Tax questions

[Global]

G'day.

I'm a US citizen considering a 6 - 12 month consulting gig in SA as an independent contractor.

- Working for a SA company
- Paid in ZAR, 127K a month
- living, transportation and other expenses to be negotiated

I understand the pluses and minuses of SA's major cities.

The US IRS will exclude about the first $90K (USD) for US income tax purposes.

What I don't know is the tax system in SA.

Am I required to pay SA income taxes?

Are negotiated living and transportation expenses considered SA income, thus taxable?

Are negotiated living and transportation expenses considered USA income, thus taxable in the US?

How are SA taxes calculated, flat rate, progressive, tables?

Any tax traps one might fall into?

Cheers,

[Bevdeforges]

Originally Posted by Global

G'day.

I'm a US citizen considering a 6 - 12 month consulting gig in SA as an independent contractor.

- Working for a SA company
- Paid in ZAR, 127K a month
- living, transportation and other expenses to be negotiated

I understand the pluses and minuses of SA's major cities.

The US IRS will exclude about the first $90K (USD) for US income tax purposes.

Be careful - this is NOT necessarily so. You cannot exclude the $90K unless you fulfill the requirements for either "bona fide resident" or "physical presence" test. Both of those include working outside the US for a full 12 months (either 12 consecutive months or one full calendar year). If your assignment is any less than 12 months, you don't qualify for the exclusion and you pay your regular taxes to the US. (Your assignment will be considered to have been an "extended business trip" - which could make some of your travel and accomodation expenses deductible.)

All living and transportation expenses plus any remuneration received in kind (say, a company car or housing) is taxable.

That said, there are tax provisions to assure that you aren't double taxed on your income. If your income from this assignment is taxable in the US, chances are it won't be taxable in SA, though I'm not at all familiar with SA taxes so can't advise you whether or not you will need to file to claim this exemption.
Cheers,
Bev

[Global]

Thanks Bev,

That helps clear up some of the open questions, especially the 12 month rule which I wasn't aware of.....

I'll have to negotiate for tax preparation assistance and also payment for any incremental taxes. I don't mind paying my fair share, but only if it's the same as if I would have paid in the USA. Your point on double taxation....

Thanks....

[DannyBoy]

Hello Global,

I too am a US citizen and am considering working in S.A.
DId you apply for the job online or did you have to go to S.A and do a Face-to-face interview.

Also what are you going to do with your car and furniture in the U.S?
Will you store or sell it?
Any advice will be appreciated.

Thanks a bunch.

[Global]

Originally Posted by DannyBoy

Hello Global,

I too am a US citizen and am considering working in S.A.
DId you apply for the job online or did you have to go to S.A and do a Face-to-face interview.

Also what are you going to do with your car and furniture in the U.S?
Will you store or sell it?
Any advice will be appreciated.

Thanks a bunch.

Danny,

The company contacted me, met the owners at a trade show in the US last year.

Will leave everything in the US as is, have a trusted friend drive the cars every few weeks and walk through the house weekly. Live in a warm climate so no issues with cold weather.