NAS/NJME Tax Issues

[C17CHS]

I understand that the Kingdom does not tax the income of expat NAS pilots. Are there any US pilots that work the NJME 35/31 schedule out there that can shed light on how the IRS treats this income? I.E. The Physical Presence (330 Days) Test is obviously out, but is there a legitimate Bona Fide Resident claim? Thanks.

Cheers,
C17

[typhoonpilot]

Only if you get a resident visa in your passport or some other form of proof that you have residency in the Kingdom. Still it would be hard to beat an audit if you spend 6 months of the year in the States.

OTOH, you could spend the days off in a country other than the USA and still meet the 330 day requirement.


TP

[C17CHS]

TP,

Unfortunately, I think the IRS excludes the time spent out of the country in which one is claiming the 330 days. I've looked at the physical presence test from a lot of different angles and have pretty much eliminated its feasibilty.

Hopefully, the bona fide resident angle will work out as it does not prohibit maintaining a residence in the US or visits back here. With the NAS/NJME contract there is no 401K or retirement plan, so if taxes come into play, that's some pretty hefty tax exposure with no way to control it. Plus, no social security credit.

Other countries seem to have much more favorable rules with regard to foreign income tax exclusion.

Cheers.

[Azzurri]

Mr. Typhoon pilot,
How are you?...If a guy goes to work for NJME for example, stays out of the US for 6 months and a day, and takes up residence in, say,...the Bahamas or something to that effect, should his salary be legally free and clear of US taxation?
If not, why not, and what would the purpose of living in a tax-haven serve in your salary was subject taxation?
This part I don't understand just yet.

Thanks in advance,

A

[typhoonpilot]

First of all, I'm not a qualified tax attorney, but I did stay at a Holiday Inn Express last night.

Unfortunately, I think the IRS excludes the time spent out of the country in which one is claiming the 330 days.

Not true, this is from the IRS website:

A U.S. citizen or a U.S. resident alien who is physically present in a foreign countryor countries for at least 330 full days during any period of 12 consecutive months.

Other countries seem to have much more favorable rules with regard to foreign income tax exclusion.

So true, I always correct people when they talk about the U.S. as being the land of the free. It's only free as long as you don't try to leave :ugh:


If a guy goes to work for NJME for example, stays out of the US for 6 months and a day, and takes up residence in, say,...the Bahamas or something to that effect, should his salary be legally free and clear of US taxation?

As long as he stays in another foreign country for 330 days out of 365 I don't see why not. Mind you, there is a limit on the amount but I doubt 6 months pay at NJME would exceed the limit.


If not, why not, and what would the purpose of living in a tax-haven serve in your salary was subject taxation?

Read this:

http://www.irs.gov/faqs/faq13-3.html and remember only your Foreign Earned Income is excluded from taxation. Tax havens are not for Americans, they are for other people. If you knew to what lengths the IRS, FCEN, and others go to track U.S. citizens and their money you wouldn't sleep very well at night if you were trying to cheat them.


TP