Payroll Here - Working in US - Double Taxed or Not?

kwikksilva

Hi,
I have a question regarding taxes in US and Ireland,
I am trying to rotate within my Company to Massachusetts for 1 year.

From an initial meeting with an Irish Tax advisor, i understood that i would probably be paying tax in both countries. So my gross pay would first be cut down by the Revenue, then by the US tax system, and i would be left with very little. My tax in ireland is about €8000 for the year, in US it would be roughly about $13000.

However, i could then claim back the double paid tax from the revenue once i get back, but thats not really much use is it... i will be broke from month to month.

Does anyone know much about the situation i am in?

Obviously everything has to be completely above board and i can't take any dodgy shortcuts, but do i actually have to engage in this double tax system? How will the US even know to take money away from me if i am an irish PRSI employee?

I would like to make the rotation happen, to gain experience in the US office, but i don't want to be ruined in the process....

Comments appreciated....

Hanley

This might be immensly stupid of me..... BUUUUTTTTT....

If you can get paid into an Irish account can you not just use an Irish Visa card for any major transactions you make in the US (shopping etc) and use an ATM card from your Irish account to withdraw money over there? I know there may be a surcharge for doing so, but you could just get around it by withdrawing enough cash to last you a week or however long it would take to make it worthwhile...?

kwikksilva

I'm not sure you can avoid tax that way, i would be travelling on an L1 Visa (Intercompany Transfer) so the IRS will be well aware that i am there, and are entitled to Tax me... However, how this would be collected i am not sure, they could just post a letter to my work and look for the amount by cheque, i don't even know....

DUBACC

Another option would be to operate as a self-employed person and bill the company. That way you only need settle up the tax at the end of the year and calculate double taxation reliefs then. Just a thought!

shewasoctober

The US and Ireland have a Double Tax Treaty. The detail are listed on the Irish Revenue site: http://www.revenue.ie. It doesn't read smoothly, to me at least.

I haven't read through the entire thing. I just briefly looked over it. I'm more interested in the other direction. I will be training as an accountant in Ireland and am a US citizen. Though, in my direction, I believe that I can make up to about $85,000 per year and it won't be taxed. So, it won't be much of an issue for the time being as I'll be on a trainee salary. I know US to Ireland, you have to meet the Tax Home requirements for the exemptions. I'd look over the Irish Revenue website.

This should be more helpful. The key factor is the tax year. If you can go to the US in the beginning of the tax year, I don't believe you pay Irish taxes, but if you are present in Ireland for a certain number of days during the tax year, you will be liable for Irish taxes. If the latter is the case, you will receive some relief through the Tax Treaty. It's explained much clearer here: http://www.revenue.ie/leaflets/res1.pdf.


Hope this helps! Cheers!

Mr. Incognito

Hi,

If you are moving with work most companies have a tax equalisation policy to cover this. In reality what this means is that they pay your US tax on your behalf whilst in the US and claim teh credit at the end of the year by filing a return on your behalf- I have something similiar on my desk at work right now.

The big question here is where are you going to be paid from- i.e localised and paid in the US or paid through Irish payroll. Tax will be deducted at source. So lets say you're being paid in the US- you'll suffer federal and state taxes etc, there will be a charge to Irish tax but you juist file a Form 12 in Ireland claiming a credit for US tax paid under the treaty.

If you are being paid in Ireland on irish payroll then yes, there will be a charge to US tax but you can claim a credit for it in filing a form 11 here.

I cannot see how you are going to be deducted twice- at source which is your worry.

kwikksilva

Thanks SetantaL, so the story is,

I am being paid through Irish Payroll....
The company is paying for my US tax...

They said that their accountants are going to handle the US Tax situation.....

So i guess.... i won't be filling out any forms when i come back, looks like it is all handled?

Mr. Incognito

ah no sweat so- what will happen in here is the accoutancy firm in the US will prepare a US tax return for you, the company will pay the us tax and probably file a form 11 in ireland on your bahalf to claim the credit back.

I'm sure you'll be contacted by the accountants for information to prepare the return and also to review and sign the return before it is submitted.