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Old 13.10.2015, 14:43
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US taxes - Equalization

Hello,

Does anyone else get this benefit from their employer? I am OK to pay taxes on what we would have earned if we were still living in the US, but paying on the Cost of Living increase, car, housing, school, etc. is killing us.

Thanks in advance,
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Old 13.10.2015, 15:09
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Re: US taxes - Equalization

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Hello,

Does anyone else get this benefit from their employer? I am OK to pay taxes on what we would have earned if we were still living in the US, but paying on the Cost of Living increase, car, housing, school, etc. is killing us.

Thanks in advance,
Ask you employer to cut your benefits, then your US tax bill will fall.
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Old 13.10.2015, 15:17
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Re: US taxes - Equalization

Tax equalisation is usually where a company pays any extra personal taxes incurred by an employee while becoming taxable in another juristiction.

For example: Joe is employed by Widgets and Things in their main office in Taxlessstan. He pays a flat tax rate of 20% on his 100,000USD salary. Widget and Things are expanding and Joe is sent to the Socialist Republic of Social Infrastructure for 6 months in order to set up the new Widget and Things office. The tax regulations of SRSI states if you "work" more than 90 days you are subject to personal tax (50%) on your global earning for the full tax year.

Widget and Things pays Joe's 30k tax bill in the SRSI. This is not considered to be a taxable benefit.

The example above is easy - but it gets a lot harder when you have thousands of employees working across a hundred countries with differing tax regulations. Taxable benefits workout well if you use them - but a bitch when you don't.

The OPs question relates to the taxable value of benefits - and is not unusual. A Swiss analogy is Eigenmietwert - where property is considered taxable income even when you don't earn anything from it.

Taxable benefits are great if you use them, but a bitch if you don't - especially if you can't get your employer to cut them.
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Old 13.10.2015, 15:24
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Re: US taxes - Equalization

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Hello,

Does anyone else get this benefit from their employer? I am OK to pay taxes on what we would have earned if we were still living in the US, but paying on the Cost of Living increase, car, housing, school, etc. is killing us.

Thanks in advance,
if you are actually paying the tax on your salary adjustment, housing, school, car, etc., then you are not tax-equalized. if you are tax-equalized, you should be paying only a hypothetical tax on your base US salary as if you were living in US, and your employer pays the actual taxes to the authorities on your behalf for everything else (using the hypo tax you pay to offset what the company pays). it rarely works out exactly the same as it would if you were still living in the US, but it should be pretty close.
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