Questions about Turkey

PsyGuy · Post by **PsyGuy** » Fri Jan 20, 2012 12:59 am

Most teachers misunderstand the tax credit actually, it's a credit that you get to apply towards the foreign TAX you pay, not income. The credit is towards the TAX paid not the income earned. So if your in a country that charges low taxes or very little then your stil legally responsible to pay the tax difference. This is how it "TECHNICALLY" works: say your in an Asian country and you make $40K USD, the Asian country your in charges you 5% income tax. So you pay $2K in taxes. your then supposed to file and complete your US income tax (Long form) and you figure your tax owed after deductions (and for simplicity sakes we wil say you don't factor value for your housing and other allowances) your in the 15% tax bracket. That means your tax on $40K is $6000. Well you get to deduct as a credit the $2000 you paid in taxes in Asia but you still owe $4000 in US taxes...

Now that said, many teachers I know just dont pay taxes, and the ones that do just cheat and it's easy to do because you don't get a W2, or any 1099s. The IRS doesn't kow ow much you make or what you pay in taxes. They also don't kow if your making any income at all. Just about everyone gets away with it too. So when I was in China down in Goungzhou a coworker I was friends with got an email from the American services section of the US embassy on Shamian Island, that his passport is due to expire (he had like 10 months left on it) and he needs to renew it. So he goes down there, and after 5 minutes is arrested by DSS agents. Apparntley his ex wife hadnt gotten (because he didn't send it) the last 4 years of child support. That's not why he was arrested though, he hadn't paid any taxes in almost 7 years and his ex wife had been getting the audit notices for the last 5 years for his previous business.

wrldtrvlr123 · Post by **wrldtrvlr123** » Fri Jan 20, 2012 6:10 am

[quote="PsyGuy"]Most teachers misunderstand the tax credit actually, it's a credit that you get to apply towards the foreign TAX you pay, not income. The credit is towards the TAX paid not the income earned. So if your in a country that charges low taxes or very little then your stil legally responsible to pay the tax difference. This is how it "TECHNICALLY" works: say your in an Asian country and you make $40K USD, the Asian country your in charges you 5% income tax. So you pay $2K in taxes. your then supposed to file and complete your US income tax (Long form) and you figure your tax owed after deductions (and for simplicity sakes we wil say you don't factor value for your housing and other allowances) your in the 15% tax bracket. That means your tax on $40K is $6000. Well you get to deduct as a credit the $2000 you paid in taxes in Asia but you still owe $4000 in US taxes...

Now that said, many teachers I know just dont pay taxes, and the ones that do just cheat and it's easy to do because you don't get a W2, or any 1099s. The IRS doesn't kow ow much you make or what you pay in taxes. They also don't kow if your making any income at all. Just about everyone gets away with it too. So when I was in China down in Goungzhou a coworker I was friends with got an email from the American services section of the US embassy on Shamian Island, that his passport is due to expire (he had like 10 months left on it) and he needs to renew it. So he goes down there, and after 5 minutes is arrested by DSS agents. Apparntley his ex wife hadnt gotten (because he didn't send it) the last 4 years of child support. That's not why he was arrested though, he hadn't paid any taxes in almost 7 years and his ex wife had been getting the audit notices for the last 5 years for his previous business.[/quote]

Possibly, but I wasn't talking about the tax credit. I was talking about the Foreign Earned Income Exclusion that allows you to exempt $87,600 of the money you earn while working in a foreign country, from a foreign company. You do have to qualify, but as long as you are living and working overseas, then it is fairly straight forward.

http://www.irs.gov/businesses/article/0 ... 17,00.html

The credit would offset your US taxes, but if all of your money is excluded, then you have no taxes to offset.

I file every year. There is no reason not to, really (although yes, some teachers don't bother, which is really asking for problems down the road).

overseasvet2 · Post by **overseasvet2** » Fri Jan 20, 2012 6:40 am

For years we heard that the IRS and Immigration were working together to share info. Now I've heard the job is done - if you reenter the States with a US passport and have not filed taxes, it could be an issue. I have not head of specific cases so maybe it's all an urban myth...

WiseTeach · Post by **WiseTeach** » Fri Jan 20, 2012 2:01 pm

Well as usual, US tax law is as clear as mud and somewhat arbitrary. Sounds like I would be best off just filing. Now need to look into other things and make a final decision. Great helpful information all! Istanbul is looking better day by day.

wrldtrvlr123 · Post by **wrldtrvlr123** » Fri Jan 20, 2012 9:20 pm

[quote="WiseTeach"]Well as usual, US tax law is as clear as mud and somewhat arbitrary. Sounds like I would be best off just filing. Now need to look into other things and make a final decision. Great helpful information all! Istanbul is looking better day by day.[/quote]

Actually, it's not that bad, once you get your head around a few terms and concepts. AND you don't really need to even do that, since sites like TurboTax now have the ability to help you claim the Foreign Income Exclusion and E-file all of the appropriate forms for you. Highly recommend.

PsyGuy · Post by **PsyGuy** » Sat Jan 21, 2012 4:04 am

I may be getting the posts mixed up, I was referring to the "freelance" spouse, who isnt exactly got a legal work permit or business license.

WiseTeach · Post by **WiseTeach** » Mon Jan 23, 2012 2:04 pm

Dreamgiver..... I took the positon in Istanbul. Many reasons why... can work with the low salary I think for at least 2 years... then reassess options. The staff at MEF just seemed like a great group to work with. Scared a bit and of course as time to leave approaches I may second guess myself..... but a whole new life awaits. Yee Haw.

Not going to hiring fair will save me a bundle as well.

dreamgiver · Post by **dreamgiver** » Mon Jan 23, 2012 3:23 pm

[quote="WiseTeach"]Dreamgiver..... I took the positon in Istanbul. Many reasons why... can work with the low salary I think for at least 2 years... then reassess options. The staff at MEF just seemed like a great group to work with. Scared a bit and of course as time to leave approaches I may second guess myself..... but a whole new life awaits. Yee Haw.

Not going to hiring fair will save me a bundle as well.[/quote]

Whoo hoo, I'm so happy for you! Congratulations! I decided not to pursue Istanbul. However I would love to live in Turkey some day. I'm sure you'll have a wonderful experience and won't regret it. All the best to you!

yeshko · Post by **yeshko** » Mon Jan 23, 2012 3:33 pm

[quote="WiseTeach"]Dreamgiver..... I took the positon in Istanbul. Many reasons why... can work with the low salary I think for at least 2 years... then reassess options. The staff at MEF just seemed like a great group to work with. Scared a bit and of course as time to leave approaches I may second guess myself..... but a whole new life awaits. Yee Haw.

Not going to hiring fair will save me a bundle as well.[/quote]

Congratulations! You'll love it!

PsyGuy · Post by **PsyGuy** » Mon Jan 23, 2012 6:34 pm

Congratulations, sounds like your happy with your decision. You get the bonus of avoiding the stress and the cost of the fair.