My employer and I currently have a contract for 1 year of employment with salary of $48k per month (full-time). However, I am actually only working part-time (roughly 20 hrs a week) and getting paid $25k per month. They are sponsoring my ARC at the moment and I believe the $48k is the minimum to get a work permit or ARC (can’t remember which exactly).
So this week they gave me my withholding tax statement. Every month reads that the total amount paid (before taxes) was $48k, net wis around $40k. I am not sure what this will mean for me. I have been told I may get a bigger tax refund, which is great, but I just don’t really feel right about lying to the tax agency. I am also worried there may be some other unforeseen implications on my side that will come and bite me in the arse later.
I really like my work environment, they treat me well and I do not want anyone to get in any trouble or anything like that. I just worry about what this could mean for me in the long run.
Any advice is greatly appreciated.
Thank you!
EDIT** Forgot to mention I am from the US, so I am worried about this as well because of the new FATCA law. I am sure I don’t make enough to have to worry about this yet, but I don’t like the idea of the US thinking I make twice as much as I really do.
I seriously doubt it has anything to do with FATCA. And as far as I know they cannot legally do that anyway. 99% of people don’t know about FATCA, so the chances your employer even knows what FATCA is is really really small. If you can talk to them nicely without them or you getting defensive about whatever is going on, perhaps you should to try to understand what is going on.
As I am completely out dated on what the labor law says, you need to contact the labor buearu and ask them what the minimums are now before you talk to your employeer.
Perhaps the company is doing you a favor by reporting a higher income or part of the tax refund will be your bonus? Many companies have reasons why they do certain things like this, but it would be nice if they would share them with us first before they do it. Might be towards your benefit in the future also if you are applying for an APRC in the future.
If you are paying tax in Taiwan on that, you will use the Taiwan tax to take the foreign credit in the US. So long as the income is reported in Taiwan I believe you can take the foreign credit for your US taxes. If the money is earned under the table than that would need to be reported as self employement income in the US.
I am not an expert about exactely what you are asking, sorry, I suggest you talk to your employer nicely to see if you can get to the bottom of the issue.
Your employer needs to report your income as 48K since that is likely the minimum allowed to sponsor your ARC. for teachers it’s 33Kish I think. It actually sucks for you since your NHI and taxes are based on a 48K/mo income but if you don’t do it this way then you have no ARC/job.
I don’t think you have anything to worry about with FATCA since you are allowed a 92K (USD)/yr foreign earned income exemption.
[quote=“Abacus”]Your employer needs to report your income as 48K since that is likely the minimum allowed to sponsor your ARC. for teachers it’s 33Kish I think. It actually sucks for you since your NHI and taxes are based on a 48K/mo income but if you don’t do it this way then you have no ARC/job.
I don’t think you have anything to worry about with FATCA since you are allowed a 92K (USD)/yr foreign earned income exemption.[/quote]
FATCA is a completely separate issue, and is not related to the 92K/yr foreign earned income exemption, they are completely different things. FATCA is related to banking issues and any money that is not reported to the IRS. FATCA’s original purposes was to catch tax cheats, however, it is more like foreign banks becoming spies for the IRS. However, as per my post this morning in another thread some companies are starting to tax Americans 30% withholding, without reason.
I had no idea that the minimum required now for an ARC was 48k, and if companies in Taiwan are getting around this law by just simply reporting they are giving you 48k isn’t it illegal to be doing so? Enlightening!
[quote=“JeffG”][quote=“Abacus”]Your employer needs to report your income as 48K since that is likely the minimum allowed to sponsor your ARC. for teachers it’s 33Kish I think. It actually sucks for you since your NHI and taxes are based on a 48K/mo income but if you don’t do it this way then you have no ARC/job.
I don’t think you have anything to worry about with FATCA since you are allowed a 92K (USD)/yr foreign earned income exemption.[/quote]
FATCA is a completely separate issue, and is not related to the 92K/yr foreign earned income exemption, they are completely different things. FATCA is related to banking issues and any money that is not reported to the IRS. FATCA’s original purposes was to catch tax cheats, however, it is more like foreign banks becoming spies for the IRS. However, as per my post this morning in another thread some companies are starting to tax Americans 30% withholding, without reason.
