your tax questions involving Japan. However, the US has reciprocal agreements with many nations so that US residents of foreign countries are not taxed twice - I'm almost sure Japan is on that list. However, you should really consult with a tax professional who specializes in such Japanese-American tax questions. There must be 100s of these pros living in Japan as I speak.

3. Of course, the fact that KSA has no taxes does not mean that you are not subject to US tax laws. You are, but I'm sure you're already familiar with these having lived and worked overseas.

[stumptowny]

thank you for replying Hash!

Sounds too great to be true!

about japan/USA, the enforcement of taxes between USA and Japan is opposite of what you say. they are sharing info and then double taxing capital gains in brokerage accounts... it is crazy.

[veiledsentiments]

There is a line item where you put in any taxes paid in a foreign country and it is removed from your US tax liabiltiy. I do it every year because some of my stock is Canadian and they take out tax.

Whoever is doing your taxes is messing up if you are not taking credit for the Japanese tax paid.

VS

[stumptowny]

[quote="veiledsentiments"]There is a line item where you put in any taxes paid in a foreign country and it is removed from your US tax liabiltiy. I do it every year because some of my stock is Canadian and they take out tax.

Whoever is doing your taxes is messing up if you are not taking credit for the Japanese tax paid.

VS[/quote]

capital gains, not FEIE.. they are not double taxing regular income, only worldwide assets, for me this is equity (which I'm already taxed on in USA).

[veiledsentiments]

[stumptowny]

Thanks for your thoughts VS..

Capital gains are not treated as ordinary income by the IRS. they are treated as capital gains and have separate tax rates, thus form 5498 and schedule D. if it were income there would be only a 1040. another way you can understand it is, your income tax rate determines your capital gains tax rate. they are not the same.

the rub about japan is, regardless of if you sell or not, they tax the increase in value, regardless of if it is a paper gain or actualized gain. so you can be buying and holding for years and they will want 20% of whatever my gains were even if I did not sell. twisted huh?!

[veiledsentiments]

My first career was in accounting and I have been doing taxes for years, so I know what capital gains are. And, of course, there is no US tax on them unless you sell it.

Form 5498 has nothing to do with capital gains. It relates to an IRA. And if you have no salary income (earned income) in the US, you are not eligible to put money in an IRA - or at least can take no deduction from your taxable income - and it would be very foolish to do so. Obviously just directly invest in whatever you choose without locking it up in an IRA.

Can't speak for Japan.

VS

[stumptowny]

I'll make sure not to ask you for help with taxes then... come back if you learn about worldwide assets in KSA (my post)

[veiledsentiments]