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Tax free salary

Soooo...
For those of you flying for...lets say an outfit in the Middle East...and you are paid "tax free" salaries----is that 100% cash in the pocket? What gives you the "expat" status (time away from the US?) and do you ever have to pay Uncle Sam anything from cash earned abroad?
Very curious as to how this works, as I keep hearing a different take on it depending on who I talk to.

Thanks !!
 

fareview

Well-known member
The first $84000 (or $82,500 - can't remember) is tax free thereafter you pay FIT on your extra earnings. As a result of the new tax law introduced in the Spring of 2006 you will also pay benefit-in-kind tax on any company accom given after a certain allowance. I believe the allowance is around $13k per annum. So in other words if the calculated value of your accom is over $13k per annum then you pay taxes on that portion over this amount. keep in mind that gross adjusted net income of $84k is equivalent to well over $100k back in the US.

So bottom line, when you start as an FO over here (here being a big Middle Eastern carrier) not so much as issue. I gets trickier when you get Capt pay. Upgrades are coming fast and furious. There are however a host of local CPA's who specialize on this matter amd may be able to mitigate the pain.

To benefit from the above you used to have to be outside the US for over 180 days per annum. That has know changed to 330 days however it does not include US work overnights

So while we here in the M. East don't get full tax free status, it is still pretty good.

Full disclosure - I am not a tax expert and I could be wrong on some of the above. Anyone care to expand and correct - please do.

Hope it helps.

Respectfully,

fareview
 
Thanks for the very useful post !!

I take it that you work in ME....what carrier? Do you have a family with you there? How long have you lived there? In your opinion, what carrier(s) would you stay away from if you were trying to make the move to the ME? What carrier(s) would you give overall thumbs up to? Any other info greatly appreciated.

Thanks for your time!
 

higherflyer

Well-known member
To benefit from the above you used to have to be outside the US for over 180 days per annum. That has know changed to 330 days however it does not include US work overnights
You can also qualify as a bona fide resident. The days out of the US don't matter as much at that point since your primary residence is outside the US. Bona fide residence will kick in after you have been outside the US with an established foreign residence for a full tax year. Check with our friendly IRS types for full details.

Disclosure: not a tax expert, just someone who took advantage of the rules for many years.
 

the turtle

GO TERPS!
Good thread. I've just been hired by the ME carrier..and meeting the tax atty tommorrow. good luck to all!
 
Congratulations !!
Do you mind sharing with who?
And if so.... how long from resume send-in, to interveiw, to hire?
Is this a DEC position or FO, what a/c?

And anything else you can think of...?

Thanks,

H.S
 

JohnnyP

Well-known member
.....

I also get different answers on this topic.

When I sat down with my tax guy, I still had a pretty confused look on my face, even he wasn't sure on some of the issues.

It is the first $82,400 is Federally tax free.

Must be out of the country for 330 days. (not consecutive)

This means to me, that except from work visits, you can't just come back on long vacations to the US anytime you want, and that you only have 35 days of "play time" back in the US to work with.

I suppose you can come back anytime/as much as you want, and still claim exempt but that would bite you if you ended up getting audited I suppose.

Like the previous guy said above, i'm no tax expert, thats obvious from my post. But these are the ideas I have been working with so far.

I just watch my leisure travel back to the states so I can stay at the 330 day out-of-country limit.

If I am completely incorrect someone please chime in and correct me.
 
I also get different answers on this topic.

When I sat down with my tax guy, I still had a pretty confused look on my face, even he wasn't sure on some of the issues.

It is the first $82,400 is Federally tax free.

Must be out of the country for 330 days. (not consecutive)

This means to me, that except from work visits, you can't just come back on long vacations to the US anytime you want, and that you only have 35 days of "play time" back in the US to work with.

I suppose you can come back anytime/as much as you want, and still claim exempt but that would bite you if you ended up getting audited I suppose.

Like the previous guy said above, i'm no tax expert, thats obvious from my post. But these are the ideas I have been working with so far.

I just watch my leisure travel back to the states so I can stay at the 330 day out-of-country limit.

If I am completely incorrect someone please chime in and correct me.

If you have a residence visa for the country you live in and use the Bona Fide Residence test on your return the 330 day rule does not apply. You may return to the USA for more than 35 days. Obviously it would be wise to keep it a reasonable number and vacation time would certainly limit it, but 100 days in the USA would not be unheard of.

Most tax attorneys have no clue when it comes to expat taxes. Don't take what they say at face value. My first year overseas I used a tax attorney and he cost me $10,000 that I didn't have to pay. Find a CPA who specializes in expat taxes. To be honest, Turbotax software handles it very well.



Typhoonpilot
 

tyuwerty

Quit your whining!
Johnny P.

It is my understanding that ANY time in the USA is counted against the 35 days (365-330=35). So if you are in the USA working or on vacation it comes off of those 35 days you are allowed. In the IRS code, I never read anything that differentiates between working or vacationing, just presence inside the USA.

