Korean Job Discussion Forums

[Real Reality]

Americans Living Abroad Get a Nasty Tax Surprise
In an effort to raise revenues, tax writers in Congress added a last-minute provision that retroactively increased taxes for Americans living abroad. But the sudden imposition of new taxes has surprised overseas taxpayers, and it has employers concerned about the added cost....

The suddenness of the move meant that American Chambers of Commerce in Asia did not have a chance to mobilize against the idea as they had in previous sessions of Congress....

Americans living overseas say the provision wrongly focuses on allowances that their employers pay to cover higher costs -- like housing, schools and trips home -- that they incur by taking a job abroad....

Americans working overseas get a dollar-for-dollar credit for income taxes paid to foreign countries to offset their American income taxes. They also get to exclude $80,000 from the income they report to the I.R.S. The new law increased the exclusion to $82,400 this year.... But analyses by the accounting firms Ernst & Young and PricewaterhouseCoopers show that by adding provisions to how the exclusion is calculated, it raises the overall tax bill and marginal tax rates as well for some overseas Americans....
By KEITH BRADSHER and DAVID CAY JOHNSTON, New York Times
May 30, 2006
http://www.nytimes.com/2006/05/30/business/30tax.html

[Hater Depot]

Life just never gets easier for us international coke dealers.

[Real Reality]

Bush promises no tax increase
Drawing an unmistakable election-year line in the sand, US President George W Bush on Saturday challenged Democrats in Congress to raise Americans' taxes "over my dead body."... In doing so, he echoed 14 years later the famous promise made by his father "Read my lips: No new taxes" a broken vow that contributed to former President George Bush's reelection defeat.
The Daily Star (Volume 3 Number 833; January 07, 2002)
http://www.thedailystar.net/dailystarnews/200201/07/n2010705.htm#BODY18

Read His Lips: No New Taxes!
Economist's View (September 16, 2005)
http://economistsview.typepad.com/economistsview/2005/09/read_his_lips_n.html

Bush: No new taxes needed to pay for recovery
Unnecessary spending must be cut, president says
The nation will "have to cut unnecessary spending," he said.
He added, "We should not raise taxes."
CNN.com (September 17, 2005)
http://edition.cnn.com/2005/POLITICS/09/16/bush.main/

Taxing Americans abroad
As an American resident in Italy for the past 26 years, I have the dubious privilege of being a citizen of the only advanced nation that taxes its own nationals living abroad ("Uncle Sam takes a bite out of expatriate incomes," May 27). On the other hand, I'm also a citizen of the only advanced country which, should I return home, will not offer me national health care.... Where's the upside in being an American? I don't see it.
by David Tabbat, Cernusco sul Naviglio, Italy
May 29, 2006
Editorials & Commentary - International Herald Tribune
Thailand's king, Taxing Americans abroad, Hillary Clinton
http://www.iht.com/articles/2006/05/29/news/edlet.php

Bush Signs $70B Tax-Cut Package
Democrats Label Bill a Boon to Wealthy Americans
President Bush today signed a $70 billion, election-year tax-cut package, predicting it will bring a "strong lift" to the economy and "help millions of Americans who are saving for the future."

Republicans hope the legislation, which extends existing tax cuts on dividends and capital gains as well as changes to the alternative minimum tax, will give their party a boost heading into the midterm congressional elections in November.

"Today's really a good day to be a millionaire, but it's a bad day if you want to be a millionaire," Senate Democratic Leader Harry Reid (Nev.) said at a news conference minutes after Bush signed the bill. "That's because President Bush just signed with the stroke of a pen a bill that sealed the fate of those trying to get ahead."
By Bill Brubaker, Washingtonpost.com (May 17, 2006)
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/17/AR2006051701277.html

[AbbeFaria]

Is this only if you're working for an American company and you're living abroad, or just a blanket thing no matter what?

�S�

[Real Reality]

[Nowhere Man]

What it essentially means is that the IRS is going to be looking at benefits and factoring them into your $80,000 deductible.

Probably not a worry for English teachers.

And, sorry to defend Bush, but the deductible has been raised to $82,000, most likely to head off such criticism.

[Real Reality]

U.S. executives warn expatriate tax increase may backfire
Merrill also said that he could "see no deep tax policy reason for this change," which he characterized as a way to raise money from one group of taxpayers to offset cuts for others. Other tax experts said they concurred in that assessment.

... the new rules will push many Americans overseas into higher brackets, he said, many companies will spend $2 for each $1 their overseas employees pay in taxes.... Some experts also questioned whether the new measure would generate the tax revenues anticipated by Congress. If companies bring Americans home or some of those overseas renounce their citizenship, the revenue estimates will not hold.

The law may also encourage more tax evasion, especially by Americans who work for foreign employers, who do not pay taxes in the United States and thus may not file tax documents with the U.S. Internal Revenue Service.
By Keith Bradsher and David Cay Johnston The New York Times
WEDNESDAY, MAY 31, 2006
http://www.iht.com/articles/2006/05/25/business/tax.php

Bush promises no tax increase
Drawing an unmistakable election-year line in the sand, US President George W Bush on Saturday challenged Democrats in Congress to raise Americans' taxes "over my dead body."... In doing so, he echoed 14 years later the famous promise made by his father "Read my lips: No new taxes" a broken vow that contributed to former President George Bush's reelection defeat.
The Daily Star (Volume 3 Number 833; January 07, 2002)
http://www.thedailystar.net/dailystarnews/200201/07/n2010705.htm#BODY18

Read His Lips: No New Taxes!
Economist's View (September 16, 2005)
http://economistsview.typepad.com/economistsview/2005/09/read_his_lips_n.html

[Nowhere Man]

OK.

[mindmetoo]

[Moldy Rutabaga]

[Real Reality]

[hogwonguy1979]

the problem though for US yanks is if you earn income in the states (interest, capital gains, maybe you rent out some property, heck you may even work while in the US while on vacation etc) that is taxed at a higher rate example:

Korean income US $ 35,000 (about what I make at my univ)
US income $ 8,000
total gross income $43,000
less foreign income exclusion $35,000
taxable income $8,000

Here where it gets nasty, you used to be able to figure the tax for the level at the $8,000 level which may be 11% or $880, now that will be taxed at rate for your total income of $43,000 say 15% or $1200, a big difference. Now of course you still your exemption and standard dedections to knock income off that taxable income but you get the picture. On our Korean income, how many of us report what your hagwon or univ is paying in rent or even have an idea what it would rent for? In all reality this won't affect us but a person who is working for a US company who gets a nice house in HK with a maid, gets his kids int school paid for etc will be nailed by this big time

Apparently this was snuck in at the last minute by Sen Charles Grassley R-Iowa chair of the Senate finance comittee who wanted to kill the foreign income exclusion a couple of years ago. Nobody really knew about it until it was too late.

What you should be doing is FAXING (not emailing, those get deleted, not snail mailing, those get tossed, somebody has to pick up and read those faxes) your senators and congressmen about this and tell them why should we be paying taxes when we don't use any US services, we don't drive on US highways, etc.

Come on fellow yanks jam thos fax maxhines,

[mindmetoo]