What amount will be paid in taxes on money earned overseas?

Question

My husband as an opportunity to work in Singapore for 18 months and make $1500.00 per day. He would obviously live there and may come home once or twice for a week...From what I have read online is that are no taxes for up to $82,000.00+/-. What about the money over the $82,000.00? Any suggestions on how to pay the minimum amount on his money would be apprecited? We live in Mississippi?

Answer 1

Hmm..US dollars or Singapore dollars? Either way, sounds like a nice rate of pay.

You have to worry about US federal income tax, state income tax, and Singapore income tax.

The Singapore income tax is graduated and the maximum rate is 21%.

On the US federal side, you may qualify for the foreign earned income exclusion. This allows you to not pay taxes on the first $82,400 you earn. You can take a further exclusion for housing expenses. I believe that the max for Singapore is about $30,000. Due to a law change that started in 2006, you exclude the income in the lowest brackets, so you'll still be paying tax in the upper US brackets (28%, 33%, and 35%). You'll get a credit for the Singapore tax you pay, but you only get part of it if you use the exclusions. As a result, you may be better off NOT taking the exclusion so that you get a bigger foreign tax credit.

Alabama has a top rate of 5%.

In summary: you are in a very complicated tax situation and you are making a lot of money. Do not rely on advice from Yahoo Answers--see a competent tax professional with international tax experience.

Answer 2

2

Answer 3

US citizens are subject to US taxation on their world-wide income from all sources regardless of where they live or earn the money.

A portion of foreign earned income can be excluded from US taxes if you meet certain residency or physical presence tests. Alternatively you can take a credit against your US tax liability for foreign income taxes paid. Additionally, certain foreign housing allowances can be excluded from taxation.

Get a copy of IRS Pub 54 from the IRS website for complete information on income earned outside the US.

FYI, don't expect him home twice a week unless he's only working 2 or 3 paid days a week. Round-trip travel time to Singapore will eat up 3 full days at least and the resulting jet-lag will leave him sleeping another 2 days a week. I travel to Asia several times a year and it is very taxing spending 18 hours on flights including connections.

And just a comment about the National Guardsman in Korea. US Military are exempt form foreign income taxes on their military pay under the Status of Forces agreements in place with all foreign countries where US Military personnel are stationed. They DO pay US taxes on their military pay, however. Employees of the US government or any of its instrumentalities are not covered by the foreign earned income exclusion or foreign tax credits. (Korea DOES have an income tax, by the way, though it's only 5%.)

Answer 4

The rules for foreign income exclusion changed starting 2006. So what your friends may be telling you, or what you read and refer to in your question, is wrong.

It is not the first $82,400 that is excluded from tax, it is the last $82,400 that is excluded from tax. So if your spouse is making significantly more than $82,400 the taxes could be much higher than they have been in the past, because the income is taxed starting at $82,400, not zero as it used to be.

There is not much that you can do to minimize this tax. I'd suggest estimating the taxes correctly so that you are not surprised, which you definitely would be assuming the income is taxed as it was under the old rules.

Answer 5

you need to get professional advice from someone with experience in foreign earnings. i worked and lived in 4 different countries over several years and always had help from price waterhouse, even though i am a cpa.

all amounts earned by american citizens are taxable in the u.s. even if earned in foreign countries. in most cases the u.s. will allow you to deduct some or all of the taxes you had to pay to the foreign country, but there are complicated limits on this. i can't tell you anything about mississippi.

Answer 6

In 2009, the IRS excluded you from paying Fed tax for the first $ninety one,four hundred. in spite of the undeniable fact that, you will pay all the social and medicare tax if getting the w2. in the different case, you should pay self employment tax for the finished volume of 1099. With earnings like yours you do not favor loose credit from the GOV. The Gov provide credit to those who can no longer have the funds for living.

Answer 7

one of my ex boyfriends went to korea with the national guard, he didn't pay any taxes what so ever while he was there because he wasn't a korean citizen. Also i work for a hotel in the states and it is owned by Indians. As far as i know they don't pay taxes either. But i could be wrong there, that's just what i have been told.

Answer 8

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