It isn't possible to put a number on deductions without it being arbitrary. The 148k number was a generalized number for a specific tax bracket based upon expected earnings on widebody FO's in HKG. That's all.

You are absolutely correct that deductions will change everything, hence why the generalization. I wanted to point out to people that the tax equalization is not as bad as portrayed and can be very effective if used correctly.

In my opinion, you can't expect Fedex or ALPA to give you any advice regarding your personal tax situation because it is simply not possible to give you an accurate picture due to the millions of variables involved on a case-by-case basis. I view any tax advice from ALPA or Fedex as a complete liability.

 

If you sell your home most pilots will lose two of their largest tax deductions, mortgage interest and property taxes. Hence your AGI is higher and may kick you into the AMT tables. This is assuming you have to "bear the burden of your equivalent US taxes" as per the tax equalization package in the LOA.

 

Bullsh!t. I am not asking for advice I am asking for facts. The union hired an accountant to explain tax equalization to them. All I am asking for is two sample tax returns, lets make them 5 year FO and 10 year Capt. Give the Capt some outside income for some variety. Now show me what they will pay in HKG and CDG. Now show me what they will pay in MEM (not that I dont trust PWC). Most of us can interpret the returns and apply them to our personal situation. The smart ones will take it to their CPA for a second opinion. Individually we should not have to pay for the same advice the union already paid for.

This should have been mandatory information provided to the pilot group prior to the vote let alone the bid. But once the NC gained HKG as a base they thought their work was done and the MEC agreed.

Lines we don't need no stinkin lines.

 

OK, folks, it's clear to me that many of you still don't get one big part of why this LOA is such a screw job. First: get it straight here -- YOU AREN'T PAYING HKG OR FRENCH TAXES. Here's what happens: FedEx has to pay to the foreign gov't., as a CODB (Cost Of Doing Business), a sort of "business tax" that is equal to the tax rate on the payroll of expats FedEx stations in the FDA. But what DOES happen is that before even bidding an FDA, you are required to give the company -- NOT the foreign gov't., but the company -- permission to keep for itself an amount of money out of your check. This amount is figured by first having PW do your US taxes, and you will get the FEIE when PW does your taxes. BUT! PW then figures up what your tax WOULD HAVE BEEN if you lived in the States, plus any state tax, plus any municipal tax. PW will take that hypothetical total, then will subtract your actual tax bill, and the difference between those two figures goes to FedEx, because as a condition of bidding an FDA, you have already given FedEx permission to keep this amount. So you can forget about deducting any HKG tax from your federal tax, because YOU AREN'T PAYING THE HKG TAX. FedEx had to pay a like amount as a cost of doing business, and you have reimbursed the company for it. This reimbursement to the company is NOT tax deductible. So -- you are effectively paying the company for your assignment to the FDA. That money is NOT going to the foreign gov't.

Can you hear me now??

 

Herky:

I think everything you are saying is correct except for the state part. As far as I knew, as part of the Tax Equalization bull s h it, no state taxes will be withheld. Am I correct?

(and by the way, the whole thing does suck for HKG. OK for CDG, but definitely not for HKG)

 

Did you bother reading any of the above posts? Seriously, if you had any understanding of how accounting and taxation works, you would understand how ridiculous you sound right now.

Please do yourself a favor and read:
http://www.irs.gov/publications/p54/index.html

Then google "tax equalization" and see what you get. For example, did you know that you can have an outside firm verify that Fedex and PWC calculations are correct? It's not quite the conspiracy you think it is.

Sorry to break it to you, but you are responsible for your U.S. taxes, just like everyone else.

 

And what you dont understand is we may not be as dumb as you think. I don't think it is a conspiracy but: my choices on the next bid are: NB FO MEM, WB FO MEM, maybe NB Capt CDG. All of them have advantages and will depend on senority %. But because of tax equalization I have no idea what my take home will be if I bid CDG. WB FO in mem could easily match the take home of NB Capt in CDG if I am forced into AMT. Show me something that looks like a tax return and I can figure it out.

I don't want to have an outside firm verify PWC's number 15 months into my tour. I want the numbers estimated before I bid. Google Pig in a Poke and maybe you can figure out what I am talking about.

 

This should have been mandatory information provided to the pilot group prior to the vote let alone the bid. But once the NC gained HKG as a base they thought their work was done and the MEC agreed.



Puck an A on that FDX. That lack of info, by itself, should have been enough to flush the LOA. Then add the other things that are in the LOA....never should have passed if the crew force had analyzed what was in it. Pathetic, to say the least. This place is a lemming farm!

I feel better now.

 

Well, then maybe you need to do a little more reading yourself, Juice. Your actual tax burden between the foreign country and the US become FedEx's burden under equalization. FedEx will collect from you...and I quote from the company website....

"Tax equalization is accomplished through the collection of a Hypothetical federal, state and local income tax..."

"Q: How does the overseas assignment affect my state and local income taxes?

A: Estimated and final hypothetical state and local income taxes will be computed on Company income allowing deductions and exemptions as determined under the laws of the tax jurisdiction the overseas employee was relocated from."


Now, you wanna run those numbers again on a first year F/O relocated from California or Iowa?

Of course your actual burden would not include state taxes, but that's not what comes out of your pocket. The "hypothetical tax" is what FedEx withholds from you and they pay whatever your true burden is.

Your bill: Hypothetical Federal, State, and Local taxes from state in which you relocated from.
FedEx's bill: Actual burden figuring FEIE, Foreign Tax Credit and foreign tax burden.

 

Okay, Juice. Just to humor you, I googled "tax equalization". The first link I found pretty much sums it up. If the Union had bothered to do the same thing, perhaps they would have negotiated for "Tax Protection" vs "Tax Equalization". Heck, they probably knew the difference and didn't even bother to do the right thing for those who will be over there. Talk about a screw job.

Here's the link for the first google return I found:
http://www.grasmick.com/equalize.htm

Now here's probably the best quote:
"Expense to employer-- tax protection is a one way street. If the total tax liability of the foreign assignment is less than the hypothetical tax, the employee keeps the benefit. However, if the total tax liability is greater, the employer incurs the additional costs.
Under tax equalization, the employer keeps the tax benefit of having employees in low tax countries, which helps to offset the tax costs of having employees in high tax countries."