Need tax advice for Expat assignment

[red92s]

I'll be working abroad over the next 2 years and would like to speak to someone familiar with these assignments about the tax consequences. I know it's a long-shot anyone here would have that type of knowledge, but maybe someone has done a similar assignment or knows how to find someone who specializes in this sort of thing?

I'm young (25) and have all my existing finances pretty well established (EF, $0 CC debt, 401k, roth). After July, many of my large monthly expenses will be disappearing (rent, utilities, cell, most food all expensed to company) and others (car, insurance, gas) will be nonexistent. I should have quite a bit of extra cash each month. Obviously I'd like to take some of it and travel on my own as time allows, but what should I do with the rest?

[jeffrey]

A lot depends on how much you're making. Up to a certain amount is not taxed by the US, but you do need to pay taxes in the country where you are working. If the company pays for your rent, etc, that is all counted as income. Another issue is what you're being paid in - dollars or the local currency. Currency swings of 20% or more per year can happen which can greatly affect purchasing power.

[red92s]

Originally Posted by jeffrey

A lot depends on how much you're making. Up to a certain amount is not taxed by the US, but you do need to pay taxes in the country where you are working. If the company pays for your rent, etc, that is all counted as income. Another issue is what you're being paid in - dollars or the local currency. Currency swings of 20% or more per year can happen which can greatly affect purchasing power.

I'm aware of the above, and have been trying to get my brain wrapped around the foreign tax credit situation. I will be below the $80k limit of the IRS. My contract is fairly complicated as it involves simultaneous salary from both the US and Foreign divisions of our company. Essentially my "pay" (in foreign currency, from the foreign division) is being drastically cut to maintain parity with what they pay engineers there. The US based division is making up the difference (in $USD) between the foreign pay, and what they would be paying to retain me in the US. The pay from the US division is a "educational allowance" paid quarterly. I do have a tax equalization agreement with my US based employer so that I'm not liable for anything more than I would be working only stateside.

[saversaba08]

You may want to check out Pub 54 and Pub 519 at the irs website. (Sorry I am not allowed to post the links ) It seems your contract is a bit complicated and could do with professional advice. I would look for CPA firms specializing in international tax services (quite hard to come by depending on where you live)

All the best!

saversaba08

[red92s]

Originally Posted by saversaba08

It seems your contract is a bit complicated and could do with professional advice. I would look for CPA firms specializing in international tax services (quite hard to come by depending on where you live)

Thats exactly what I'm seeking . . . but having problems locating; hence my post here.

[saversaba08]

Originally Posted by red92s

Thats exactly what I'm seeking . . . but having problems locating; hence my post here.

Check Crowe Chizek out, if you are in FL, Kentucky,IL, Michigan, Ohio, Tennessee or IN. Our firm uses their services. Sorry, don't know of others.

[Seeker]

You can find most (if not all) of the IRS forms here:

Index of /pub/irs-pdf/

In addition to the ones posted above, you may also want to look at 901.