Tax free salary

[HoldShort31C]

Soooo...
For those of you flying for...lets say an outfit in the Middle East...and you are paid "tax free" salaries----is that 100% cash in the pocket? What gives you the "expat" status (time away from the US?) and do you ever have to pay Uncle Sam anything from cash earned abroad?
Very curious as to how this works, as I keep hearing a different take on it depending on who I talk to.

Thanks !!

 

[fareview]

The first $84000 (or $82,500 - can't remember) is tax free thereafter you pay FIT on your extra earnings. As a result of the new tax law introduced in the Spring of 2006 you will also pay benefit-in-kind tax on any company accom given after a certain allowance. I believe the allowance is around $13k per annum. So in other words if the calculated value of your accom is over $13k per annum then you pay taxes on that portion over this amount. keep in mind that gross adjusted net income of $84k is equivalent to well over $100k back in the US.

So bottom line, when you start as an FO over here (here being a big Middle Eastern carrier) not so much as issue. I gets trickier when you get Capt pay. Upgrades are coming fast and furious. There are however a host of local CPA's who specialize on this matter amd may be able to mitigate the pain.

To benefit from the above you used to have to be outside the US for over 180 days per annum. That has know changed to 330 days however it does not include US work overnights

So while we here in the M. East don't get full tax free status, it is still pretty good.

Full disclosure - I am not a tax expert and I could be wrong on some of the above. Anyone care to expand and correct - please do.

Hope it helps.

Respectfully,

fareview

 

[HoldShort31C]

Thanks for the very useful post !!

I take it that you work in ME....what carrier? Do you have a family with you there? How long have you lived there? In your opinion, what carrier(s) would you stay away from if you were trying to make the move to the ME? What carrier(s) would you give overall thumbs up to? Any other info greatly appreciated.

Thanks for your time!

 

[higherflyer]

To benefit from the above you used to have to be outside the US for over 180 days per annum. That has know changed to 330 days however it does not include US work overnights

You can also qualify as a bona fide resident. The days out of the US don't matter as much at that point since your primary residence is outside the US. Bona fide residence will kick in after you have been outside the US with an established foreign residence for a full tax year. Check with our friendly IRS types for full details.

Disclosure: not a tax expert, just someone who took advantage of the rules for many years.

 

[Thedude]

Check with our friendly IRS types for full details.
.

Wheeh...I laughed so hard I think I peed a little

 

[the turtle]

Good thread. I've just been hired by the ME carrier..and meeting the tax atty tommorrow. good luck to all!

 

[HoldShort31C]

Congratulations !!
Do you mind sharing with who?
And if so.... how long from resume send-in, to interveiw, to hire?
Is this a DEC position or FO, what a/c?

And anything else you can think of...?

Thanks,

H.S

 

[JohnnyP]

.....

I also get different answers on this topic.

When I sat down with my tax guy, I still had a pretty confused look on my face, even he wasn't sure on some of the issues.

It is the first $82,400 is Federally tax free.

Must be out of the country for 330 days. (not consecutive)

This means to me, that except from work visits, you can't just come back on long vacations to the US anytime you want, and that you only have 35 days of "play time" back in the US to work with.

I suppose you can come back anytime/as much as you want, and still claim exempt but that would bite you if you ended up getting audited I suppose.

Like the previous guy said above, i'm no tax expert, thats obvious from my post. But these are the ideas I have been working with so far.

I just watch my leisure travel back to the states so I can stay at the 330 day out-of-country limit.

If I am completely incorrect someone please chime in and correct me.

 

[typhoonpilot]

I also get different answers on this topic.

When I sat down with my tax guy, I still had a pretty confused look on my face, even he wasn't sure on some of the issues.

It is the first $82,400 is Federally tax free.

Must be out of the country for 330 days. (not consecutive)

This means to me, that except from work visits, you can't just come back on long vacations to the US anytime you want, and that you only have 35 days of "play time" back in the US to work with.

I suppose you can come back anytime/as much as you want, and still claim exempt but that would bite you if you ended up getting audited I suppose.

Like the previous guy said above, i'm no tax expert, thats obvious from my post. But these are the ideas I have been working with so far.

I just watch my leisure travel back to the states so I can stay at the 330 day out-of-country limit.

If I am completely incorrect someone please chime in and correct me.

If you have a residence visa for the country you live in and use the Bona Fide Residence test on your return the 330 day rule does not apply. You may return to the USA for more than 35 days. Obviously it would be wise to keep it a reasonable number and vacation time would certainly limit it, but 100 days in the USA would not be unheard of.

Most tax attorneys have no clue when it comes to expat taxes. Don't take what they say at face value. My first year overseas I used a tax attorney and he cost me $10,000 that I didn't have to pay. Find a CPA who specializes in expat taxes. To be honest, Turbotax software handles it very well.



