Relocating and Working Overseas - Foreign Income (1 Viewer)

[Chemical X]

I know there are a couple of threads poking around, but I am curious about those of you have relocated and worked overseas.  My scenario would not be a temporary relocation, rather a permanent relocation to a foreign country, maintaining employment with a company that has offices around the world. 

Mrs. X it appears has a verbal go ahead from her company that will allow us to relocate to Italy full time, which is our goal anyway.  We figure if her company will pay her to keep doing her job, why not relo sooner rather than later.  As many of you know, we already have a place in Italy.  We would go and seek residency, then settle in.

Some of questions are as follows; anyone have experience with giving up their address in the states?  does the company pay you thru its foreign affiliate?  do they do direct deposit to your foreign bank account?  any experience with the foreign income credit, etc. in the states when filing a return?  No matter where we live, as US citizens we are required to file US returns.  How did you handle exchange rate?

I have been doing research off and on for a couple of years, but nothing specific about every scenario that can come up.  I think I have a grasp on the residency thing and all that would be involved going forward, but we didn't expect to have the possibility of bringing a job with us, so any insight would be appreciated.  Shtick is welcomed, not appreciated as much.

T & P

 

[sbonomo]

I am interested to hear how much more the taxes are there...

 

[Phil Elliott]

Jealous. Enjoy Italy!

 

[ajm27501]

Start hiding money?

 

[rodg12]

Had a co-worker that moved to Germany but couldn't keep working for us because we did not have a location there.  Ended up resigning her full-time gig, getting hired back as a contractor through a German company and then got hired back full-time when she ended up moving back to the US.  I assume your wife's company has offices in Italy?

 

[skol asylum]

Good luck in your move. I'm jealous of all the amazing culture your life will allow you to experience in Italy. Even their movie industry seems to put American movies to shame. Exhibit A:

https://youtu.be/UhHhXukovMU

 

[Chemical X]

I am interested to hear how much more the taxes are there...

well, I think I saw that if you make over 75k euros the rate is 43%, but the US helps by offering up the foreign earned income credit, basically you can deduct up to 101k in earnings on your tax return.  so if you make 125k, you claim 24k in earnings, but you may be able to take the taxes paid in Italy off of your schedule A.

 

[Chemical X]

Had a co-worker that moved to Germany but couldn't keep working for us because we did not have a location there.  Ended up resigning her full-time gig, getting hired back as a contractor through a German company and then got hired back full-time when she ended up moving back to the US.  I assume your wife's company has offices in Italy?

they do......

 

[Chemical X]

Do you have a pool?

swimming?  no....

 

[eoMMan]

Do you both speak fluent Italian?

How's the chicken parm over there?

 

[Chemical X]

Do you both speak fluent Italian?

How's the chicken parm over there?

upper intermediate.... chicken parm does not exist.  only the u.s. cheeses everything.

 

[Clown Car]

Stai lontano da mi. Non credo que mi aye fatto abastanza. 

 

[Chemical X]

Stai lontano da mi. Non credo que mi aye fatto abastanza. 

I am far away from you?  You don't believe I waited for you?  FYI - aye = hai.  also, you don't know me, so please use the formal, not the informal.

Also, Credere is subjunctive, so you would say; Non credo que mi abbia fatto abbastanza. The verb avere would be abbia.

 

[Clown Car]

I am far away from you?  You don't believe I waited for you?  FYI - aye = hai.  also, you don't know me, so please use the formal, not the informal.

Also, Credere is subjunctive, so you would say; Non credo que mi abbia fatto abbastanza. The verb avere would be abbia.

It is the only line I remember from my high school Italian class play at the foreign language competition. I was murdered shortly after this line. 

 

[msommer]

Enjoy!

Now, I obviously hope that your wife's new office is close to your place in Italy because otherwise you may still have to rent....

 

[Chemical X]

It is the only line I remember from my high school Italian class play at the foreign language competition. I was murdered shortly after this line. 

Well, you murdered the line, so it seems fair.

 

[Chemical X]

Enjoy!

Now, I obviously hope that your wife's new office is close to your place in Italy because otherwise you may still have to rent....

Well, she will be a work from home, no need to go to the office.  Seems there is an office in Rome and Ancona, so spending a day or 2 there every so often is feasible.  What she does does not require working out of the local office.

 

[Phil Elliott]

Stay healthy. When we visited Italy last spring, several locals said don't go into the hospitals as you will never come out. Just a few comments from the Rome/Amalfi areas and I have no idea what the actual health care experience is, but probably worth a little research on the local options. Many US companies will have a service for employees in other countries to refer you to "acceptable" doctors/facilities.

 

[jplvr]

Can't wait to visit.

 

[Steve Tasker]

well, I think I saw that if you make over 75k euros the rate is 43%, but the US helps by offering up the foreign earned income credit, basically you can deduct up to 101k in earnings on your tax return.  so if you make 125k, you claim 24k in earnings, but you may be able to take the taxes paid in Italy off of your schedule A.

You are confusing terms.

If you are a resident of a foreign country, you can claim the foreign earned income exclusion (not a credit).  You can also potentially take a foreign tax credit, but you can't double-dip; i.e. you can't claim a foreign tax credit on income that you've excluded under the FEI exclusion.  Generally it is more advantageous to claim foreign taxes as a credit on form 1116 instead of a deduction on Schedule A.  I've seen it maybe once in practice where the opposite has been true.

I recommend that you seek professional US tax guidance should you decide to go ahead with this full-time move.  There are many pitfalls and many ways to accidentally get yourself in trouble.  This is a niche area of mine and I can't tell you how many times a taxpayer unknowingly walks into a major tax problem because they either relied on bad advice or tried to manage it themselves.

 

[Chemical X]

You are confusing terms.

If you are a resident of a foreign country, you can claim the foreign earned income exclusion (not a credit).  You can also potentially take a foreign tax credit, but you can't double-dip; i.e. you can't claim a foreign tax credit on income that you've excluded under the FEI exclusion.  Generally it is more advantageous to claim foreign taxes as a credit on form 1116 instead of a deduction on Schedule A.  I've seen it maybe once in practice where the opposite has been true.

I recommend that you seek professional US tax guidance should you decide to go ahead with this full-time move.  There are many pitfalls and many ways to accidentally get yourself in trouble.  This is a niche area of mine and I can't tell you how many times a taxpayer unknowingly walks into a major tax problem because they either relied on bad advice or tried to manage it themselves.

any advise on where to turn for advise?

 

[Steve Tasker]

any advise on where to turn for advise?

It sounds like your wife's company has an Italy office and has presumably relocated US employees to Italy before.  Does she know any of them?  Maybe ask them.  I assume you may be getting involved with an immigration attorney to make sure your paperwork, visas, etc. are all above board....maybe ask them.  Some of my best referrals come from immigration attorneys and vice versa.

I don't have any particular experience with Italy so I'm not the person to ask specifics but I'm happy to give generic non-binding "shoot the ####" type advice if you ever want via PM.

 

[Chemical X]

It sounds like your wife's company has an Italy office and has presumably relocated US employees to Italy before.  Does she know any of them?  Maybe ask them.  I assume you may be getting involved with an immigration attorney to make sure your paperwork, visas, etc. are all above board....maybe ask them.  Some of my best referrals come from immigration attorneys and vice versa.

I don't have any particular experience with Italy so I'm not the person to ask specifics but I'm happy to give generic non-binding "shoot the ####" type advice if you ever want via PM.

maybe an immigration attorney would be helpful.....thx