Overseas work tax help ?

[paraman1]

Looking for someone who is familiar with the tax laws regarding income earned overseas . I will be traveling to another country and living there for the next 9+ months but having never done this before I am curious what if any of the tax rules for income earned overseas might apply to me .

 

[mrsleeve]

IIRC you have to pay income taxes at your regular rates here in at home, UNLESS you dont make any money here and you spend no more than 60 days out of the year in the US. You get credits for the taxes you pay in the country your working in as well.

I have not done this personally just what I am remembering when I was considering taking a 6 month hitch for gig over seas and from talking to guys that have been all over the world in the oil biz.

 

[rcnpthfndr]

i will ask my HR for ya,

where ya headed too?

 

[paraman1]

Finland , looks like I will get to spend part of the winter oh joy

 

[pawprint2]

Do your research in advance!!! Years ago-I did some time in Central America, we had an IRS publication (I think it was #9, but can't remember), that was specific to the countries we worked in at that time, you had to stay gone for more than 330 days (out of country) in any 12 month period in order for your first 90,000 to be tax free. One of the biggest mistakes I've heard people make, is not getting a good stamp on their Pass Port! Make sure the date is easily read,etc-coming and going, as this will be your best "proof" if you have a problem with the IRS. Spend a couple of bucks with an expert on the front end-it'll be like casting your bread upon the water!

 

[84bandit]

The Taxman Cometh: Tips for Contractors - Dangerous Magazine

Here is a little info, from another sector of overseas work

 

[84bandit]

* double post*

 

[dogman]

I've worked in AFG since 2003.

You need to meet the physical presence test to qualify for tax free income. That means you have to be overseas 330 out of 365 days. Nine months isn't going to make the cut. Once you get past the physical presence requirement, which can go across 2 years, your tax free income will be pro-rated based on the number of months (days) you are out of country.

For example...you start working 1 JUL 2013 for a full year until 30 JUN 2014 and you come back to the states. You meet the physical presence test for tax free income up to 90K plus (whatever it is this year), but your tax free income, not eligibility, is based on a the fiscal year of 1 JAN - 31 DEC. Since you worked 6 months in 2013 and 6 months in 2014, only 50% of your income is eligible for the tax free benefit. Let's just say you made 80K for those 6 months in 2012...only 40K would be tax free. Same for 2014. Now if you did multiple years into 2015 or beyond, you would get the 100% tax free (up to 90+K) for all full fiscal years.

You can also claim residency for the country you work in and that trumps the physical presence test, but different countries have different residency requirements.

I recommend just having full taxes taken out so if for some reason you don't meet the physical presence test, you won't owe Uncle Sugar an ass load of money.

 

[paraman1]

I've worked in AFG since 2003.

You need to meet the physical presence test to qualify for tax free income. That means you have to be overseas 330 out of 365 days. Nine months isn't going to make the cut. Once you get past the physical presence requirement, which can go across 2 years, your tax free income will be pro-rated based on the number of months (days) you are out of country.

For example...you start working 1 JUL 2013 for a full year until 30 JUN 2014 and you come back to the states. You meet the physical presence test for tax free income up to 90K plus (whatever it is this year), but your tax free income, not eligibility, is based on a the fiscal year of 1 JAN - 31 DEC. Since you worked 6 months in 2013 and 6 months in 2014, only 50% of your income is eligible for the tax free benefit. Let's just say you made 80K for those 6 months in 2012...only 40K would be tax free. Same for 2014. Now if you did multiple years into 2015 or beyond, you would get the 100% tax free (up to 90+K) for all full fiscal years.

You can also claim residency for the country you work in and that trumps the physical presence test, but different countries have different residency requirements.

I recommend just having full taxes taken out so if for some reason you don't meet the physical presence test, you won't owe Uncle Sugar an ass load of money.

So how do I get the money I will make this year tax free (whatever portion that may be) when I file my taxes ? Do I have to go back when I do my 2014 taxes to pick up this years ?

The plan at this point is to either transfer to another job when this contract expires or go visit some friends in Mexico for the remainder of my 330 days .

 

[dogman]

Whenever I started a new cycle overseas and did not meet the requirement by 15 APR, I would just file an extension. You can also just go back and file an amended return. I highly recommend an accountant once you start dealing with overseas income.

Some companies handle the tax withholding for you. Mine starts adding the taxes as soon as you hit your threshold. Most don't so you have to be responsible for your own money. There is a IRS for 673 that you file that is an Exemption from Withholding.

 

[Redmanss]

You don't have to stay out of the US the rest of the time, it will work on a prorated rate for the income you earned while across the pond. My best advice though is to get an accountant's advice that is well experienced in overseas income.

 

[bohem]

My SIL is a CPA that specializes in International Tax and Tax Law.

Shoot me a PM and I"ll get her info to you, she's not free but she's also not expensive. Even without the family discount she would still save me somewhere between 6x-8x's what she charges to go through returns and filing paperwork.

 

[Kells81]

Pay it... If your only going to be there 9 months then you will not meet the 330 requirement. I have been getting hosed on this in the last couple of years because I have only been taking 6 month contracts and working in the US the other 6 months. Uncle sugar is going to get his money so why mess with it. Back when I would do the full 330 I found it much more in my favor to pay it then get it back. If I didnt meet the 330 then oh well my bad, but if I would have done the 673 or wheveter the form is and not made the 330 then I would have been holding the bag on around 93k. I received over 23k back last time I did this as I claim Single 0 all year then pick up the right shit on the filing. A good CPA is a MUST!!! I have paid nearly $600/year for one but it was worth every penny on the backside.

 

[paraman1]

I am frantically searching for a good , local CPA that has experience with overseas income as we speak .

If I can't find one locally I am gonna hit up Bohem .