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If you are moving to the Netherlands to work for a Dutch company then you will have to pay full Dutch taxes to the Netherlands on your worldwide income. You still will have to file your US taxes but should not end up owing any money to America assuming your only income is from your job and you don't have taxable investment accounts, rental property, etc. Dutch tax rates should be higher than in the US at pretty every income level, it would make more sense to use FTCs to cover your US tax liability as it gives you more options than the FEIE and isn't really any more complicated. FTCs are nice as they should allow you to contribute to a Roth IRA, I think you could be eligible for certain tax credits when you have kids, and any taxes paid above and beyond to what you would owe in the US can be carried over for 10 years, so if you go back to the States, then you could use them to pay fewer taxes. The US and Holland have a totalization agreement so you don't need to worry about having to pay SS taxes or that you will not qualify for SS in either country based on your time spent there. I don't know much about the 30% rule other than what I've seen on Google. I found this thread that seems to go pretty in-depth explaining the ins and outs of doing it. By electing to use this rule, it may change the math on whether or not it makes more sense to use the FEIE or FTCs to eliminate your US tax burden as it could reduce your Dutch tax burden to less than what you would owe on that same income in the US.
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Oct 29, 2015 15:18
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Gold and a Pager posted:If you are moving to the Netherlands to work for a Dutch company then you will have to pay full Dutch taxes to the Netherlands on your worldwide income. You still will have to file your US taxes but should not end up owing any money to America assuming your only income is from your job and you don't have taxable investment accounts, rental property, etc. Dutch tax rates should be higher than in the US at pretty every income level, it would make more sense to use FTCs to cover your US tax liability as it gives you more options than the FEIE and isn't really any more complicated. FTCs are nice as they should allow you to contribute to a Roth IRA, I think you could be eligible for certain tax credits when you have kids, and any taxes paid above and beyond to what you would owe in the US can be carried over for 10 years, so if you go back to the States, then you could use them to pay fewer taxes. Cool, thanks for the info. I'll look into the FTC. Gold and a Pager posted:The US and Holland have a totalization agreement so you don't need to worry about having to pay SS taxes or that you will not qualify for SS in either country based on your time spent there. What exactly does this mean? That I would contribute to the Dutch social security system and…? To be frank I don't really know how retirement/social security works in both the US and other parts of the world. I just assumed that in the US I would receive little to no benefit from the SSS anyway and my retirement would be covered by my own retirement savings.
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Oct 29, 2015 15:27
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Boris Galerkin posted:What exactly does this mean? That I would contribute to the Dutch social security system and…? To be frank I don't really know how retirement/social security works in both the US and other parts of the world. I just assumed that in the US I would receive little to no benefit from the SSS anyway and my retirement would be covered by my own retirement savings. My understanding of totalization agreements is that their main purpose is so that if you work for a while in the US, but not enough to qualify for SS because you then moved to another country, but also did not work long enough to qualify for the local SS, then you would still be able to get your government SS benefit because, between your payments to the two countries, you paid enough to qualify. It also allows for Americans who are sent to a foreign country to work for a limited period of time to be exempt from local SS taxes and continue to just pay them back in America. Finally, they mean that you don't have to worry about paying two different SS taxes if you move to another country for a longer period of time/work for a foreign company. In your case, it just means that you will only pay SS taxes to the Netherlands and not to the US.
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Oct 29, 2015 15:42
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Gold and a Pager posted:My understanding of totalization agreements is that their main purpose is so that if you work for a while in the US, but not enough to qualify for SS because you then moved to another country, but also did not work long enough to qualify for the local SS, then you would still be able to get your government SS benefit because, between your payments to the two countries, you paid enough to qualify. It also allows for Americans who are sent to a foreign country to work for a limited period of time to be exempt from local SS taxes and continue to just pay them back in America. Finally, they mean that you don't have to worry about paying two different SS taxes if you move to another country for a longer period of time/work for a foreign company. Yeah, I was doing reading up on that the other day and you've pretty much got it. I didn't read the Netherlands one, but if it's like the one with Australia, basically Boris's time working in the Netherlands would count towards the credits he needs to qualify for US SS, although he probably needs at least some genuine US earned credits, too (6?). The way an SS benefit is calculated is averaging the 35 highest years of taxed income, I assume if he uses the FTC he could also count foreign earned income towards that? I'm not making any great bets on Social Security being there when I retire either, but if it's not costing anything extra, can't hurt to try.
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Oct 29, 2015 22:19
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Boris Galerkin posted:For example I'd qualify for the 30% ruling which from what I can tell is a no brainer to accept, but surely there are consequences since no free lunch etc? edit: missed the newer posts, looks like I was probably wrong.
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Oct 29, 2015 22:26
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I've been reassigned from my current role working in the US to a role that rotates overseas (28 days on/28 days off). I'm trying to figure out the tax equalization scheme my company uses. By taking the assignment I get the following uplifts in pay: 15% foreign service premium, 35% location premium (I'm going to a shithole), and 30% risk pay (see previous note). The tax policy states that the company will pay all host country taxes (easy enough). But for home country taxes the hypo tax will be the "stay at home" liability, the amount I would pay if I never took the assignment. It then states that the uplifts are not subject to the hypo tax and the company pays the home country taxes for these items. Does this mean that the uplifts are basically tax free to me and I'll see an uplift of 80% of my gross?
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Jan 28, 2016 19:44
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That's probably a question best addressed in the tax thread.
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Jan 31, 2016 21:28
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My company does basically the same thing, the uplifts will be tax free to you and you'll see the exact amounts in your paycheck. if it's not already planned, you should push to have a meeting with the company that will prepare your taxes before going on the assignment. They should ask for your previous years taxes return, but if not I would bring it anyway and go through it. Contributions to IRAs, ROTH or Trad, should definitely be discussed as income contributed must be taxable and that interacts with both the foreign earned income exclusion and foreign housing exclusion.
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Jan 31, 2016 22:13
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asur posted:My company does basically the same thing, the uplifts will be tax free to you and you'll see the exact amounts in your paycheck. if it's not already planned, you should push to have a meeting with the company that will prepare your taxes before going on the assignment. They should ask for your previous years taxes return, but if not I would bring it anyway and go through it. Contributions to IRAs, ROTH or Trad, should definitely be discussed as income contributed must be taxable and that interacts with both the foreign earned income exclusion and foreign housing exclusion. We use KPMG and I'm trying to get something set up. I have so much other poo poo to get done before I leave (cultural training, physical, etc) that it might not get done before I leave for my first hitch. I met with HR on Friday and they cleared up a lot of things.
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Jan 31, 2016 22:36
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ch3cooh posted:Does this mean that the uplifts are basically tax free to me and I'll see an uplift of 80% of my gross? Yes. This is what I had. Remember that the IRS will see both the uplifts AND tax gross-ups (where required) as income, so you might lose eligibility for things like a Roth IRA.
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Feb 2, 2016 02:00
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