Our expatriate tax services are provided to our clients who utilize global assignments to provide their clients and their foreign affiliated companies with individuals with the requisite specialized skills on project teams.
We can assist multinational corporations address the tax landscape applicable to short-term and long term (longer than one year) assignments. In addition to the tax issues, we can assist employers with policy and process to manage costs effectively for global assignments.
Expatriate Tax: Overview of US Tax Rules
The opportunities for tax savings center primarily on maximizing the deduction of all ordinary and necessary business expenses paid or incurred during the tax year. Generally, a taxpayer can be treated as being temporarily away from home on business if the expected duration of their global assignment away from home in a single location does not exceed one year. The reimbursement of taxpayer incurred expenses is treated by the employer as business expense and is not required to be reported by the taxpayer as wages.
If the assignment is intended to be long term, taxable expenses may be offset by foreign tax credits or may possibly be eligible for exclusion which could yield more beneficial results than a short term assignment. These situations have to be analyzed on a case by case basis.
Policy and Process
Short-term assignments can turn out to be not as tax effective as planned because the employer lacks a standard process for administering assignments.
Having a written formal short-term assignment policy document goes a long way toward ensuring consistency and clear communication with employees increasing the likelihood of a successful assignment.
It is essential that the home and host country payroll personnel are involved in planning for the short-term assignments. We work with your existing payroll processor or can make arrangements with a U.S. publicly traded company, on setting up the host company payroll processing.