My_question_is: US-specific
Subject: us cit. work in UAE re. irs tax and time limits
Expert: taxman at centa.com
Date: Saturday January 27, 2007
Time: 11:13 AM -0500
QUESTION:
I am a US citizen working in UAE (for a contractor)... I have been working
there for 4 years with visits back home 3 to 4 times a year. Is there a
limit of how many years I can work over there without having to come back to
US for a year or whatever to maintain citizenship and tax status
-------------------------------------------------
david ingram replies:
Once a US citizen, always a US citizen unless you attend at a US Consular
office and formally revoke your US citizenship in front of a US Consular
officer and fill out a 4 page form letting them know that you" think" you
know what you are doing.
But! A US citizen has to continue to file a US return and calculate tax on
their worldwide income no matter where they live.
If in Canada, Spain, Argentina, Australia, Austria, Japan, Indonesia, Libya,
Bulgaria, Chile or any other country with an Income Tax, there is not
usually any tax because you can deduct $82,400 of earnings on form 2555 (if
you are a bone fide resident of the other country for an entire calendar
year or out of the US for 333 out of 365 days. There is also a housing
allowance deduction of about $36.00 a day ($13,000 a year) which means that
for most Americans out of the country the first $95,000 is tax free to the
US. Any income over that is subject to tax but the American can claim a
Foreign tax credit (form 1116) for tax paid to the other country and that
usually wipes out any tax owing to the US. Note that prior to 2005, at
incomes of over about $150,000 US, there was an AMT owing to the US but it
was not usually very much.
However, If you are a resident of the UAE, Dubai, Qtar, Kuwait, Saudi, Grand
Caymans, Bahamas or any other tax free country, there is no foreign tax to
claim so the US citizen starts being paying US tax for sure at around
$100,000 US and lower if no Housing allowance involved.
Canadians, Brits, Australians and citizens from most other countries can
make themselves a non-resident of their home country and avoid having to pay
their home country tax. In fact, as a non-resident with no income from
Canada, a Canadian (as one example) does not have to file a Canadian return
once they have left Canada.
I/we specialize in out of country tax returns for persons in your position
and can process your US tax return for you by email (pdf only please), snail
mail, courier or fax.
Note that because you are living out of the USA, your actual 1040 is not due
until Friday June 15, 2007 for the 2006 year. However, any tax you owe was
due on April 15 to avoid late paying penalties and it is likely that you
should have been making instalment payments to avoid interest charges all
together.
sample pricing follows:
Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour). Please note that GST is added if product remains in Canada or a phone
consultation is in Canada.
This is not intended to be definitive but in general I am quoting $800 to
$2,400 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are
complicated because of the back and forth foreign tax credits. - The IRS
says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not
live in or a rental and a business and foreign tax credits no move in or
out
$2,400 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection
period) with two or three slips and no capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing
period) with about the same things in the same range with a little bit more
if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS
be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part
of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales) are likely $50.00 for the first and $20.00 each after
that.
Just a guideline not etched in stone.
---
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time -
(please do not fax or phone outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer: This question has been answered without detailed information or
consultation and is to be regarded only as general comment. Nothing in
this message is or should be construed as advice in any particular
circumstances. No contract exists between the reader and the author and any
and all non-contractual duties are expressly denied. All readers should
obtain formal advice from a competent and appropriately qualified legal
practitioner or tax specialist for expert help, assistance, preparation, or
consultation in connection with personal or business affairs such as at
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