I may be offered a remote job as a technical writer (I’d be working in Texas, but the company is based in California.)
I had read before that usually employers will not let employees work remotely from abroad (I had previously had plans to spend 1-2 years in Taiwan - incidentally, this company also has a branch office in Taiwan, although their main headquarters is in California) for “tax issue” reasons.
If the employer is willing to let people work abroad, and I am perfectly willing to continue paying federal and FICA taxes as if I’m on American soil when in fact I’m on Asian soil, what are the reasons the IRS/federal government might object to such an arrangement? I’m not sure what the “tax issues” are if I’m willing to keep paying taxes, even willing to forego the foreign exclusion income benefit if it makes such foreign work more doable.
Thousands, perhaps tens of thousands of Americans work outside the United States for U.S.-based companies. As long as you pay your taxes to the U.S. and the host country according to the laws, you’ll be fine.
I’m not a tax accountant, but my guess is that even though your plan is to keep paying taxes as if you were on American soil, that may not be the case for others in a similar situation. An employer probably doesn’t want to get into the difficulties in sorting out who is planning to do what.
You may not be legally able to work in Taiwan as a matter of Taiwan law. Are you a Taiwan citizen or resident with a work permit?
There may be laws in Taiwan about hiring foreigners as local employees, and the “branch” in Taiwan may be a legally separate company (actually almost certainly is)
If you are allowed to work in Taiwan, you will have a very different tax situation with respect to the US (and state of residence) than you seem to understand. It costs us tens of thousands of dollars in tax consulting and tax “normalization” for each expat employee we have either coming into the US or going to another country.
I do have permanent Taiwanese residency and may soon qualify for full citizenship in a few months. That’s a good point about the branch being a separate entity, though, I hadn’t figured on that.
Some functions in my line of work must be performed by US citizens on US soil. But those tasks are few and far between, we just have to make sure there’s someone working out of our US offices (usually working from home) available.
I think you’re mixing up two different things - US companies often won’t allow employees to work remotely from another state due to tax and labor law issues but those won’t apply to the Federal government and working in a foreign country. For example, if your situation was reversed, and you were being hired to work in California for a Texas company*, that company would have to follow California law just as if they set up a branch office in CA. California generally requires overtime pay for nonexempt employees for over 8 hours worked in a day - regardless of the weekly total. California requires that you be paid for any accrued vacation time when you are terminated - Texas might not. Your company may now have established a sales tax nexus in CA requiring them to collect sales tax from CA customers. They will have to set up workers comp and unemployment insurance and arrange to withhold state and local taxes for CA. Those issues all involve the state where the work is being done - Texas couldn’t care less if your employer follows CA law when you work remotely in CA. And the US isn’t going to care if your employer follows Taiwan law if you are working in Taiwan. But the Taiwan government will - and that might cost your employer money.
* And I reversed it for a reason - California has requirements that Texas may not.
It’s not only US tax law that matters here. Perhaps Taiwanese tax law requires you to tax your income in Taiwan if you’re based there, even if your employer is in the US. Does Taiwanese tax law require this? I don’t know. But perhaps your employer doesn’t know either and doesn’t want to run the risk of violating Taiwanese law.
It’s this. Precisely this. Every country has different laws pertaining to remote workers, and in many, they require you to pay local taxes and for your employer to follow local employment law.
When we all started working from home during Covid, I had a fantasy of buying a little French farmhouse and working there for the six months that my tourist visa would allow. Aside from the fact that a tourist visa wouldn’t allow this, French employment law would mean my employer would be on the hook for the very complex and onerous benefits given to French workers, including annual leave and pensions rights.
So unless your employer routinely deals with the employment situation of the country you want to work from, they’e going to say no.
I oftenwondered how that worked for, say, a successful author who decided to live in the south of France but sold novels to a NYC publisher. I suppose the difference is self-employment and gig economy vs. regular salaried employee. Still - what about the taxi driver in NYC that takes me to Newark airport in NJ? The mind boggles.
I know if someone is moving to another country to work, they have to have the necessary paperwork. My dad simply collected Canadian pensions while living in the USA, ad his tax was moderately interesting.
I worked for years outside of the US. At the time, if you stayed out at least 280 days, the first $90k of my salary was not taxed (I think those were the numbers, it’s been a while). The US government did not care if I worked overseas as long as I filed my taxes.
That being said, I have previously worked remotely in Taiwan, with company permission, for a few weeks out of each year for a company based in Virginia. I think it was sort of a don’t ask don’t tell thing. They technically weren’t complying with Taiwanese laws (not that they’d even know what those were) but I never mentioned it, my federal, Virginia state, and FICA taxes were deducted all the same, and nobody cared.
Thousands of Americans work for the foreign arm of a US-based company. I think in most countries this is the only way you can work there for longer than a temporary visit. Unless you are independent contractor who has the legal right to work in that country and just happen to be working on a contract for a US based firm (the laws about what is needed to do this will vary country by county of course)
As a lifelong expatriate (US citizen residing in the Federated States of Micronesia, Egypt, Indonesia, and Mozambique between 1986 and 2018), I find that assertion quite surprising. Yes, filing taxes as a US citizen is more complicated when living abroad, at least when you have a complex life (such as benefits in the form of your kids’ schooling being paid for, property in the US that you rent out, etc.) But it is not so complicated that it should cost tens of thousands of dollars per person to sort it out. There are tax preparers who specialize in preparing returns for expats. They might charge thousands of dollars for each return, but not tens of thousands.
It’s the “normalization” that costs tens of thousands. The tax consultants also implement the agreements between the employer and employee to negate the consequences of any double taxation.
It’s been this way at all three employers I’ve had that have significant expat populations.
Ah, okay, if I understand correctly, you’re talking about the cost to the employer of having US employees in foreign countries make an after-tax income (taking into account both US and foreign taxes) equivalent to what their after-tax income would be if they resided in the US. Is that correct?
That’s highly dependent on what countries the expats are posted in, along with any tax treaties between the US and the other country. But under some circumstances, for highly paid executives, I could see the “normalization” being costly. I don’t think of that as a “tax” per se, but it is definitely a tax-related issue.
Within the U.S., it’s not just taxes, it’s payroll-related benefits that can vary state by state. I’m in a city very near the state line, and my employer has many employees who live in the neighboring state. Our payroll department has to take some amount of care to process their benefits in accordance with the neighboring state’s law.
The organization can’t very well forbid people from living in the neighboring state (it’s, like, 0.5 miles away) but they can and do forbid empoyees to live in any other random state in the nation, let alone in another country. Far too much of a PITA for the employer.
Uncle Sam doesn’t care as long as you file as an American living abroad and pay any tax due. You get a tax holiday as well, but I haven’t claimed this since 2009 so YMMV. But I did live in Taibei, HK, Tokyo and Shanghai for 20+ years and haven’t been sent to the pokey.
