Salary and offer/package questions - Part 2 - Page 8

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Salary and offer/package questions - Part 2 - Page 8


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  #71 (permalink)  
Old 21st August 2013, 04:19 AM
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Default Salary and Taxes for US citizens

I am also in a negotiation phase. My question to some of the users would be - for example:
If salary is 95,000 USD, 30,000 USD in housing allowances, 20,000 in school allowances for children, comissions being seperate, then my tax liability for US citizens would be as follows:

Foreign earned income exclusion for 2013 is 97,600 USD based on the fact that I pass either the Bonafide residence test or Physical Presence test - So salary would be tax free
I also get some housing exclusions up to 57,000 for dubai which means no taxes on housing allowances
With my wife and my two children as dependents, I am sure i will get further tax breaks,
So my thinking is that my tax liability would be very little, ie. whatever is the remaining amount left and on commissions
i know its not this simple but somebody share their thoughts.....the tax thing is driving me crazy

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  #72 (permalink)  
Old 21st August 2013, 06:30 AM
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Originally Posted by abbzia786 View Post
I am also in a negotiation phase. My question to some of the users would be - for example:
If salary is 95,000 USD, 30,000 USD in housing allowances, 20,000 in school allowances for children, comissions being seperate, then my tax liability for US citizens would be as follows:

Foreign earned income exclusion for 2013 is 97,600 USD based on the fact that I pass either the Bonafide residence test or Physical Presence test - So salary would be tax free
I also get some housing exclusions up to 57,000 for dubai which means no taxes on housing allowances
With my wife and my two children as dependents, I am sure i will get further tax breaks,
So my thinking is that my tax liability would be very little, ie. whatever is the remaining amount left and on commissions
i know its not this simple but somebody share their thoughts.....the tax thing is driving me crazy
It is lump sum, the breakdowns have nothing to do with anything from a USA tax perspective. You claim your entire foreign earnings as one total amount, if they were to give you housing instead of an allowance you would need to claim the value of that housing.

But it is far more complex than simply saying anything over $95,100 (2012 number) is going to be taxed. As you already noted there is a housing exclusion that can be added to that, which comes with a goofy calculation about how much of your actual expenditure can be deducted (this includes rent, utilities, and some other things if you want it to). I do not have kids, but I would think there is a way to claim some of the school fees just like some of these costs are deductible if you live in the USA. Also what about your house, will you be renting it? Something to also keep in mind is by not having a taxable income you will not be able to invest in IRA plans, so no money into a Roth while here

I found a good thing to do was use a tax software package and just start running through scenarios and see how the number start to look. I did a lot of research on IRS and other websites. It certainly may also be worth the investment to talk to a specialist.

And my standard disclaimer, I am not a tax expert.

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  #73 (permalink)  
Old 21st August 2013, 07:11 AM
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Hello everyone,

I have been exploring various options on how to land a job in Dubai and realized that the best market entry strategy would be to transfer internally through my firm. I work for one of the BIG 4 firms in their management consulting area and have started the transfer process. As part of this process, I know that the local firm will have to hire me and from what I understand, they may not exactly match my base pay here in the US due to the "we don't have income tax here in UAE" logic and that I get paid a lot for my role here. However, this may not be financially viable for me (considering that I still have to pay US taxes & I have a mortgage) unless they offer me a decent living allowance.

So my question is if there is a general rule of thumb when companies offer a living allowance (specially if the base is being low-balled)? I have seen them to be 50% of base pay. What should I expect lets say if my base salary is a USD 100K (or AED equivalent), USD 50K?

I have been advised by a couple of colleagues who have worked in the Dubai firm on a similar transfer that I should aim for 110% of my base pay here - e.g. if I make USD 100K here then I should aim for a total package of USD 110K there. This is not great but its reasonable.

A little about myself. I have almost 10 years of consulting experience in process and operational improvement here in the US primarily focusing on the financial industry. It'll just be my wife and I moving over there. I am only looking be in a decent 2 (maybe 3) bedroom apartment close to downtown and I will probably end up getting a decent used car. I am not into much else in terms of spending.

Thoughts?
The reason that companies break salary into base salary and allowances is because they only pay End of Service Gratuity on the base salary. So the lower they keep the base salary the less they are required to pay when you leave. It has nothing to do with covering the costs of what they say it is for. Heck my first job had something called an Adjustment Allowance.

