[Submariner]

A friend mentioned that the WSJ had published an article regarding US tax law changes. I havent been able to find the article myself, but here is what she sent me:

US tax law changes regarding living abroad are changing, making it particularly unfavorable for expats in Singapore and Hong Kong. They recommend asking your employer to pick up the extra costs 'which in some cases can run into tens of thousands of dollars'.

Does anyone have any idea what this is about?

Thanks

[PDLM]

See the the thread linked below...

More tax changes for US expats?

[Submariner]

Yeah, I did read that thread, but missed the article bc it didn't seem relevant at first glance.

So according to the article:

The new law raises the foreign- earned income protected from U.S. taxation to $82,400 from $80,000. But because it raises taxes on additional compensation and caps housing allowances, it could quadruple the tax burden on some overseas Americans, while leaving others untouched. The highest impact will be in low-tax jurisdictions with high housing costs.

That's about all it says. Does this "additional compensation" mean a higher tax rate on bonuses? (I had asked about this earlier and people indicated that bonus is calculated the same as income). Someone had also mentioned that we (Americans) all have to pay double taxes on housing allowances anyway. Any clarification would be greatly appreciated.

[Submariner]

Here's another thing I found:

But under the new system, this tax exemption on housing will be capped at $11,536, although is some cases the Internal Revenue Service could adjust it based on geographic differences in the cost of living.

I didn't even realize there was a housing exemption. Does this mean that assuming the company pays for your housing, one's tax exemption is ($82,400 + $11,536) = $93,936?

[penguinsix]

I think the other issue is the first $80x is exempt, but after that, you are taxed, and taxed at the tax rate of you making $80k +.

So say you make $200,000 or so. That $120k is taxed starting at the rate for someone making $80k and up, rather than say starting at $0 and then upto $120k.

If you made $81,000, and $80k was exempt, you would be liable for the rate a person making $81,000 pays on that remaining $1,000, not the rate of a person making $1,000. A person making $1000 pays something like a 0% tax rate, whereas a person making $81k pays 30% (rates for illustrative purposes).

But I'm not totally sure. I think that was one of the reasons they expected it to hit high income earners especially hard. I'll see if I can find the original article. I'm not entirely certain if the exact regulations have been issued yet.

[Submariner]

Well, if that's all, it's not that big of a deal for us since we negotiated a package already expecting that tax rule thanks to the folks at GeoExpat.

So how does the $11,000 housing exemption fit in?

[thewongs]

Earlier this month there was an article in the New York Times titled "For Workers Sent Abroad, Tax Changes" regarding the tax changes to overseas Americans. Perhaps your friend just mixed up the source? I read the article but now it's too old to be free on the NY Times. I had taken a quote from the article:

The new law raises the exclusion to $82,400. But under a provision
known as "stacking" in the new law, the next dollar of income is now
being taxed at a much higher marginal tax rate as though it were the
82,401st dollar of income.

which describes what penguinsix was saying here.

Here is the link to the article if you feel like paying for it or you already have a membership:

http://select.nytimes.com/gst/abstra...A00894DE404482