Expat vs Local Tax Question
#1
Just Joined
Thread Starter
Joined: Jun 2017
Posts: 1
Expat vs Local Tax Question
I'm in the process of relocating to the US from the UK and my company wants me to move as a local and will pay the equivalent of an expat package (i.e. housing, etc). I want to make sure I am comparing apples to apples but cannot find any information on the US taxation of an expat package. I imagine that if I am paid a lump sum it will be taxed as income so should I ask for this to be grossed up or would the benefit of an expat package be taxable in the US as well?
Any help would be very welcome as I have gone through this site (awesome resource) and Google without luck.
Thanks!
Any help would be very welcome as I have gone through this site (awesome resource) and Google without luck.
Thanks!
#2
Re: Expat vs Local Tax Question
Moving expenses are tax deductible in the US. When I've moved in the past it was just treated as a business expense where I submitted receipts and the company paid them.
If you get extra salary to pay for the moving you will be able to deduct anything you pay on your US taxes.
If you get extra salary to pay for the moving you will be able to deduct anything you pay on your US taxes.
#3
BE Enthusiast
Joined: Nov 2012
Posts: 902
Re: Expat vs Local Tax Question
I would ask for this to be grossed up.
#5
Re: Expat vs Local Tax Question
Basically, everything is income in the USA.
Wages, salaries, tips, interest (no matter how small), capital gains, cash bonuses, work perks, etc--it can all be considered income. Now many things can be clawed back or given a deduction, but that comes later in the filing forms. Mentally consider everything 'income' and then go looking for an exemption or exclusion rule to see if you can take it back.
Expat packages, like school fees, housing rent, airline tickets home, etc are considered income and I can't find any exclusions for most of those things. Money they give you for moving expenses would be considered 'income', but then in another bit of the tax form later on you get to take it back out as a deduction from income. Note you can only deduct actual moving expenses--if they give you $10,000 for 'moving' but you spend it on Vegas and beer then it's not deductible.
https://turbotax.intuit.com/tax-tool.../INF14389.html
In addition, if the firm gives you cash to help pay the taxes on these benefits, that cash is also considered income (and you have to pay tax on that as well). Can be a bit of an endless cycle.
Wages, salaries, tips, interest (no matter how small), capital gains, cash bonuses, work perks, etc--it can all be considered income. Now many things can be clawed back or given a deduction, but that comes later in the filing forms. Mentally consider everything 'income' and then go looking for an exemption or exclusion rule to see if you can take it back.
Expat packages, like school fees, housing rent, airline tickets home, etc are considered income and I can't find any exclusions for most of those things. Money they give you for moving expenses would be considered 'income', but then in another bit of the tax form later on you get to take it back out as a deduction from income. Note you can only deduct actual moving expenses--if they give you $10,000 for 'moving' but you spend it on Vegas and beer then it's not deductible.
https://turbotax.intuit.com/tax-tool.../INF14389.html
In addition, if the firm gives you cash to help pay the taxes on these benefits, that cash is also considered income (and you have to pay tax on that as well). Can be a bit of an endless cycle.
#6
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,865
Re: Expat vs Local Tax Question
A negative exponential progression.... my employer was able to get this right, but apparently many skip the complexity and don't.