I come back to the USA about every 3rd month. Each and every time I have entered the USA, my passport has been swiped and stamped. That means that Customs and Immigration at the very least has a record of all of my entries to the USA. All Air Carriers flying out of the USA are required to transmit passenger info to TSA, I don't know who actually has access to that info. It does mean that there is a record somewhere of your departures. Regardless, in the event of an audit, I would think that the burden would be on you to show you had been outside for the required time. (hopefully, I am mistaken)

A person also needs to remember that the way the IRS rules read, your travel over international waters (Atlantic Ocean) is considered as time against the 330 days. For me that means that I usually lose a day on one side of my travel into or out of the USA. That is because the 330 days you are required to be out of the country need to be FULL calendar days, not partial days. So travel over international waters, into and out of the USA, further reduces the 35 days that you are allotted for being in the USA.

For example:

I leave CDG at 1000Z on the 1st and arrive in JFK at 1700Z.

I spend the 1st to the 7th inside USA.

I depart JFK @ 2300Z on the 7th and arrive LHR at 0600Z on the 8th. Even though I left USA on the 7th, I was still over international waters so the clock is still ticking.

1st through the 8th = 8 days
35 - 8 = 27 days remaining days for the year.
 

tyuwerty

Quit your whining!
Or as Typhoon pointed out you can use the Bona Fide Residence route if that applies.

I seem to remember that there were some possible pitfalls during your first year abroad.
 

JohnnyP

Well-known member
....

Thanks guys those are both interesting replies.

I am such a numbskull when it comes to taxes.

This is why we need to get rid of the IRS completely.

But too many bigshots benefit from the way the system is currently set up, so we will probably never see that happen.
 

the turtle

GO TERPS!
Congratulations !!
Do you mind sharing with who?
And if so.... how long from resume send-in, to interveiw, to hire?
Is this a DEC position or FO, what a/c?

And anything else you can think of...?

Thanks,

H.S

Sure,

Anything I can answer I'd be happy to. I had dates scheduled with both Emirates and Cathay, both DEFO. I really wasn't considering moving overseas again but I'm completely disgusted w/aviation in the US. I met with both of them at AIRINC ATL...I was truly impressed w/Emirates and gave them a resume. They called me the following week and wanted me to come out in two weeks-which I couldn't make. I interviewed in Aug, evidently they had A LOT of fo's going through that month...they were really busy.

They hired me two weeks later, which as I understand it is pretty quick however I had a job offer here in the States(they tell you at the welcome brief if that occurs to contact them so they can give you answer early, pretty classy). They also allowed me to pick equiptment and class date. They impressed me and I accepted the job-from what I saw it was a smooth operation and their growth plans are mind blowing.

If there is anything else I can help you with I'd be more than happy to.

Let's see what the tax attny says today...my wife will also earn decent $$ over there so lets see.
 

JohnnyP

Well-known member
.....

Congrats Turtle on the job!

I'll be arriving Dubai tomorrow afternoon (but not for an EK interview, although it sits in the back of my mind), 3-4'ish nights overnight. It's an interesting place! But hot!

I've taken a bunch of different carriers around from here and there overseas (i.e KLM, Lufthansa, Air France, Gulf Air, BA, United, Delta, Emirates). I always thought EK was the best, handsdown, out of them all, and did it consistently.

When do you start school?
 
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the turtle

GO TERPS!
Mid December....I've got a lot to clean up here in the States before going out!

And it's no hotter there than PHX...plus I doubt global warming will be an issue!!!
 

JohnnyP

Well-known member
.......

Mid December....I've got a lot to clean up here in the States before going out!

And it's no hotter there than PHX...plus I doubt global warming will be an issue!!!
Yes, you do have a lot to clean up before you leave!!

And you'll still leave, and remember a bunch of things you still could have handled or forgot to do (after you left)!

Global warming???....The globe is already warm here, nothing left to heat up!

enjoy!
 

Morgoth

Well-known member
I'm heading over to Dubai for an interview in November. Any tips or gouge available for someone who's never been to the ME before?

Thanks!
 

bman

Well-known member
Emirates

Guys,

consider this decision very carefully. On paper Dubai seems great, but the city itself has some serious downsides and the job does too!

www.escapeartist.com has some excellent tax tips and will add to the conversation. Also there is a great article about top 10 reason not to live in dubai.

All that being said it does work for some, but I think u must certainly leave the what is fair union mentallity at the door.

Rergards
Bman
 

fareview

Well-known member
Guys,

consider this decision very carefully. On paper Dubai seems great, but the city itself has some serious downsides and the job does too!

www.escapeartist.com has some excellent tax tips and will add to the conversation. Also there is a great article about top 10 reason not to live in dubai.

All that being said it does work for some, but I think u must certainly leave the what is fair union mentallity at the door.

Rergards
Bman
Bman,

When did you live in Dubai?

Respectfully,

fareview
 

bman

Well-known member
Bman,

When did you live in Dubai?

Respectfully,

fareview

Fareview,

I didin't actually live there altough it seemed like I did! I worked for Atlas on the 400 which basically meant you flew for Emirates Skycargo which meant lotsa days/night/weeks in Dubai over the last two years.

I know a few emirates guys and alot more by association with the JAA capts at Atlas. They all say one thing. They are looking for the exit sign. The place is basically the platinum handcuffs. No union no work rules that are set and lots of pushing the outer edge of crew duty and staffing.

As for Dubai, Bad traffic, Super high cost of living (beyond the "included housing"), and the overall understanding that you round eye are just the help! The Emiraties are your superiors in everyway! It is their country after all and that's how your treated.

I should reiterate I do not nor have I worked for emirates (mainline)! Only passing along my impressions of Dubai and other's impression of Emirates.

Caveat Emptor

Bman
 
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