Originally Posted by FDXLAG
XXXXXXXXXXXXXXEstimated Tax Equalization Benefit
Tax equalization was/ is NOT to be a Monetary Benefit for Gain but rather a benefit to minimize TAX burdens to expats. In other words one should not be expecting to MAKE MORE.
Simply put, TAX equalization pays the difference in Taxes both to the US and Foreign governments on your "Taxable income" over what you would pay the US government as if you still lived in the US.
With the Tax equalization, one will not further benefit from the first $82,500 as that will be incorporated.
The money that the company pays both governments on your behalf taxes, will also be taxed as income
To simplify it (if that is possible with tax issues), if you Normal US TAX is $25,000 and your foreign Taxes obligations are an additional $15,000 USD, the accountants will figure your gross income with all benefits and see what you would have paid as a resident of the US and any additional tax burden to other goverments will be paid by the company.
In the example above the company would pay 15,000 to the French or HKG government on your behalf, but that 15,000 they pay will be figured into your gorss w-2 for tax purposes. So you will be paying taxes on the Taxes FedEX paid on your behalf.............Simple??
So pilots should not expect to "Make out on taxes", they just won't have to bear the Buren of paying additional foreign taxes.
Also you should check with you individual States because each state handles EXPAT taxes differently. SOme States forgoe any state taxes to Expats, others will still tax you as if you still reside there.
Good bad or indifferent,