EK Road Shows

[bafanguy]

I've seen more optimism at a time share seminar.

THAT...is funny stuff !! :laugh:

 

[NEDude]

Look up "foreign income exclusion"

Foreign earned income only applies to regular income earned within the borders of another country. It does not include housing allowances, bonuses, or retirement and investment accounts/dividends. Nor does it include, according to the IRS interpretation, any money earned in international airspace or international waters. Anything earned while flying over the Indian, Atlantic or Pacific oceans (or any other international airspace) is considered by the IRS to have been earned in the United States and thus not eligible for the foreign income exclusion. Also, unless you are covered by the social security program of another country, you will owe at least 15% of your income in Social Security tax. In order to claim an exemption for the 15% Social Security tax you will be required to get an official letter or some other documentation that proves you are covered by another country.

There are a lot of gotchas in the tax code and many expatriates have mistakenly believed they get a lot more tax breaks than they really do. I personally know three people who are paying out a lot in massive IRS penalties because they earned money overseas for years and were not fully aware of all of the laws. You would be wise to consult a professional who specialises in expat taxes before you make a move abroad so you can fully understand everything that will apply to you.

 

[Green]

Actually there is an adjustment for your housing allowance. It's based off the city you are a foreign resident of. Dubai has a very high cost of living adjustment. I believe it's in the high 40k range. So you get your 90k+ exclusion plus the cost of living adjustment which puts your tax free income at 130-140k. The international waters issue is a tough one to monitor. A flight from Dubai to MNL for example could be largely over international waters or it could be nearly entirely over land if you take the northerly route. Entirely depends on the winds, weather, etc. Dubai-LAX is virtually entirely over land because you head straight north over the pole and then south over Canada. I wonder if the IRS tracks the ice melt when determining international waters...

 

[sinkrate]

Foreign earned income only applies to regular income earned within the borders of another country. It does not include housing allowances, bonuses, or retirement and investment accounts/dividends. Nor does it include, according to the IRS interpretation, any money earned in international airspace or international waters. Anything earned while flying over the Indian, Atlantic or Pacific oceans (or any other international airspace) is considered by the IRS to have been earned in the United States and thus not eligible for the foreign income exclusion. Also, unless you are covered by the social security program of another country, you will owe at least 15% of your income in Social Security tax. In order to claim an exemption for the 15% Social Security tax you will be required to get an official letter or some other documentation that proves you are covered by another country.

There are a lot of gotchas in the tax code and many expatriates have mistakenly believed they get a lot more tax breaks than they really do. I personally know three people who are paying out a lot in massive IRS penalties because they earned money overseas for years and were not fully aware of all of the laws. You would be wise to consult a professional who specialises in expat taxes before you make a move abroad so you can fully understand everything that will apply to you.

There is some incorrect information in this post. If you have a residents permit, work visa, and a physical residence in a foriegn country there are several different methods to qualify for the 'foriegn income exclusion'. The method you choose will determine how many days a year you can spend in the US. Choose one method it is not many, you cant work while here, and all the extras are also taxable income. Choose another and you can return to the US as much as you want, work some of those days, and the extras may be treated differently. Do your home work or go to a tax accountant that specializes in expat taxes. But don't screw it up. If the IRS catches you cheating they are brutal about garnishing wages. You will also get special treatment by customs everytime you enter the US. Been there, done that.

Another thing to consider is the exclusion will lower your marginal tax rate. The income you do pay taxes on will be taxed starting from the zero income bracket.

 

[NEDude]

There is some incorrect information in this post. If you have a residents permit, work visa, and a physical residence in a foriegn country there are several different methods to qualify for the 'foriegn income exclusion'. The method you choose will determine how many days a year you can spend in the US. Choose one method it is not many, you cant work while here, and all the extras are also taxable income. Choose another and you can return to the US as much as you want, work some of those days, and the extras may be treated differently. Do your home work or go to a tax accountant that specializes in expat taxes. But don't screw it up. If the IRS catches you cheating they are brutal about garnishing wages. You will also get special treatment by customs everytime you enter the US. Been there, done that.

Another thing to consider is the exclusion will lower your marginal tax rate. The income you do pay taxes on will be taxed starting from the zero income bracket.

My point is valid even if some of the information may not be entirely correct in every circumstance. The point is that being an expat is extremely complicated from a U.S. tax perspective and there are a lot of people who mistakenly believe that they do not have to file/pay taxes if they work overseas. Not all sources of income are exempt, in fact many sources are not exempt at all. In several cases you end up paying double tax. There are numerous forms that may have to be filed to other government branches besides the IRS depending on how much money you have overseas, if you have business interests overseas, or even if you have signing authority on a foreign companies account. Recently the U.S. Bureau of Economic Analysis (never even heard of them) has recently decided to require any American who has anything over a 10% stake in a foreign corporation, no matter how small, to file a form with them. So if you set up a sole proprietorship or LLC in a foreign country you must file this form or face a $10,000 fine and a year in prison. This is not IRS stuff, but still applicable to U.S. expats. If you have overseas accounts (more than $10,000 aggregate total in all accounts) make sure you file you FBAR forms to the Department of the Treasury Financial Crimes Enforcement Network by June 30 or you could be facing up to $500,000 in fines and ten years in prison if your failure to file was combined with another tax error.

Anyway, this may have been long winded, but my point is to consult a specialist in U.S. expat taxes before you decide to move or work abroad so you can get a clear sense of what you will be dealing with. I know many people who lived and worked outside of the United States who had no idea what their obligations were and are now paying dearly for it. The U.S. tax code is so complex and there are a lot of pitfalls and traps, especially for those of us who live and work outside the United States. A tax professional is HIGHLY recommended and virtually required for anyone with dealings outside the United States. And that information is not incorrect.

 

[sniper]

Has the IRS audit the EK employed American pilots?

 

[NEDude]

Has the IRS audit the EK employed American pilots?

Can't speak to audits, but I do have a friend working for Emirates and he says several banks in Dubai have begun refusing American customers due to FATCA.

 

[Green]

Yes the IRS has audited many EK pilots. I personally know of 3 and they all seemed to know many others. There seems to be an IRS office in NC that is gunning for EK pilots. They claim that all flying done over international waters is taxable. That kind of kills the whole purpose of flying overseas. Fortunately for EK most of our flights have different routing depending on the winds. How the IRS could prove that on a particular date you over flew the bay of bengal vs flying over India, Bangladesh, and Yangon is beyond me.