EK: is the potential tax liability too great for US pilots?
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Video Interview with an IRS tax compliance officer
Attached is an interview with an IRS tax compliance officer,
Her stance is that she there to help the customer. The reality is that her internal progression within the IRS is based upon how much she takes in by sending out demand letters ( as I understand it they are demand letters not audit letters)
It looks as if most of the letters are coming from an IRS office in
Charlotte. Either one officer or an office feels they are on to something of a gold vein.
Flying over international waters issue.... It looks as if they are cut and pasting maritime law and applying it to pilots.
http://m.youtube.com/watch?autoplay=1&v=MDIDtFj9Cj4
Her stance is that she there to help the customer. The reality is that her internal progression within the IRS is based upon how much she takes in by sending out demand letters ( as I understand it they are demand letters not audit letters)
It looks as if most of the letters are coming from an IRS office in
Charlotte. Either one officer or an office feels they are on to something of a gold vein.
Flying over international waters issue.... It looks as if they are cut and pasting maritime law and applying it to pilots.
http://m.youtube.com/watch?autoplay=1&v=MDIDtFj9Cj4
Last edited by Desdihold; 31st Mar 2014 at 04:06. Reason: Mis spelling
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The area that is sometimes overlooked is that you must declare the dollar value of benefits in addition to salary alone. Therefore, housing, school allowance, transport, annual free tickets etc are all to be declared. For most, adding these will exceed the normal tax free exclusion provided and there might be some tax liablity.
Also don't forget the FBAR's to be filed each year for ANY overseas bank account that has a balance exceeding $10,000 anytime during the year. Not filing can attract a major fine and jail time.
Also don't forget the FBAR's to be filed each year for ANY overseas bank account that has a balance exceeding $10,000 anytime during the year. Not filing can attract a major fine and jail time.
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"If you want to hold a passport for your democratic USofA, then you have to pay for it and will continue to pay. Have a look at the US national debt clock, the US is in deep poo and they need you to keep paying them wherever you are so they can continue to generate revenue which is spent, but not on paying off the debt."
If you love the stars and stripes , you gotta pay ! Not that anything will change regarding the debtclock , it will continue to rise.
And yes twentytwoyearstoolate you are smack on. This taxation disease will only grow into the other nato member states.
And Ngfellow you are also absolutely right! Regarding the 10000$ rule; The banking system (so that means any bank) is in bed with the governments of the western nations. And this is how they KNOW the gold vein is there. The policy makers are only looking how to make this look acceptable to the public without making too much noise.
If you love the stars and stripes , you gotta pay ! Not that anything will change regarding the debtclock , it will continue to rise.
And yes twentytwoyearstoolate you are smack on. This taxation disease will only grow into the other nato member states.
And Ngfellow you are also absolutely right! Regarding the 10000$ rule; The banking system (so that means any bank) is in bed with the governments of the western nations. And this is how they KNOW the gold vein is there. The policy makers are only looking how to make this look acceptable to the public without making too much noise.
Last edited by Boeingrestricted; 31st Mar 2014 at 08:01. Reason: correction
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Do not try to spread fear with the statement that all western pilots have to pay tax on earnings made overseas. In the UK, having had a professional tax return specialist, the tax man wrote to tell me not to file any returns anymore. The reason for this is, I do not make my money in the UK, nothing I have in the UK is making money above the taxable income band and it costs the inland revenue time and money to process a return that gives them nothing.
If you want to hold a passport for your democratic USofA, then you have to pay for it and will continue to pay. Have a look at the US national debt clock, the US is in deep poo and they need you to keep paying them wherever you are so they can continue to generate revenue which is spent, but not on paying off the debt.
If you want to hold a passport for your democratic USofA, then you have to pay for it and will continue to pay. Have a look at the US national debt clock, the US is in deep poo and they need you to keep paying them wherever you are so they can continue to generate revenue which is spent, but not on paying off the debt.
As to the UK, I don't know your personal situation. But I was looking at getting a home there to go on my days off, but with the new tax ruling that came in effect April 2013, having ANY ties with the UK, even a house that you only use occasionally, you will be deemed resident for tax. Although they have purposely made it a grey area, your "tax specialist" is wrong if he is just quoting you earning your money overseas makes you safe. Not so! Go read the new ruling!
I'd better go, as I have so many other websites to spread the fear of governments and taxation
Last edited by twentyyearstoolate; 2nd Apr 2014 at 02:35. Reason: spelling
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Just been told that Uncle Sam and UAE Central Bank are in bed together. FATCA is the reason? I am glad I have a unicorn on my passport.
Twenty - You're correct to a degree, it is a grey area as are many legalities in the U.K. I know I read law. They have a definition of just how tied to the U.K you are. If you own a property you can rent it out and not be deemed a resident, if you hold a UAE visa you are non dom for U.K. I have 2 houses both of which family live in (Grandmother + Uncle) and I'm joint on the deeds but I'm not deemed resident. I have a U.K account and credit card still, but provided I'm not earning and don't go use NHS every day HMRC have no issues.
