TESA/SOFA and taxes

11 posts in this topic

Looking at taking a contracting job for System Engineer is Stuttgart with a base of 90k + 2200 housing/600 utilities + COLA + up to 25k for tuition (each kid?)

 

I would be start information end April/beginning May and worried about filing taxes as I heard you get a W-2 with the miscellaneous allowances added as income.

 

How do I show permanent physical residence for 12 months when starting midyear?

 

Some say to file extensions until to meet the 12 months/330 days but you're still required to pay tax liabilities.

 

I don't understand how I would pay tax liabilities without first submitting taxes to know how much I pay. I know I will need a CPA who does expatriate taxes and I assume I could use what's available on base?

 

Will I have to pay for ~150k taxes and wait for refund?

 

Do I get tax credits or exemption for the tuition or housing?

 

I'm making 80k now so I was originally thinking I would be making quite a bit more over there if I'm able to rent out my house stateside.

 

I want to be able to afford for my 2.5, almost 3 to start kindergarten over there and I'm assuming the tuition will pay for that? This is with SRA/CSRA

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The answer for the physical residence requirement is as you wrote, you have to file an extension and wait to file your US taxes until you meet the 330 days requirement. So if you start on the 1st of May 2017 and you are outside of the US from that time onwards, you can file your taxes in the end of March 2018. Since this is before tax day, in this situation, you will not need to file an extension and can just submit your taxes. But if you go back to the US say for work or for holidays, this is subtracted from the 330 days.

 

Can't help with the other questions. But I will say that TurboTax has a decent foreign income section that should cover you. There will, however, be tax advisors on base for free during tax season as long as you have an ID card which it seems like you will.

 

One thing to check out before moving would be your state tax situation as you may still have to pay state taxes on foreign income.

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Do you have to pay state taxes under SOFA/TESA status? Im currently living in Pennsylvania but will be leaving for Germany soon under SOFA/TESA status. My parents live in Texas. Since we are leaving our apartment in PA anyways, will it be ok to change my stateside residence address to my parents' address to avoid the state taxes?

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18 hours ago, kvktm said:

Do you have to pay state taxes under SOFA/TESA status?

 

Your SOFA/TESA status is not directly relevant to a determination of your Pennsylvania tax liability.  Your physical departure and subsequent presence in another state is a potential determining factor but by itself is not dispositive. The fact that you leave in order to live elsewhere under a special legal status that indicates, circumstantially, that you will not be able to maintain that presence in that status indefinitely is a factor for determining whether a claim to have acquired a new domicile is credible.

 

18 hours ago, kvktm said:

 

 

Im currently living in Pennsylvania but will be leaving for Germany soon under SOFA/TESA status. My parents live in Texas. Since we are leaving our apartment in PA anyways, will it be ok to change my stateside residence address to my parents' address to avoid the state taxes?

 

Using a mailing address in a state other than the state in which you are obligated to pay taxes would not have any legal effect on that obligation. (In some circumstances it could be regarded as evidence of an intent to evade taxes by disguising your actual domicile.)

 

The classic common law concept of "domicile" is the key to PA income taxation of its tax residents who are temporarily absent from the state.  Simply moving away for a while is not enough.  You must depart with the intention of abandoning your PA domicile and you must upon physical arrival in the new state of residence (Germany) form the intent to remain in that new state indefinitely and to return to it following any temporary absence.

 

Here is what PA has to say on the subject:

https://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/PIT/Documents/rev-611.pdf

 

 

 

 

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He asked 4 years ago. I think the horse has already bolted.

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8 minutes ago, McDee said:

He asked 4 years ago.

 

More like 20 hours ago.

 

Newcomer to the thread.

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Why are you assuming I was referring to you, Poop?

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Perhaps consult a PA lawyer before doing this to be sure, depending on your particular situation things may be complicated, or not at all. But if you are not planning on keeping any property in Pennsylvania, and really have no other (ie rental income, business income etc) ties to the state, you could fly to your parents, get a drivers license and register to vote in Texas and you should be good on being a Texas resident. Texas of course has its own residency requirements, maybe you need to pay for your parent's utilities or something like that for a few months.

 

But yes, just changing your address by itself is probably not going to be enough.

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2 hours ago, danielg said:

But if you are not planning on keeping any property in Pennsylvania, and really have no other (ie rental income, business income etc) ties to the state, you could fly to your parents, get a drivers license and register to vote in Texas and you should be good on being a Texas resident. Texas of course has its own residency requirements, maybe you need to pay for your parent's utilities or something like that for a few months.

 

You really need to read the Pennsylvania brochure to which I linked.

 

There is a lot of misinformation about what it takes to change one's domicile.  None of the acts you describe alone or taken as a whole will do anything to change the OP's PA domicile to TX.  Domicile is a question of INTENT.  If the OP does not intend to make TX his domicile then he will remain a PA domiciliary until such time as he is physically present on the soil of another state (or foreign country) and simultaneously formulates the intent to remain in that place indefinitely.

 

If the genuineness of that stated intent is challenged, then objective facts of the kind you list will be FACTORS or INDICIA in determining whether the claimed intent to abandon PA and adopt TX domicile was real or feigned.

 

 

 

 

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Guys,

 

Thanks very much for the replies. Taking a look at the brochure, I see that being domiciled means the place where I intend to return after my sofa/tesa assignment ends. That place is Texas where my parents reside. Hence, I will go ahead and change my IDs (drivers license, voters' registration etc.) according to that.

 

Regards

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