I had no idea that the minimum required now for an ARC was 48k, and if companies in Taiwan are getting around this law by just simply reporting they are giving you 48k isn’t it illegal to be doing so? Enlightening![/quote]
It’s not related but making 1600USD/mo even if you aren’t isn’t going to affect anything with the IRS.
I don’t think Taiwan’s tax office is going to care about reporting a higher income since the company and employee pays higher taxes. The illegal part would be that they are not paying the foreigner 48K/mo and the foreigner would have a case with the labor board. Of course the company would probably find an unrelated reason to fire that employee for bringing it up.
[quote]
I don’t think Taiwan’s tax office is going to care about reporting a higher income since the company and employee pays higher taxes. The illegal part would be that they are not paying the foreigner 48K/mo and the foreigner would have a case with the labor board. Of course the company would probably find an unrelated reason to fire that employee for bringing it up.[/quote]
This is the part I question. The employer is not being on the up and up, but, indeed they’ll find some excuse as to why there is a difference.
Just a side note to this, it could end up relating to FBAR though. This must be filed yearly if your aggregated account balances in Taiwan are over US$10,000. And it doesn’t matter if it is USD accounts or NTD accounts or whatever. FATCA and FBAR are related in some ways, as they will eventually tie the two of them together.
My employer and I currently have a contract for 1 year of employment with salary of $48k per month (full-time). However, I am actually only working part-time (roughly 20 hrs a week) and getting paid $25k per month. They are sponsoring my ARC at the moment and I believe the $48k is the minimum to get a work permit or ARC (can’t remember which exactly).
So this week they gave me my withholding tax statement. Every month reads that the total amount paid (before taxes) was $48k, net wis around $40k. I am not sure what this will mean for me. I have been told I may get a bigger tax refund, which is great, but I just don’t really feel right about lying to the tax agency. I am also worried there may be some other unforeseen implications on my side that will come and bite me in the arse later.
I really like my work environment, they treat me well and I do not want anyone to get in any trouble or anything like that. I just worry about what this could mean for me in the long run.
Any advice is greatly appreciated.
Thank you!
EDIT** Forgot to mention I am from the US, so I am worried about this as well because of the new FATCA law. I am sure I don’t make enough to have to worry about this yet, but I don’t like the idea of the US thinking I make twice as much as I really do.[/quote]
The minimum wage they could pay to you for you to meet the requirement for the APRC – note – the “permanent” one, is about 40K/mo.
I suppose this is the sole reason that they are over reporting your actual salary. In most cases I have seen, the employers under report to save on health/retirement benefits paid to the gov each month. In these cases, the obvious downside is if you ever have to claim for severance (amount based on your pay), how do you prove the actual figure?
Thus, the only down side here is maybe extra charge paid to get health insurance. I’m sure you would believe this is a small trade off for the APRC.
Just a side note to this, it could end up relating to FBAR though. This must be filed yearly if your aggregated account balances in Taiwan are over US$10,000. And it doesn’t matter if it is USD accounts or NTD accounts or whatever. FATCA and FBAR are related in some ways, as they will eventually tie the two of them together.[/quote]
It won’t affect anything with FBAR/FATCA. It’s theoretical money that never exists in a bank account (what FBAR/FATCA cares about). It’s a reported salary that gets filed on your US tax return and is well under the 100Kish tax exemption.
I don’t think he is a teacher so his minimum monthly wage is higher (around 48K/mo).
The minimum salary to get a work permit as a white-collar worker (this is a separate category than teachers) is NT$48k a month (technically, $47,971). I wouldn’t dispute the reported salary to get a larger tax refund, but possibly lose your work permit and thus your ARC and right to be here. Like people have said, as long as you qualify for the Foreign Earned Income Exclusion, you won’t owe any US tax on your income from Taiwan. And yes, this has nothing to do with FATCA, which only reports information on your bank accounts, not your income, to the IRS.
Information on the minimum salary in Chinese: http://hirecruit.nat.gov.tw/TopMenu.do?method=faq&ssid=02#q6
Foreign Earned Income Exemption: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion