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Mail in rebates????

Mail in rebates????

Old Jul 26th 2004, 8:02 pm
  #31  
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Originally posted by 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.
That is not true, read my earlier post. I worked for the Brit Embassy (they were essentially my employers, but I worked for the Brit Military liaison office in Philly for 7 years). I DID NOT PAY UK INCOME TAX NOR IRS CONTRIBUTIONS for those 7 years.
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Old Jul 26th 2004, 8:37 pm
  #32  
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effi - I DID READ YOUR EARLIER POST - i'm fine with the fact you didn't pay tax and i said, comparing work for an embassy is of no use here - people working in diplomatic office are exempt from all kinds of rules and regulations that I have no knowledge of

what I stated IS true - those paragraphs are taken verbatim from the irs website - if you were a special exception then great
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Old Jul 27th 2004, 9:44 am
  #33  
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Originally posted by CalgaryAMC
lol.

Rebates are not income. Nor are refunds; not even tax refunds.
Not true! It does depend on what state you live in. In NY state we have to declare on our tax forms what state tax refund we received from the year before and it is taken as income.

The same may be true in some states for rebates. This is probably why they have been given the information to not apply for rebates because the company giving the rebates will have to declare it at their end and the IRS tie the two together at some point. It may take years, it may never happen, but because it can happen, no chances should be taken.

Military soil is not classed the same as the soil the country it sits in. They may be working for the US government but because they are being paid in pounds they are classed as working for the UK and therefore being on military soil the US government is probably treating it as UK territory. This means that they are not resident of the US, don't pay US taxes, don't have a SS number and don't need to fill in tax returns as far as the IRS is concerned. As long as they don't abuse this in any way no one will take any notice and it is legal. As UK citizens and being paid by the UK, they follow UK tax laws which states they don't have to pay UK tax when not resident in the UK which as far as UK tax is concerned, they aren't. If it was the other way round and they were US citizens doing this in the UK, then they would have to follow US tax laws which states they would have to pay tax even when working abroad. Simple - can't see why some are having such a hard problem understanding.
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Old Jul 27th 2004, 12:51 pm
  #34  
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Originally posted by Ben
...As UK citizens and being paid by the UK, they follow UK tax laws which states they don't have to pay UK tax when not resident in the UK...
Being deemed non-resident from the UK does not absolve all UK tax liability. This is a common myth. There is normally tax liability on income arising in the UK, which is what there is in this case. Hence why some of us non-residents who actually deal with this and pay UK taxes are having such a hard time understanding.
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Old Jul 27th 2004, 3:36 pm
  #35  
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Originally posted by CalgaryAMC
Being deemed non-resident from the UK does not absolve all UK tax liability. This is a common myth. There is normally tax liability on income arising in the UK, which is what there is in this case. Hence why some of us non-residents who actually deal with this and pay UK taxes are having such a hard time understanding.
If it is 'earnings' where you have physically worked out of the UK, on foreign soil, then that isn't subjected to UK taxes. There are many people who work on oil rigs and in foreign lands who have earnings that are exempt from UK tax and are paid in british pounds. That's why they do these jobs. People who have a rental property in the UK that have to pay tax on the rent collected is different because the property is in the UK and the people who receive the rent aren't 'earning' it. They are not having to physically work for that money.

This was the way I always understood it. It might have changed over the years as the government do have a tendency to change things but there are still tax havens to be had and maybe this is still one that works.
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Old Jul 27th 2004, 3:40 pm
  #36  
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Good grief people, calm down.

Tax forms at twenty paces
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Old Jul 27th 2004, 6:12 pm
  #37  
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Ben

1. 'Military soil is not classed the same as the soil the country it sits in'

What the hell? what would 'military soil' in the USA be then?Chinese?

2. the 'foreign soil' bit is nonsense - there is a physical prescence test in the UK like in the USA.

for example, if you are a teleworking programmer or oil rig worker in the UK who spends 3 months a year in somalia working, but the rest of the time in the UK - you are still liable for UK taxes. If you leave the UK for a protracted period of time and any return is of a short enough stay then you can get a NT (nil tax) code

ergo: working abroad is not what gives you this code per se, its how LONG you spend abroad

I went through a lot of discussions with the inland revenue centre for non-residents - its very possible laws have changed.

in the case under discussion, the chap almost certainly qualifies to be non-resident for tax purposes from the inland revenue and would not pay UK income tax, but would be liable to pay US income tax if the USA is where he is tax resident - this is judged by the IRS physical precence test.

there seems to be a lot of conjecture on this and very little factual basis for some comments - this information is freely available on

http://www.inlandrevenue.gov.uk/cnr/

http://www.irs.gov/businesses/small/...=96493,00.html

"If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report these amounts whether from sources within or outside the United States."

i'm not sure why this thread is still going when the above is black and white
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Old Jul 27th 2004, 6:37 pm
  #38  
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Ok, I'm by far no expert on US taxes, and I've been paying them for years. I've never heard of anyone having to pay taxes on rebates that they cashed in. This would probably be for 2 reasons:

1) How the hell can the government track rebates that were cashed in? You send your little slip, along w/the receipt directly to the company. I've never heard of any company reporting this information to the IRS. You can't claim it on taxes unless you get sent a 1099 form (I think, but could be wrong).

2) Essentially a mail-in rebate is just getting back money you've already spent. The item was on sale, but rather than letting you pay nothing for it in the store, they want you to pay full price and mail the information back. How can getting back money you've already spent be considered income??

Getting back a tax refund is a little different because you essentially didn't even get to spend this money, it was already gone by the time you get your check.

I'm not an expert in international tax law, but I truly would not worry about rebates.
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Old Jul 27th 2004, 7:20 pm
  #39  
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The question is which visa are they here on?

Check out this : http://www.irs.gov/pub/irs-pdf/p519.pdf on page 15

Still looks like they should be doing a return each year though.
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Old Jul 27th 2004, 8:48 pm
  #40  
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Originally posted by BritGuyTN
Ben

1. 'Military soil is not classed the same as the soil the country it sits in'

What the hell? what would 'military soil' in the USA be then?Chinese?
A US base in the UK or any other country (Iraq for example) is classed as belonging to the US. A UK base in another country is classed as being a part of the UK. So people who are in the military and are posted abroad carry on working for their own country. they don't have to go through the same problems of visa requirements that non-military people do.

In this instance, just as in the UK, america and UK personnel share bases. What is so hard to understand about that?
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Old Jul 27th 2004, 9:43 pm
  #41  
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yeah, i'm fine with that rationale :-) i.e. heavily pregnant women visiting US battleships (not sure whether this is a myth or not)

its the context - all we know is that hes a UK contractor living in the USA working for the us military

All i based my thoughts are on what i've read on the IRS site and what ladyofthelake just posted

my personal opinion is that (without knowing all the facts) the agency is either talking crap (entirely possible) or that they are leaving people to work out their own tax affairs (more probable)

BTW - ladyofthelake, that is a great doc for my future reference on my tax affairs - cheers!
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Old Jul 28th 2004, 12:36 pm
  #42  
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Originally posted by BritGuyTN

BTW - ladyofthelake, that is a great doc for my future reference on my tax affairs - cheers!
You're welcome! ..as they say here.
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Old Jul 28th 2004, 2:01 pm
  #43  
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Default Re: Mail in rebates????

Originally posted by Slushpuppy
Can anyone tell me if rebates given to you for purchasing certain items are classed as income, and are they taxable?


Hello There

Mail In Rebates are not taxable income - they are a refund of a cost that you have already paid. For comparison - if you return an item to a shop and get a refund - that is not income, it is a refund of a cost.

Regarding your tax postion, whilst I don't care if you get a massive back tax bill and this maybe not what you feel you have asked about, I think you should be aware of the following. The USA government have investigated the UK agency/company to establish whether it is a viable company. It is - therefore they are paying the company for it's services.

This company is then paying the individuals who are working for it. The USA governments interest in this payment ends when it pays the company/agency. They do not care if the company is correctly deducting tax from the individuals it pays - whilst it sounds ridiculous - that is a different department!!

An agency employer simply means that the agency employer does not have to deduct PAYE tax from payments to people it employs - they simply apply a set of tax rules to prove it is an "agent" of the individuals it employs and so they do'nt have to deduct PAYE and the indiviuals are then responsble for calculating and paying their own tax.

So the agency is relatively safe - if it has proved it is an agency using the tax rules.

Then the individual, who now has to calculate and pay their own tax as they are working for an agency and not paying PAYE, proves that they are non-resident in the UK using the tax rules for that. OK - potentially no UK tax to pay (provided there are no specific tax laws).

Then you must look to the country where the money was earned. Earned, not paid. Unless there are some specific rules you must pay tax in the country where the income was earned. A tax treaty between countires means that you would not pay tax twice - once in the UK and once in the USA, but as you are not paying tax in the UK..........

It may seem unbelievable but most company's are not tax specailists and adopt "agency" laws to advocate not deducting PAYE from employees and tell their employees that they will have little or no tax to pay. Some take advice from inexperienced accountancy firms that tell them this rule will work for them, as it has worked for others. All that means is that the others have not been investigated yet either. These advisors are also working on behalf of the company and want to save them tax - not the individual.

I am sure that if your husband reads the small print of the contract he has signed it will say somewhere that whilst the agent/ employer thinks these tax rules apply, the individual is personally responsible for all tax and should seek independent tax advice.

Whilst the tax rules probably do apply if you stay out of the UK for the specified time period, tax is payable somewhere, along with penalties, interest and possibly jail time.

Ignorance of the law is no defence of it IN ANY COUNTRY - if you tell them that the company told you that you would not need to pay tax - so what? Did you check yourself? Did you get indepenent advice?

Have you heard of "self assessment"? It is each individuals responsibilty to ensure they pay the correct tax. That is the same in the USA as the UK - in fact the UK copied the USA self assessment tax system.

Unless you seek independent tax advice form a USA tax lawyer then you are taking a risk that if you are investigated you would be liable. There MAY be some specific tax rule whereby you are exempt. I cannot see it. My husband is working over here for a USA / UK company and we are paying tax - if it was that simple we'd simply get paid in the UK!!!

Sorry to lecture. I am a UK chartered accountant now living in the USA and I am not a specific tax expert in this very complicated area so you should get some advice to confirm the position - or not and hope for the best!!! Good luck!!

Last edited by CEO DMF; Jul 28th 2004 at 2:58 pm.
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Old Jul 28th 2004, 3:09 pm
  #44  
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Default Re: Mail in rebates????

Originally posted by CEO DMF
Hello There

Mail In Rebates are not taxable income - they are a refund of a cost that you have already paid. !!
Hey, that's what I said. Whew, good to know it was true.

I spout such nonsense at times.
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Old Jul 28th 2004, 3:37 pm
  #45  
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Originally posted by Ben
A US base in the UK or any other country (Iraq for example) is classed as belonging to the US. A UK base in another country is classed as being a part of the UK. So people who are in the military and are posted abroad carry on working for their own country. they don't have to go through the same problems of visa requirements that non-military people do.

In this instance, just as in the UK, america and UK personnel share bases. What is so hard to understand about that?
That is absolutely correct. Whilst working in Philly for the Brit Military inside a large US manufacturing plant, we had our own set of offices in the 'foreign national' section. No one from the company could come into our office unless invited, we had coded locks on the main door to our area. We were to all intents and purposes on UK soil.
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