Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Hi, My wife and I are Dutch citizens with a Greencard, working

Hi, My wife and I are...
Hi,
My wife and I are Dutch citizens with a Greencard, working temporarily in the UK. We're considering a posting in Malaysia, and have to decide before week's end.

Question:
* my employer Shell pays their expats net-of-tax. That is, they take care of paying all taxes to the host country, as well as any due in the base-country (in my case the Netherlands). Working in the UK seems to pose no problems, since the UK taxes are higher than US taxes. Consequently, the US doesn't charge me any tax over my net-of-tax-income, since Shell has already paid more taxes to the UK on my behalf than the US would charge. My question: how does this situation unfold when working in Malaysia? That is: a) is there some tax treaty between the US and Malaysia that governs this, and b) is Malaysian income tax higher than that in the US, so that the US won't charge me tax over my net-of-tax-income, that is, over and above what Shell already pays Malaysia on my behalf?

Thanks
Erik
Show More
Show Less
Ask Your Own Tax Question
Answered in 1 day by:
11/3/2009
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,684
Experience: Taxes, Immigration, Labor Relations
Verified

As you are a green card holder - you are required to file your tax return based on income level - and are required to report all your income worldwide.

 

In additional - you might be eligible for a foreign earned income exclusion.

As an US person living abroad - you may claim a foreign earned income exclusion.

The person may qualify for the foreign earned income exclusion - he/she should:
-- Work and reside outside the United States for at least 330 days during the year, or
-- Meet either the Bona Fide or Physical Presence tests.
If the person qualifies, he/she may exclude up to $91,400 (2009 in foreign wages -- plus housing allowances (limited to 30% of the earned income exclusion).

To receive that exclusion - the taxpayer should file either form 2555 or 2555EZ.

Here are forms you likely need:

Please be aware that - the exclusion above will not affect self-employment taxes - only income taxes. Only earned income is excludable. For instance dividends, investment income, etc - are not excludable.

Please also be aware that this credit is not granted automatically - you need to file a tax return and claim the credit.

 

If the same income is taxable in the US and in a foreign country - you may claim a credit for taxes paid in a foreign country on your US tax return.

To determine the amount of credit -the person should use the form 1116 and attach it to his/her tax return. - http://www.irs.gov/pub/irs-pdf/f1116.pdf

Here are instructions - http://www.irs.gov/pub/irs-pdf/i1116.pdf

 

As you are a green card holder - your situation is not covered by tax treaties.

Let me know if you need any help.

 

Ask Your Own Tax Question
Customer reply replied 8 years ago

I was hoping for a more specific answer. Assuming that...

* I earn 300.000$ gross, all in Malaysia

* My wife doesn't earn anything

* I have a 1-year old son

* We live in Malaysia the entire year, going to the US for 2 weeks vacation a year

* Housing is provided free-of-charge by employer

* I have 500k$ on checking accounts in the US

* I have no further financial transactions, or assets (either real estate or other)

 

Under these conditions, do I end up paying taxes to the US over and above the taxes I (i.e., my employer pays) to Malaysia?

 

thanks

EJB

 

Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Verified
Hi EJB

There is no tax treaty between the United States and Malaysia.

Malaysia has an income tax system with the higest tax rate for an individual is 30%.

If I read your question correctly, you expect to earn $300,000. For US tax purposes, this will put you in the 33% bracket, so yes, under this scenario, you would still owe some tax to IRS. You will also have to pay tax on any interest income your $500,000 in US bank earns. Please see below:

Malaysia Tax Law - Income Tax Law



If the above link doesn't work, here's the web address you can copy & paste into your web browser.

http://www.lawyerment.com.my/tax/income.shtml

2009 Tax Rate Schedule (copy & paste in your web browser)

http://taxes.about.com/od/2009taxes/qt/2009_tax_rates.htm

I hope this helps.



Edited by Anne on 11/4/2009 at 2:26 AM EST
Ask Your Own Tax Question
Customer reply replied 8 years ago

Anne - I'm still a bit confused.

A quick back-of-the-envelope on the income-tax part (forgetting about the 500k checking accounts) seems to suggest that I owe virtually nothing to the US:


Assuming 300,000$ gross income, an exchange rate of 3.43 Malaysian Ringit per US$ gives 1,029,144 RM.

300,000 lies between 195,850 and 349,700, yielding US tax amounts of 43,830.50 + 33% over (300,000-195,850) = total of 78,200$

If I understand Malaysian tax brackets correctly (http://fortunesense.blogspot.com/2009/01/malaysia-individual-income-tax-rate-for.html and http://www.hasil.gov.my/lhdnv3e/individuIndex.jsp?process=21000&menu=13&expandable=1), I'd pay 54,825 RM over the frist 250,000 RM, and 27% over the remainder of 779,144 RM, equating to 265,194 RM = 77,305$ .

