"Den" <nul[at]nul.nul> wrote:

- quote -

Its been quite a few years since I had any clients that this
covered, so please keep in mind that I am speaking from
memory - a rather old and weathered memory!

Some foreign employers intend for employees to "take home" a
certain amount of income. This works well in countries
where there is either a very low income tax or a very
simplistic tax system. However, in the U. S. with the
various tax brackets for both Federal and State income taxes
and the way in which income is arrived at - usually the
aggregation of all income and not just wages - it is
virtually impossible for an employer to determine what they
need to pay you to make sure you "take home" what they
intended you to. So, some foreign employers agree to cover
some, or all, of the taxes associated with the amount of
money they want to see you "take home".

This requires a circular reiteration calculation, where they
pay you what they want you to get, then pay your estimated
taxes for you, which raises your income, which causes more
taxes to be due, and so on. Most of the folks who use this
type of program run the calculations similarly to how we
account for refunds of overpaid state income taxes - where
we deduct it in year one because it was withheld then add it
back to income in the year we get the refund.

As I said, I haven't had a client in this situation in
years. The last one I had worked for the World Bank and as
part of one of the tax treaties this was how they were paid
and how their tax was paid.

Hope this helps,
Gene E. Utterback, EA

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Den wrote:

- quote -

I'm guessing, but it probably refers to the treaty clause
that provides a U.S. tax exemption if the person employed is
a national of the employer country. The compensation would
only be taxable by the employer country. The first number
would be what a US resident or citizen would make and the
second number is the adjusted figure for a country national
that would not be taxed by the U.S.

--
Alan
http://taxtopics.net

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Den wrote:

- quote -

I don't know the specifics, but my recollection is that
special tax provisions apply to the diplomatic employees of
foreign governments and the United Nations. I suppose it is
part of the "diplomatic immunity" concept.

MTW

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"Den" <nul[at]nul.nul> writes:

- quote -

It's not a tax law term. Best source of more information
regarding a term is asking the person who used it.

Phil Marti
Topeka, KS

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- quote -

A U.S. citizen or resident alien is generally subject to
U.S. tax on total worldwide income. However, if you are a
United States citizen or a resident alien who lives and
works abroad, you may qualify to exclude all or part of your
foreign earned income. For specific information, refer to
Tax Topic 853, Foreign Earned Income Exclusion - General.

If you would like more information on who qualifies for the
exclusion, refer to Tax Topic 854, Foreign Earned Income
Exclusion - who qualifies. For more information on what type
of income qualifies for the exclusion, refer to Tax Topic
855, Foreign Earned Income Exclusion - what qualifies. You
may also wish to refer to Publication 54, Tax Guide for U.S.
Citizens and Resident Aliens Abroad, for a detailed
discussion.

If the information you need relating to this topic is not
addressed in Publication 54, you may call the IRS
International Tax Law hotline. The number is (215) 516-2000.
This is not a toll-free number.

You may access these publications at http://www.irs.gov
,if the links are not apparent in the message.

Hope this helps 'n' Good Luck!!-

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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Group:

I've seen a job advertised locally here in California with a
foreign consulate. The salary is advertised as $xxxx (gross
salary), $yyyy (net tax abated salary).

W`hat is a net tax abated salary ... does it mean that you don't pay tax on
it (federal / state) and if so, why not?

Cheers

Den

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