British Expats

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-   -   Working in Saudi Arabia and taxes in home country (https://britishexpats.com/forum/me-job-discussions-136/working-saudi-arabia-taxes-home-country-921610/)

iranis Jan 31st 2019 4:32 am

Working in Saudi Arabia and taxes in home country
 
Hi!
Many people say: "Oh, living in Saudi Arabia is great because you can save lots of money!"
I know I am going to hate myself for asking this simple question, but I don't understand: If I am a US citizen working in Saudi Arabia, how can I save lots of money of I still have to pay the US taxes, which are about 20% of my income?
OK, let's say I am paid 5000 USD each month in Saudi Arabia. Good salary. But $1000 USD is going for Taxses, right? Si, I am left with 4000 USD in my pocket. Which is still good but still...
Also, If I am going to the US for summer vacations, I will not have a US medical insurance for that period of time. So should I buy a medical insurance before traveling to the US?
Can someone tell me about taxes and medical insurance?

christmasoompa Jan 31st 2019 2:03 pm

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by iranis (Post 12630084)
Many people say: "Oh, living in Saudi Arabia is great because you can save lots of money!"
I know I am going to hate myself for asking this simple question, but I don't understand: If I am a US citizen working in Saudi Arabia, how can I save lots of money of I still have to pay the US taxes, which are about 20% of my income?

Obviously the US is different then. If you're a UK citizen, you don't usually pay tax in the UK if you're working in Saudi Arabia. Hence why you'll see people on this forum (aimed at British Expats - although of course other nationalities are very welcome) saying that they'll be saving lots.

HTH.

christmasoompa Jan 31st 2019 2:05 pm

Re: Working in Saudi Arabia and taxes in home country
 
P.S. 5000 USD a month surely wouldn't be considered a 'good' salary would it? Seems very low to me, I certainly wouldn't move to SA for that!

iranis Jan 31st 2019 5:21 pm

Re: Working in Saudi Arabia and taxes in home country
 
I am not sure what is the average salary range at universities for assistant professors in mathematics with Ph.D in Saudi Arabia? Do you have any idea?

iranis Jan 31st 2019 5:26 pm

Re: Working in Saudi Arabia and taxes in home country
 
Thank you very much for your prompt comments! Also, another question about buying a car in Saudi Arabia. If I work at university there, what, you would think, would be a best choice to get a car:
1) Leasing a car (I am not sure though if I can lease it, since, as I understand, leasing should be paid by the company but, I think, universities don't provide leasing)
2) Buying a new car (in this case, I have to take a loan from the bank) and buy a car using cash
3) Buying a used car; it is cheaper and you can still pay the amount by parts, let's say during a year. But how reliable can be a used car, say 2017 Honda?

christmasoompa Jan 31st 2019 5:44 pm

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by iranis (Post 12630403)
I am not sure what is the average salary range at universities for assistant professors in mathematics with Ph.D in Saudi Arabia? Do you have any idea?

No idea I'm afraid, it's just that you said it was a 'good salary' and personally it struck me as a low salary for moving to a less desirable country like Saudi. I'd want a heck of a lot more than that to move there! :lol:

Millhouse Jan 31st 2019 6:42 pm

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by christmasoompa (Post 12630283)
P.S. 5000 USD a month surely wouldn't be considered a 'good' salary would it? Seems very low to me, I certainly wouldn't move to SA for that!

Quite right ... then again I wouldn’t move to the states for that either 😀😀

iranis Jan 31st 2019 7:37 pm

Re: Working in Saudi Arabia and taxes in home country
 
Yes, I agree, there is no "limit" for a high salary. For someone, even 1000000 USD might be a low salary.
Any way, I was wondering about taxes.

christmasoompa Jan 31st 2019 7:48 pm

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by Millhouse (Post 12630443)
Quite right ... then again I wouldn’t move to the states for that either 😀😀

Ditto! But then I don't get out of bed for less than £10,000 a day, obvs.


Originally Posted by iranis (Post 12630468)
Yes, I agree, there is no "limit" for a high salary. For someone, even 1000000 USD might be a low salary.
Any way, I was wondering about taxes.

As explained to you, most people on here are Brits, so won't be paying tax on their Saudi salary. Might be worth seeing if there is a similar forum for US expats?

iranis Feb 1st 2019 6:02 am

Re: Working in Saudi Arabia and taxes in home country
 
Unfortunately, I could not find any similar forum for US expats. But the only difference is a tax situation, which, apparently, I have worked out. Typically, taxes in the US consist of two parts (state and federal). And, if your income in Saudi Arabia does not exceed $104.000 per month, you should pay only one state tax, which is about 8% of the income. Not bad!
So, if you go to Saudi Arabia, don't work too hard!)))
Actually, thinking of $5000 per month, it is not a bad salary since the universities provide free accommodation and you don't spend more than $300 for food. The only thing now is to figure out how to buy a car there. But, of course, if you make the same amount or more in UK, you don't need to consider moving to SA

Charl01 Feb 3rd 2019 4:04 am

Re: Working in Saudi Arabia and taxes in home country
 
Go see a place like Hertz and do a long term car rental.....easy

Pulaski Jun 9th 2019 12:39 pm

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by iranis (Post 12630607)
.... And, if your income in Saudi Arabia ....