Typhoonpilot

 

[tyuwerty]

Johnny P.

It is my understanding that ANY time in the USA is counted against the 35 days (365-330=35). So if you are in the USA working or on vacation it comes off of those 35 days you are allowed. In the IRS code, I never read anything that differentiates between working or vacationing, just presence inside the USA.

I come back to the USA about every 3rd month. Each and every time I have entered the USA, my passport has been swiped and stamped. That means that Customs and Immigration at the very least has a record of all of my entries to the USA. All Air Carriers flying out of the USA are required to transmit passenger info to TSA, I don't know who actually has access to that info. It does mean that there is a record somewhere of your departures. Regardless, in the event of an audit, I would think that the burden would be on you to show you had been outside for the required time. (hopefully, I am mistaken)

A person also needs to remember that the way the IRS rules read, your travel over international waters (Atlantic Ocean) is considered as time against the 330 days. For me that means that I usually lose a day on one side of my travel into or out of the USA. That is because the 330 days you are required to be out of the country need to be FULL calendar days, not partial days. So travel over international waters, into and out of the USA, further reduces the 35 days that you are allotted for being in the USA.

For example:

I leave CDG at 1000Z on the 1st and arrive in JFK at 1700Z.

I spend the 1st to the 7th inside USA.

I depart JFK @ 2300Z on the 7th and arrive LHR at 0600Z on the 8th. Even though I left USA on the 7th, I was still over international waters so the clock is still ticking.

1st through the 8th = 8 days
35 - 8 = 27 days remaining days for the year.

 

[tyuwerty]

Or as Typhoon pointed out you can use the Bona Fide Residence route if that applies.

I seem to remember that there were some possible pitfalls during your first year abroad.

 

[JohnnyP]

....

Thanks guys those are both interesting replies.

I am such a numbskull when it comes to taxes.

This is why we need to get rid of the IRS completely.

But too many bigshots benefit from the way the system is currently set up, so we will probably never see that happen.

 

[the turtle]

Congratulations !!
Do you mind sharing with who?
And if so.... how long from resume send-in, to interveiw, to hire?
Is this a DEC position or FO, what a/c?

And anything else you can think of...?

Thanks,

H.S

Sure,

Anything I can answer I'd be happy to. I had dates scheduled with both Emirates and Cathay, both DEFO. I really wasn't considering moving overseas again but I'm completely disgusted w/aviation in the US. I met with both of them at AIRINC ATL...I was truly impressed w/Emirates and gave them a resume. They called me the following week and wanted me to come out in two weeks-which I couldn't make. I interviewed in Aug, evidently they had A LOT of fo's going through that month...they were really busy.

They hired me two weeks later, which as I understand it is pretty quick however I had a job offer here in the States(they tell you at the welcome brief if that occurs to contact them so they can give you answer early, pretty classy). They also allowed me to pick equiptment and class date. They impressed me and I accepted the job-from what I saw it was a smooth operation and their growth plans are mind blowing.

If there is anything else I can help you with I'd be more than happy to.

Let's see what the tax attny says today...my wife will also earn decent $$ over there so lets see.

 

[JohnnyP]

.....

Congrats Turtle on the job!

I'll be arriving Dubai tomorrow afternoon (but not for an EK interview, although it sits in the back of my mind), 3-4'ish nights overnight. It's an interesting place! But hot!

I've taken a bunch of different carriers around from here and there overseas (i.e KLM, Lufthansa, Air France, Gulf Air, BA, United, Delta, Emirates). I always thought EK was the best, handsdown, out of them all, and did it consistently.

When do you start school?

 

[the turtle]

Mid December....I've got a lot to clean up here in the States before going out!

And it's no hotter there than PHX...plus I doubt global warming will be an issue!!!

 

[JohnnyP]

.......

Mid December....I've got a lot to clean up here in the States before going out!

And it's no hotter there than PHX...plus I doubt global warming will be an issue!!!

Yes, you do have a lot to clean up before you leave!!

And you'll still leave, and remember a bunch of things you still could have handled or forgot to do (after you left)!

Global warming???....The globe is already warm here, nothing left to heat up!

enjoy!

 

[Morgoth]

I'm heading over to Dubai for an interview in November. Any tips or gouge available for someone who's never been to the ME before?

Thanks!

 

[bman]

Emirates

Guys,

consider this decision very carefully. On paper Dubai seems great, but the city itself has some serious downsides and the job does too!

www.escapeartist.com has some excellent tax tips and will add to the conversation. Also there is a great article about top 10 reason not to live in dubai.

All that being said it does work for some, but I think u must certainly leave the what is fair union mentallity at the door.

Rergards
Bman

 

[fareview]

Guys,

consider this decision very carefully. On paper Dubai seems great, but the city itself has some serious downsides and the job does too!

www.escapeartist.com has some excellent tax tips and will add to the conversation. Also there is a great article about top 10 reason not to live in dubai.

