How to Calculate Expatriate Taxes

Expatriate is that person who has been sent to other country for doing duty by employer. Suppose, Krishanan was working in a MNC as accountant in the state of Kerala. One year ago, he had been sent to MNC's UAE Branch. Now, Krishanan will be expatriate. Everything is ok. But one of important question, how to calculate expatriate taxes. It may be legal issue for two countries. So, we are telling some tips which may be useful for you.

1. If you are Citizen of USA and as Expatriate working in abroad

As per the Internal Revenue Code of IRS, all the citizen of USA who are working any other country have to pay income tax to USA Govt. He can get deduction of only $91,500 of earned income from foreign country from U.S. Income Taxation for 2010. If he does not file expatriation form 8854, then he is responsible to pay the penalty of $ 10,000. If expatriate has paid tax in foreign country, he can get tax credit from USA Govt. The tax also applies to green card holders who abandon U.S. permanent residence

2. If you are Citizen of Indian and as Expatriate working in abroad

If you are citizen of India and living abroad for working purpose as expatriate, you tax will be calculated on the basis of rules and regulation of Indian Income Tax Act 1961. According to this law, there is not compulsory to pay tax to Indian Citizen who are working outside. As Indian citizen your tax liability to Indian Govt. is calculated on the basis of your resident status.

(A) Remuneration from an employer is not taxable if the expatriate does not live in India exceed 90 days.

(B) For other income, his income is taxable in India, if he lived in India for 182 days. or 60 days during the year and 365 days during preceding four years.

3. If you are Citizen of UK and as Expatriate working in abroad

India was slave of UK in past. Even after Indian Independence, we can not leave our mental slavery. That is the reason almost all laws had been copied from UK Laws. If a person is citizen of UK and you live in UK for 183 days, your tax will be payable in UK. Additionally, if you go and work abroad for more than one year, you must not be back in the UK for more than 91 days, on average, in any 365 day period, for the duration of your time abroad.


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Accounting Education: How to Calculate Expatriate Taxes
How to Calculate Expatriate Taxes
Accounting Education
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