Or any other country outside the US.

does not exceed $104.000 per month, you should ....
Per "year". :nod:

scot47 Jun 11th 2019 8:27 pm

Re: Working in Saudi Arabia and taxes in home country
 
US citizens are liable for income tax even when outside USA. That is not the case for UK folk, although that nasty Gordon Brown (who was at school and university with me) wanted to introduce US-style taxation for UK expats.

Notice that I am name-dropping again so everyone can see I mix with important folk.

nonthaburi Jun 12th 2019 8:45 am

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by iranis (Post 12630607)
Unfortunately, I could not find any similar forum for US expats. But the only difference is a tax situation, which, apparently, I have worked out. Typically, taxes in the US consist of two parts (state and federal). And, if your income in Saudi Arabia does not exceed $104.000 per month, you should pay only one state tax, which is about 8% of the income. Not bad!
So, if you go to Saudi Arabia, don't work too hard!)))
Actually, thinking of $5000 per month, it is not a bad salary since the universities provide free accommodation and you don't spend more than $300 for food. The only thing now is to figure out how to buy a car there. But, of course, if you make the same amount or more in UK, you don't need to consider moving to SA

1000 SAR a month on food might be a bit frugal. In a place with little joy, food is something to be enjoyed. Make it $500+ a month.

scot47 Jun 13th 2019 4:23 pm

Re: Working in Saudi Arabia and taxes in home country
 
Most people put on weight when in KSA. Comfort eating ?

PootleK Jan 5th 2020 2:31 am

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by iranis (Post 12630607)
And, if your income in Saudi Arabia does not exceed $104.000 per month, you should pay only one state tax, which is about 8% of the income. Not bad!)))
A

If you don't have a home in the USA, why would you pay state tax? Couldn't you remotely "relocate" in the USA to a state like Nevada without state income tax?

Pulaski Jan 6th 2020 5:29 pm

Re: Working in Saudi Arabia and taxes in home country
 

Originally Posted by iranis (Post 12630607)
.... if your income in Saudi Arabia does not exceed $104.000 per month, ....

I think you mean "per year".

Originally Posted by PootleK (Post 12785301)
If you don't have a home in the USA, why would you pay state tax? Couldn't you remotely "relocate" in the USA to a state like Nevada without state income tax?

If you emigrate (leave the US) from a US state that charges state income tax on emigrants, then you are usually stuck with that link and the obligation to pay state income tax to that state. Certainly it isn't easy to just "relocate" to another state for tax purposes when you are already living outside the US and trying to do so could leave you open to a charge of tax evasion by the state that you attempted to sever a connection to. Good tax planning would include relocation to a zero income tax state, such as Texas, before you leave the US, and that would include renting a home, registering your vehicles, registering with a doctor, etc. i.e. all the things you would do if you were genuinely relocating, which is exactly what you are trying to evidence.

carcajou Jan 7th 2020 1:23 am

Re: Working in Saudi Arabia and taxes in home country
 
Your salary would be exempt from US taxation under the Foreign Earned Income Exclusion. Something like the first $100,000-plus of foreign earned income is exempt if your tax home has been outside the US for roughly 11 months of the year.

That will obviously get blown if you spend your whole summer holiday in the US and don't limit your time to the 35 days or less.

$5,000 per month is on the high end for that kind of position in Saudi Arabia but is not competitive with similar positions at reputable universities in the US.

Yes you would need some kind of medical cover on returning to the US unless you wanted to throw the dice.

Legend_no7 Apr 26th 2020 11:11 pm

Re: Working in Saudi Arabia and taxes in home country
 
I know we have said above that British expats will not pay tax on income earned in Saudi. However, are there any conditions to this? What if I spend all my holidays in the UK and occasional long weekends during the year (don’t want to accidentally get a huge tax bill)

thanks

fth May 7th 2020 12:59 pm

Re: Working in Saudi Arabia and taxes in home country
 
OK - perhaps I can help here. I’m in the position of having a few different nationalities, and unfortunately from a tax perspective the USA is one of them.

Bad News
- The USA, alongside Eritrea is one of very few countries that tax you regardless of your residence status. You have to file
- Some states within the USA also make it very difficult for you to break residency and will try and tax you as well
- Avoid without proper research, investing into any mutual fund, collective investment scheme or anything outside the USA (individual shares and interest accounts are less hassle)
- You have to separately report your non- US financial accounts (Google FBAR)

Not so bad News
- You may be able to claim a foreign earned income exclusion, this means that your first $105,000 earned per annum is not taxed. You still have to file. in addition you can’t exclude “passive income” eg investment earnings
- In addition you may be able to partially exclude accomodation costs in Saudi

You are best to get a decent accountant on the case. I have no idea what is there in Saudi, but often the US embassy will provide a list. Because the Saudis are not taxing you, you could probably do with a well versed accountant stateside. Expats typically report filing costs in the order of $1,000-$2,000 per annum.

The utter crappiness of the US tax system for Americans Overseas gets more stupid the more you look at it. Getting rid of the US passport may be an attractive option if you don’t want to live there.

FOR MOST OTHER NATIONALS they will talk about breaking their tax residency. This varies from country to country. Sometimes people who fly-in-fly-out get caught by their home countries too.


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