All that being said it does work for some, but I think u must certainly leave the what is fair union mentallity at the door.

Rergards
Bman

Bman,

When did you live in Dubai?

Respectfully,

fareview

 

[bman]

Bman,

When did you live in Dubai?

Respectfully,

fareview

Fareview,

I didin't actually live there altough it seemed like I did! I worked for Atlas on the 400 which basically meant you flew for Emirates Skycargo which meant lotsa days/night/weeks in Dubai over the last two years.

I know a few emirates guys and alot more by association with the JAA capts at Atlas. They all say one thing. They are looking for the exit sign. The place is basically the platinum handcuffs. No union no work rules that are set and lots of pushing the outer edge of crew duty and staffing.

As for Dubai, Bad traffic, Super high cost of living (beyond the "included housing"), and the overall understanding that you round eye are just the help! The Emiraties are your superiors in everyway! It is their country after all and that's how your treated.

I should reiterate I do not nor have I worked for emirates (mainline)! Only passing along my impressions of Dubai and other's impression of Emirates.

Caveat Emptor

Bman

 

[typhoonpilot]

Fareview,

I didin't actually live there altough it seemed like I did! I worked for Atlas on the 400 which basically meant you flew for Emirates Skycargo which meant lotsa days/night/weeks in Dubai over the last two years.

I know a few emirates guys and alot more by association with the JAA capts at Atlas. They all say one thing. They are looking for the exit sign. The place is basically the platinum handcuffs. No union no work rules that are set and lots of pushing the outer edge of crew duty and staffing.

As for Dubai, Bad traffic, Super high cost of living (beyond the "included housing"), and the overall understanding that you round eye are just the help! The Emiraties are your superiors in everyway! It is their country after all and that's how your treated.

I should reiterate I do not nor have I worked for emirates (mainline)! Only passing along my impressions of Dubai and other's impression of Emirates.

Caveat Emptor

Bman

I've said this before and I'll say it again, being an expat is not for everybody. It takes a certain set of character traits to be successful as an expat. Americans, in general, do not have the experience that the English do at living/working away from their home country. They also don't have the tax advantages.

Emirates works really well for some people. If does not work well for others. I consistently tell younger pilots that moving overseas to work is not a good idea. Those in the 20s and early 30s should look at the major airlines in their home country prior to going overseas. Even those in their late 30s andearly 40s need to consider all the angles carefully. Career goals, family considerations, etc all play a major factor in ones happiness overseas.

Emirates has been great for me and I enjoy my life in Dubai. I do not feel that I work too hard ( most of the time ). I do feel I have been treated fairly ( most of the time ).

Dubai itself can be a challenge to live in and one can be the victim of unfortuate events, but where on the planet is that not the case?


Typhoonpilot

 

[cl604driver]

If you leave your money in a bank in Dubai and use a visa/visa checkcard wherever and dont bring money into the us, what are the tax laws then. Youare coming in 2-3 months a year but not bringing in money. can the irs find money you have earned elsewhere and try to tax you

 

[typhoonpilot]

can the irs find money you have earned elsewhere and try to tax you

Yes, but more than that they will throw your butt in jail for tax evasion. As a U.S. citizen you must file your taxes and report your global income. It's so much easier to pay the little bit of tax you owe and sleep soundly than to worry about all the angles to dodge the tax man.


Typhoonpilot

 

[Wiggums]

If you leave your money in a bank in Dubai and use a visa/visa checkcard wherever and dont bring money into the us, what are the tax laws then. Youare coming in 2-3 months a year but not bringing in money. can the irs find money you have earned elsewhere and try to tax you

My plan is to renounce my American citizenship while I am overseas. Then when I wish to return I will pay a working girl a couple thousand for an arranged marriage. I'll save a bunch of money and might even get some strange.

 

[bman]

I've said this before and I'll say it again, being an expat is not for everybody. It takes a certain set of character traits to be successful as an expat. Americans, in general, do not have the experience that the English do at living/working away from their home country. They also don't have the tax advantages.

Emirates works really well for some people. If does not work well for others. I consistently tell younger pilots that moving overseas to work is not a good idea. Those in the 20s and early 30s should look at the major airlines in their home country prior to going overseas. Even those in their late 30s andearly 40s need to consider all the angles carefully. Career goals, family considerations, etc all play a major factor in ones happiness overseas.

Emirates has been great for me and I enjoy my life in Dubai. I do not feel that I work too hard ( most of the time ). I do feel I have been treated fairly ( most of the time ).

Dubai itself can be a challenge to live in and one can be the victim of unfortuate events, but where on the planet is that not the case?