I'm not sure where your 30% Malaysian rate comes from, or if the 28% quoted by http://asiatax.wordpress.com/2009/06/30/malaysia-tax-and-accounting-principles-at-a-glance/ is correct. In any case, a higher Malaysian tax-rate could only help me, since my employer would pay more tax to Malaysia, which I can deduct from my US taxes, can't I?

 

Is the above correct, and does it indeed mean I'd have to pay an extra 78,200-77,305 = 895$ extra tax to the US over and above what I (i.e. my employer) pays to Malaysia, presuming the 27% is indeed the correct max Malyasian tax rate?

 

thx

Erik

Yes you are correct. My answer was based on $300,000 US dollars, no exchange rates taken into account. With your calculations and the exchange rate, then your figures look like they're going to be pretty accurate.

I hope this helps.

Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Verified
Anne and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Anne Your Own Question
Anne
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2,439
2,439 Satisfied Customers
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses

Anne is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Ministers Housing/Self-Employment After form 4361 is
Ministers Housing/Self-Employment After form 4361 is approved by IRS, I need to go back and file form 1040X to amend my return, where I paid self-employment tax.Let's say form SE showed $5,000 in self… read more
Lev
Lev
Tax Advisor
30,684 satisfied customers
My question is: Is the foreign tax credit 100% Offset to the
Hi, my question is: Is the foreign tax credit 100% Offset to the Alternative Minimum Tax, if there are only foreign income? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
What are the forms for reporting Rental Income to the IRS on
What are the forms for reporting Rental Income to the IRS on foreign properties - we collect each month? Is this filed separately from our personal returns?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Would the estate pay self employment taxes on the income
Richard,Would the estate pay self employment taxes on the income before the beneficiaries are determined? For instance if it takes the court 2 years to say the parents are the beneficiaries. How is th… read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,338 satisfied customers
On a NJ W-3 form, is line 3 the NJ Gross income tax withheld
On a NJ W-3 form, is line 3 the NJ Gross income tax withheld or is that supposed to include unemployment tax, FLI, SDI, etc... as well… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
A law firm (which is a Schedule C filer) has gross income of
A law firm (which is a Schedule C filer) has gross income of 1,000,000 & Net Income 0f 280,000. In the tax reform just passed, there is a 20% deduction for law firms that have income less than 315,000… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
I plan to declare some foreign interest and dividends
I plan to declare some foreign interest and dividends totaling about 3000 pounds in each of the last 3 years, on some of which i suffered withholding tax at source. I have not been submitting an annua… read more
taxmanrog
taxmanrog
Master\u0027s Degree
776 satisfied customers
FOR GUILLERMO: What line on the 1040 income tax return is
FOR GUILLERMO: What line on the 1040 income tax return is used to determine the sponsor's income for Form I-864? Is it line 22: TOTAL INCOME? Or, line 37, ADJUSTED GROSS INCOME?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Self employed, Im wondering if inmigration uses gross income
Self employed, Im wondering if inmigration uses gross income or net income for their figures... I make about 70,000 gross income on 1099 but after deductions net income is about 32,000.. we are a fami… read more
Lev
Lev
Tax Advisor
30,684 satisfied customers
What tax form is filed to report dividends paid by US Corp?
What tax form is filed to report dividends paid by a US Corp which is owned by a Canadian Corp? I think it might be 1042S. I want to know the rate of WH.… read more
abci168
abci168
Principal
27 satisfied customers
Us citizen living and working in colombia SA earned income
us citizen living and working in colombia SA earned income and unearned how do i report the interest and dividends are these tax at he same rate or can you also exclude them like the earned income … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
What is the income tax rate if it is not withdrawn from the
Hi! What is the income tax rate if it is not withdrawn from the LLC? The owner has not withdrawn any balance from the business all the amount reinvested into the business. Thank you!… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
Can franking credit on an Australian income tax return be
Can franking credit on an Australian income tax return be used on Form 1116 as tax paid on the franked distributions? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
Foreign earned income tax exemptions. My husband started
foreign earned income tax exemptions. My husband started working in the UAE in February 4, 2017. How many days is he allowed to physically visit the USA in a 12 month period to be qualified for the ex… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I am looking at the form 1116 (foreign tax credit). I have
I am looking at the form 1116 (foreign tax credit). I have paid $30,000 in taxes in the UK (I live all year here), the US tax says line 22 on the form can only be 21,000. Where do I report the carry o… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
When utilizing the foreign earned income exclusion and
When utilizing the foreign earned income exclusion and housing deduction on Form 2555 and coordinating with the Form 1116, the foreign tax credit must be reduced a formula for prorating tax credit ava… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I have to use form 1116 for a foreign tax credit line 14
I have to use form 1116 for a foreign tax credit line 14 code B the amount is 108, I got to putting in the country which is various, where do I put the 108 … read more
Anne
Anne
Master Tax Preparer
2,439 satisfied customers
RE Form 1116 provision for adjustment of foreign qualified
RE Form 1116 provision for adjustment of foreign qualified dividends:I have foreign sourced qualified dividends (QD) from 4 different countries in excess of 30K. Form 1116 requires adjusting the amoun… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x