All money earned overseas however IS tax free provided you are not resident. So if I take 1m USD back to the U.K which was earned overseas then I keep my 1m USD (as an example to make a point)
Twenty - You're correct to a degree, it is a grey area as are many legalities in the U.K. I know I read law. They have a definition of just how tied to the U.K you are. If you own a property you can rent it out and not be deemed a resident, if you hold a UAE visa you are non dom for U.K. I have 2 houses both of which family live in (Grandmother + Uncle) and I'm joint on the deeds but I'm not deemed resident. I have a U.K account and credit card still, but provided I'm not earning and don't go use NHS every day HMRC have no issues.
All money earned overseas however IS tax free provided you are not resident. So if I take 1m USD back to the U.K which was earned overseas then I keep my 1m USD (as an example to make a point)
At least EK pilots don't have to deal with the commuting issues facing some CX pilots. Many an Australian has been caught out by claiming to be Hong Kong resident while having a house and family in Sydney and visiting them every month.
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TheDarkHorse and jack schidt
Couple of points and apologies for slight thread drift as UK not USA.
Firstly, if you earn any income from any source in the UK then it is most likely a requirement to file an annual tax return. If the tax office have actually told you not to bother then I'd ensure you have a copy of that correspondence and keep it somewhere safe. If it's an accountant, get advice from someone who specializes in overseas matters. Regardless of wether you're classed as resident or not, income generated within the UK must be declared, even if it's below the personal threshold. You will pay 25% tax on income generated over your allowance.
Secondly, if you do fall into the category above, say your income on property rentals exceeds the personal tax free allowance, then a proportion of your salary earned in EK also will be taxed against time spent in the UK during work. In the scenario above, you could spend 89 days a year on holiday without further tax liability. However, your once a month Manchester or Birmingham trip will incur a charge. It uses a formula of salary, total hours/trips and time spent in UK. Each UK trip is worth 2days. If you don't earn above the personal tax threshold, the tax on partial salary does not apply. Tax on income will only be charged if the personal allowance is exceeded!
All of the above as well as far more complicated definitions of UK domiciled, resident have been brought in to generate income from those dodging the system. It also stops the BA 'Nigels' of this World not paying tax on their super B747-400 pay while they sun it in Nice and St.Tropez.
For the vast majority of EK pilots this will not be an issue but cover all bases and if it means getting sound financial advice, do so. What pennies you may be saving now could cost you dear if the tax man comes knocking and your house is not in order.....even if it is in Meydan!
Couple of points and apologies for slight thread drift as UK not USA.
Firstly, if you earn any income from any source in the UK then it is most likely a requirement to file an annual tax return. If the tax office have actually told you not to bother then I'd ensure you have a copy of that correspondence and keep it somewhere safe. If it's an accountant, get advice from someone who specializes in overseas matters. Regardless of wether you're classed as resident or not, income generated within the UK must be declared, even if it's below the personal threshold. You will pay 25% tax on income generated over your allowance.
Secondly, if you do fall into the category above, say your income on property rentals exceeds the personal tax free allowance, then a proportion of your salary earned in EK also will be taxed against time spent in the UK during work. In the scenario above, you could spend 89 days a year on holiday without further tax liability. However, your once a month Manchester or Birmingham trip will incur a charge. It uses a formula of salary, total hours/trips and time spent in UK. Each UK trip is worth 2days. If you don't earn above the personal tax threshold, the tax on partial salary does not apply. Tax on income will only be charged if the personal allowance is exceeded!
All of the above as well as far more complicated definitions of UK domiciled, resident have been brought in to generate income from those dodging the system. It also stops the BA 'Nigels' of this World not paying tax on their super B747-400 pay while they sun it in Nice and St.Tropez.
For the vast majority of EK pilots this will not be an issue but cover all bases and if it means getting sound financial advice, do so. What pennies you may be saving now could cost you dear if the tax man comes knocking and your house is not in order.....even if it is in Meydan!
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Re: US IRS
Not correct. The (US) IRS are specializing in US pilots at ME airlines. We are a soft target and the same tactics used on pilot A can be used on pilot B as our compensation packages are standardized.
I know of three pilots who have received such letters and they probably know of three more each.
These letters are classic shakedown policies, they shake the tree and see what falls out. They only problem for us is that they see a forest of several hundred trees all nicely lined up in a row (a seniority list) and they will shake what ever tree they want.
The production line system worked for Henry Ford and now the IRS is making it work for them.
Not correct. The (US) IRS are specializing in US pilots at ME airlines. We are a soft target and the same tactics used on pilot A can be used on pilot B as our compensation packages are standardized.
I know of three pilots who have received such letters and they probably know of three more each.
These letters are classic shakedown policies, they shake the tree and see what falls out. They only problem for us is that they see a forest of several hundred trees all nicely lined up in a row (a seniority list) and they will shake what ever tree they want.
The production line system worked for Henry Ford and now the IRS is making it work for them.
