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Expat vs Local Tax Question

Expat vs Local Tax Question

Old Jun 5th 2017, 10:28 am
  #1  
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Default 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!
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Old Jun 5th 2017, 11:27 am
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Default 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.
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Old Jun 5th 2017, 12:49 pm
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Default Re: Expat vs Local Tax Question

I would ask for this to be grossed up.
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Old Jun 5th 2017, 12:52 pm
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Default Re: Expat vs Local Tax Question

The company I work for grosses it up.

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Old Jun 5th 2017, 11:14 pm
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Default 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.
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Old Jun 6th 2017, 5:32 am
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Default Re: Expat vs Local Tax Question

Originally Posted by penguinsix View Post
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.
A negative exponential progression.... my employer was able to get this right, but apparently many skip the complexity and don't.
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Old Jun 6th 2017, 6:32 am
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Default Re: Expat vs Local Tax Question

Originally Posted by Giantaxe View Post
A negative exponential progression.... my employer was able to get this right, but apparently many skip the complexity and don't.
What does that mean? Thanks
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Old Jun 6th 2017, 4:27 pm
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Default Re: Expat vs Local Tax Question

Originally Posted by Ecto17 View Post
What does that mean? Thanks
It means that the "endless cycle" of money given to pay taxes itself being taxable trends towards zero exponentially.
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