Have a Tax Question? Ask a Tax Expert
Half of your refund would only belong to your spouse if they also worked and were due a refund based on their own withholding.
The fundamental principle behind tax equalisation is that a worker abroad should be no better off or no worse off as a result of being assigned abroad.
To guarantee employee is ‘tax neutral’ on taxes, the employer bears any increase in tax costs , as well, any windfall from reduction in worldwide taxes of the employee is credited to the company. This is where the tax credit comes in.
The foreign tax credit is meant to protect form double taxation.
It is a standard practice for many now.
I personally do not like the use of those either. If it were me I woudl rather do my own tax reporting in both countries.
They are fronting the tax so they would be entitled to the tax returned by use of credits.
It is not illegal.
The foreign tax credit goes hand in hand withthe tax reporting it is not separate. The same would be true if the foreign tax exclusion were used instead of the credit.
You may want to take this to a legal labor issue but for tax purposes, they are not doing anything illegal.
Perhaps your right to not have to be required to use the policy in place could be covered under some labor law.
I cannot give an opinion about labor issues outside of tax.
Thank you for allowing me to address the tax situation.