BritGuyTN

i didn't say rebates were income... in fact i explicitly said earlier that they were not

i was referring to income in the UK that he was not paying tax on...

I sorry, i should have made myself more clear

BritGuyTN

Slushpuppy

Sorry to be blunt, but you are wrong about your husbands tax liability

its correct that since he is out of the UK he dows not pay the inland revenue tax on income as he is non-resident for tax purposes

however, if you are resident in the USA, irrespective of where the income is earned or paid into you are liable to pay income tax to the IRS

embassy work sounds complicated from a diplomatic tax perspective so lets not draw comparisons

Slushpuppy

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jambo_2004

It's a money making gimmik basically. They figure that a significent proportion of people wont bother to send it back or will simply forget to...I lost $80 on a bunch of them last year and so I no longer get taken in by them.

CalgaryAMC

No, you didn't. You asked how a rebate would affect a tax situation. The question you asked is fundamentally about tax liability, not a $150 rebate.

Slushpuppy

Oh dear....... :lecture:

CalgaryAMC

Your husband works for or is a contractor for BAe (or whatever) which has a contract with the US military. Fine.

I have never heard of a US-UK situation that has simultaneously absolved tax-liability in both countries and would very much like to hear how it is being done. You should get your husband to tell us!

Slushpuppy

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BritGuyTN

i don't profess to be a tax professional, but unless there is some special agreement, which seems unlikely, its pretty clear from on-line sources, that if you are resident, you pay income tax - no matter where the income is earned or paid

i would not presume just because the agency says one thing, they are correct

check out www.irs.gov or call them - they will be able to clarify

as they say, you can be certain of 2 things in life, death and taxes... and the IRS is not known for its generosity

BritGuyTN

having just read your quick reply it would seem that your husband is worried about potential legal issues

if it was all above board then there should not be an issue

Slushpuppy

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CalgaryAMC

Your situation is highly specific but you are unwilling to provide any specific information. And I don't blame you.

I would not send in the rebate form. Why? Because your husband says so.

The situation sounds very much like the one I know dozens of people doing in Europe, where they are working in country X for but on a limited term contract but never declare residency in country X. Country X never detects that the person is really resident because intra-EU movement is so slack and the tax agencies cannot easily talk to one another (contrary to popular belief).

It's not legal, it is simply taking advantage of the sloppiness of the foreign jurisdiction's tax department and the laxness of intra-EU movement.

I suppose the same thing could happen in the US. There are certain categories of aliens that are not liable for tax on foreign income - students, for example. Wouldn't surprise me if certain others aren't liable either, UNLESS they start generating US income.

It's starting to make sense.

Again, I would not send in the rebate form. Why? Because your husband says so.

BritGuyTN

i don't think you are being lectured, no-one is being judgemental

but i do think you either missed or ignored my point

its irrelavent where the income is paid

if your husband is resident in the USA and he has a source of income - he is liable for US income tax

i can't think how i can make the above statement clearer

i think you should see a tax accountant specialising in foreign nationals asap - paying nearly 2 years of back income tax,social security and medicare would be painful for most people

see the below and check out the irs site

Source of Earned Income
The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for working in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City.

If you receive a specific amount for work done in the United States, you must report that amount as U.S. source income. If you cannot determine how much is for work done in the United States, or for work done partly in the United States and partly in a foreign country, determine the amount of U.S. source income using the method that most correctly shows the proper source of your income.

CalgaryAMC

On the matter of the respectability of the job, it is the agency handling the dirty side of things (the money), not the contracting company. Everyone I know running this scam is working through agencies for very big companies.

CalgaryAMC

And, incidentally, in this case I believe he is not absolved of all UK liability either, even though he is non-resident. Wouldn't surprise me if he's done the rounds with IR-35 too.