Typhoonpilot

Typhoon,I have a quick question for you. Do you think you'll retire from emirates? I'm unsure of your current age, but just wanted to get an idea of what the long term feeling is from guys who are "happy " (happy being a daily reassesment and extremely relative for pilot types) at Emirates.I just think that guys from the states should seriously have their eyes open about what they are signing on for. It is a different life. Being an expat can be tough especially in a place like dubai where cultural assimilation is practically nonexsistant. Most of the lifetime expats I know (save for the ones running from the lawman) have largely assimilated into the culture where they are living and it makes life much easier and better if you will.Of course with all of this YMMV!!!RegardsBman
Beware the Shiny JEt Syndrome!!!!

 

[Dumb Pilot]

Beware the Shiny JEt Syndrome!!!!

If you are to become an expat, make sure that it is making the big bucks! NOT because you want to fly one A/C or the other. There are some very well paid contracts out there.

About taxes, I'm with Typhoon on that one. How much is Peace of mind worth?

 

[fareview]

Fareview,

I didin't actually live there altough it seemed like I did! I worked for Atlas on the 400 which basically meant you flew for Emirates Skycargo which meant lotsa days/night/weeks in Dubai over the last two years.

I know a few emirates guys and alot more by association with the JAA capts at Atlas. They all say one thing. They are looking for the exit sign. The place is basically the platinum handcuffs. No union no work rules that are set and lots of pushing the outer edge of crew duty and staffing.

As for Dubai, Bad traffic, Super high cost of living (beyond the "included housing"), and the overall understanding that you round eye are just the help! The Emiraties are your superiors in everyway! It is their country after all and that's how your treated.

I should reiterate I do not nor have I worked for emirates (mainline)! Only passing along my impressions of Dubai and other's impression of Emirates.

Caveat Emptor

Bman

Bmann,

Don’t believe the negative bs that people say about EK. This is a good airline that treats its people well.

A number of issues you brought up – traffic; not much different that any major city at rush hour the difference being with work EK pilots get picked up by a driver in an air conditioned sedan for every work related activity.

You inverted your coma’s on company accom – not sure why. It is as advertised, fully paid, fully furnished, no utilities or you can choose rental/utility allowance.

Assimilation – expats gravitate towards expats wherever they live. Not fully assimilating into the Emirati way of life is not an issue for most.

To suggest that there is an environment of people looking to get out because you know of some examples of people no longer wanting to be at EK is a misrepresentation of the situation.

No union, no work rules. No idea what you are talking about – very pleasant environment. Pay raises (cumulative 16%) and bonuses this yr – without a union.

Are there detractors – yes. Are they a minority – yes. Do they exist at all airlines – yes. I know a number of guys who bailed from CX to UPS last year – because they did not care for the culture. Does this make CX a bad airline – no.

I understand this a conversation forum and all opinions are just that – but to be so emphatic and use the amount of exclamation marks you did in your posts about a country and a company you have not lived and worked in – is surprising.

The pilot community thrives on misguided schadenfreuede – human nature to boost our existential situation. It is my humble opinion that you are off the mark on this one.

Oh BTW, next time you are in DXB, drop me a pm and I will show the town – and it wont be where the pilots hang out.

Respectfully,

fareview

 

[fareview]

Bman you wrote the below post a while back about EK and Dubai:

"some might contend that US carriers have unions and no protection! Management can seem to change their rules and policies at will.

I spend alot of time in dubai and abroad and will tell you its alot of fun! Dubai can be a bit clickish, but so can anyplace. But let me tell ya been one place in the states and its pretty much like everywhere else, but if you are open minded and like adventure do the EK thing. New Equipment great destinations good looking FA's and a 100% Tax free income. Housing's included make some money have some fun.

Frankly the pay at CO isn't very good and after taxes ur working very hard for not very much, but hey live the dream! Sometimes you should think outside the box and maybe your life will change. - Bman"

Somewhat contradictory however the beer offer still stands,

Respectfully,

fareview

 

[bman]

Fareview,

Well what can I say you've got me there on the contradiction. However at running the risk of being labeled a "flip flopper" I 've re-evaluated my endorsement with a bit of caution.

I never once said in any post that Emirates was a bad place to work, only that which others who have worked there have shared with me.

One only has to venture over to the pprune site to expereince the actual negative energy!

As to living in Dubai, well I've spent a lot of time in Dubai and I know it well enough to know that I wouldn't want to live there unless the opportunity is too good to pass up. I feel the same about Vegas for the most part. The whole place feels very plastic.


Maybe your experience has been different and I am sure that hanging out with you would be a blast especially if your buying:beer: !


Regards
Bman

PS
As to the traffic I gotta really disagree with you there unless you mean LA! At least with other cities you can sort of plan around it Dubai on the other hand is relentless save from between 0200-0430

 

[fareview]

I'm buying!

fv