FedEX HKG LOA is out, and boy is it funny...

[eatme]

I want to know who is getting paid to get fedex to mess with the expat tax exemption?

Why do you say this? IRS supercedes anything in the contract or LOA. The foreign earned income tax exclusion is irrespective of any agreement between FDX and the pilots.

 

[AV80R]

Why do you say this? IRS supercedes anything in the contract or LOA. The foreign earned income tax exclusion is irrespective of any agreement between FDX and the pilots.

Propjob27's original message:
...
6--We're getting "tax equalization." In other words, you will pay the exact same taxes as if you lived in the USA. Isn't that the whole point of being an ex-pat, to avoid paying US Federal income tax (on the 1st 84K anyway) Take away that benefit, and still expect guys to live in THE most expensive, one of the MOST polluted (complete with air you can see), and crowded cities in the world?? I have never, ever, in the history of any US company basing employees overseas, heard of taking away the tax benefit Is FedEX honing its stand-up routine or what?
...

 

[eatme]

Still doesn't answer my question re how FDX corp can take it away. IRS tax law supercedes any "tax equalization" agreement between FDX and ALPA. Doesn't it mean taxes minus host countries tax minus IRS tax exclusion?

 

[AV80R]

Still doesn't answer my question re how FDX corp can take it away. IRS tax law supercedes any "tax equalization" agreement between FDX and ALPA. Doesn't it mean taxes minus host countries tax minus IRS tax exclusion?

Not sure and I'm not even a purple pilot but my friend said that as far as his W2 form, the taxes would be as much as if he lived in the US. Not sure how it'll work...

 

[FlyBoeingJets]

Still doesn't answer my question re how FDX corp can take it away. IRS tax law supercedes any "tax equalization" agreement between FDX and ALPA. Doesn't it mean taxes minus host countries tax minus IRS tax exclusion?

In a way, you have a valid point.

FedEx could be on the hook for extra tax over and above your expected U.S. tax burden. But they can also make money with equalization if your tax burden is lower with the exclusion.

It's possible newhires going to Hong Kong and Paris will actually make the company money as their tax burden may (I don't really know) be lower overseas with the foreign tax exclusion and low first year pay.


How can they take the exclusion away? By having you sign an individual contract (as is proposed in the LOA) that commits you to the equalization. Every person that bids (or newhires that go as a condition of joining FedEx in this decade) a foreign domicile is required to sign the individual contract.

 

[AV80R]

Tax burden in France will defintely not be lower than in the US (not sure about Hong Kong but I doubt that as well).

 

[Little Bubba]

Tax burden in France will defintely not be lower than in the US (not sure about Hong Kong but I doubt that as well).

16% tax in HK...

 

[eatme]

In a way, you have a valid point.

How can they take the exclusion away? By having you sign an individual contract (as is proposed in the LOA) that commits you to the equalization. Every person that bids (or newhires that go as a condition of joining FedEx in this decade) a foreign domicile is required to sign the individual contract.

So you are saying FDX would rather pay more in tax by taking the exclusion away? Also, who cares what the LOA says re taxes and equalization..not addressed specifically just as an addendum to the contract. My point is why would they choose to file a return for you without the exclusion. Even so, this does not preclude your rights under federal law to give up a legal exclusion.

 

[AV80R]

16% tax in HK...

Do they have a flat income tax no matter what your income is?

 

[AV80R]

So you are saying FDX would rather pay more in tax by taking the exclusion away? Also, who cares what the LOA says re taxes and equalization..not addressed specifically just as an addendum to the contract. My point is why would they choose to file a return for you without the exclusion. Even so, this does not preclude your rights under federal law to give up a legal exclusion.

I probably totally misunderstood this but I thought it was about the host countries wanting to get some of the tax revenues one way or the other, am I wrong?

 

[jonjuan]

Mod-Cargo board please.....thanks.

 

[FlyBoeingJets]

So you are saying FDX would rather pay more in tax by taking the exclusion away? Also, who cares what the LOA says re taxes and equalization..not addressed specifically just as an addendum to the contract. My point is why would they choose to file a return for you without the exclusion. Even so, this does not preclude your rights under federal law to give up a legal exclusion.

When FedEx's contracted accounting firm does your taxes, they can still use the exclusion. FedEx is merely comparing what you would pay to the U.S. vs. what you would pay HKG. FedEx pays the difference. The question I have is will your tax burden in HKG be less or more than if you were in the States?

You ask who cares what the LOA says about taxes and equalization. Everyone involved does. You agree to the equalization benefit (or penalty if you would owe less in HKG) by signing the individual contract that is specified in the LOA.

Tax equalization is just one plan or benefit to offer American's working overseas for American companies. FedEx could have offered the lesser of HKG or US taxes, higher compensation to adjust for higher taxes, etc. They apparently did not.

And, yes, you are giving up your right to the exclusion. But that is only toward U.S. taxes, if I am not mistaken. FedEx is also taking your higher Paris tax rate and paying it. That's the whole point of the LOA individual contract and FedEx paying the higher of the two taxes.

Although I think the equalization is a benefit, I don't have any facts about foreign taxes to make that call with certainty. No info from ALPA or the company. That lack of info, and STV, is enough to vote no.

 

[DiamondZ]

Mod-Cargo board please.....thanks.

jonjuan...your Delta Tau Chi name is

Thread Nazi

 

[Phaedrus]

or Bud Inski....

 

[Huck]

A/C Flown: C-150,DA20,CE550

Mods, corporate board please.