All that matters to you in the end is the lump sum. I don't like the idea of thinking in percentages, because what makes sense for a single guy may not for a family of four. My 'magic' equation is, I think that you should make the same gross and cover reasonable rent on top of that. I think as soon as companies start telling me that it is ok because I don't pay income tax it is a red flag. My tax liability has nothing to do with my value. Do they bill clients less based on their employees tax liability?

What are your goals for coming here? Is it to save money? If so then you need to only accept an offer that will allow you live the lifestyle you want and save an acceptable amount. A 2+ bed downtown is expensive, I personally would never spend that kind of money if my salary was $110K (mine is more and I still won't spend that kind of money on rent). Based on your screen name perhaps your have family reasons for wanting to live in this region, if that is the case than your salary requirements may be lower

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  #74 (permalink)  
Old 21st August 2013, 07:36 AM
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Bloody hell, what is happening!? People are willing to leave a 1st world country for 10k dhs a month? Wtf, surely things are not that bad in UK.
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  #75 (permalink)  
Old 21st August 2013, 09:11 AM
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Bloody hell, what is happening!? People are willing to leave a 1st world country for 10k dhs a month? Wtf, surely things are not that bad in UK.
yes it's very low.

yes, the UK is totally f*cked!
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  #76 (permalink)  
Old 21st August 2013, 09:35 AM
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I just find it amazing that people are willing to give up their lives back home to come here, work for minimum wage for a startup company in dodgy Dubai. Just keep your passports close and have enough money for a one way ticket home and be careful what you sign.

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  #77 (permalink)  
Old 21st August 2013, 10:53 AM
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Bloody hell, what is happening!? People are willing to leave a 1st world country for 10k dhs a month? Wtf, surely things are not that bad in UK.
I left for half that (and accom) at first because despite having a good cv and great references, I couldn't get hired for a stupid amount of time at home after a company I worked for got sold.

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  #78 (permalink)  
Old 21st August 2013, 11:40 AM
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I just find it amazing that people are willing to give up their lives back home to come here, work for minimum wage for a startup company in dodgy Dubai. Just keep your passports close and have enough money for a one way ticket home and be careful what you sign.
i think the key here is "for a start-up company"

your chances of survival in a start-up or new branch office are far far lower than your chances in a well established business, regardless of your earnings on paper.

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  #79 (permalink)  
Old 21st August 2013, 01:19 PM
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Originally Posted by fcjb1970 View Post

The reason that companies break salary into base salary and allowances is because they only pay End of Service Gratuity on the base salary. So the lower they keep the base salary the less they are required to pay when you leave. It has nothing to do with covering the costs of what they say it is for. Heck my first job had something called an Adjustment Allowance.

All that matters to you in the end is the lump sum. I don't like the idea of thinking in percentages, because what makes sense for a single guy may not for a family of four. My 'magic' equation is, I think that you should make the same gross and cover reasonable rent on top of that. I think as soon as companies start telling me that it is ok because I don't pay income tax it is a red flag. My tax liability has nothing to do with my value. Do they bill clients less based on their employees tax liability?

What are your goals for coming here? Is it to save money? If so then you need to only accept an offer that will allow you live the lifestyle you want and save an acceptable amount. A 2+ bed downtown is expensive, I personally would never spend that kind of money if my salary was $110K (mine is more and I still won't spend that kind of money on rent). Based on your screen name perhaps your have family reasons for wanting to live in this region, if that is the case than your salary requirements may be lower
FCJB1970, Thank you for the feedback. No, I don't have family in Dubai. The Ex is for Expat and the Arab is for being an expat in an Arab country :-). Yes, the goal is to save $$$ and I was just running a hypothetical set of numbers. Since my post, I have come across other posts on the forum from folks from the UK with similar background to me (less experienced though) who have made the move and their base was the same as in the UK and have roughly 40%-50% of base as rent so that gives me hope.

I guess I will cross that bridge when I get there.

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  #80 (permalink)  
Old 21st August 2013, 08:39 PM
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Default Assistant manager dubai

Hi everyone,

I am currently looking at offers for a restaurant manager position with a high profile group.

Any idea of the type of realistic offers I should expect?

Thanks,
Matt

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