Contract Employee vs. Independent Contractor Are you an employee for Defense Base Act Insurance purposes but an Independent Contractor for Tax purposes? Expat Tax Information 2012 |
If your are receiving DBA benefits they are not taxable Were you injured prior to 2006 and lost your expat status for USTaxes? Under provision IRC 662 (a) you are exempt from the time requirement of being out of the country for the full 330 days. IRS Form 2555 (Foreign Earned Income) was revised 2006 Determination of Worker Status for purposes of Federal Employment Taxes and Income Tax WIthholding IRS Form SS-8 Combat Zone Pay Exclusion A-8 The combat zone military pay exclusion applies only to members of the U.S. Armed Forces. Neither federal civilian employees nor civilian defense contractors deployed with U.S. forces qualify for an exclusion of income earned while working in a combat zone or qualified hazardous duty area. They may, however, qualify for an extension of deadlines to file and pay taxes. Foreign Earned Income and Housing: Exclusion – Deduction You may be able to exclude up to $92,900 of your foreign earned income in 2010. Tax Guide for U.S. Citizens and Resident Aliens Abroad Employer's Tax Guide to Fringe Benefits Blackwater Dodges Taxes Tax Evasion or Fraud Combat Support Associates, CSA dodges taxes for a decade WASHINGTON (AP) — When the Pentagon announced an obscure California company had won a lucrative military contract, no one mentioned any plans for a Caribbean outpost — a tropical shell the company quickly created that allowed it to duck millions in taxes and deflect U.S. lawsuits. It's legal, at least for now. Contractors large and small have been heading offshore to shield piles of taxpayer dollars, according to an Associated Press investigation, but irate lawmakers are thundering that they'll put an end to it. Almost a decade ago, a few months after winning the deal that has totaled more than $2 billion, Combat Support Associates established its subsidiary in the Cayman Islands, a British territory and tax haven. read story here MPRI dodges taxes Shell Firms Shielded Contractor Boston Globe May 4 2008 by Farah Stockman full story here WASHINGTON - In March 2005, one of the Pentagon's most trusted contractors - Virginia-based MPRI, founded by retired senior military leaders - won a $400 million contract to train police in Iraq and other hotspots. Two months later, MPRI set up a company in Bermuda to which it subcontracted much of the work. It was not the first time that MPRI executives had used a shell company in an offshore tax haven to perform government-funded work. A year earlier, MPRI headed a joint venture that won a $1.6 billion contract to provide US peacekeeping forces in Kosovo and elsewhere. Three months later, MPRI set up a company in the Cayman Islands to do the work. Like MPRI's Bermuda subsidiary, the Cayman Islands company appears to have no phone number, website, or staff of its own there. Blackwater Dodges Taxes IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U. S. tax advice within this website is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code |
Civilian Contractors in Iraq and Afghanistan Defense Base Act Comp Blog Civilian Contractor News and Views South African Justice for Injured Contractors MsSparky.com Taxes for Expats |
Class Action Tax Misrepresentation Filed Against Xe/Blackwater Scott Bloch blasts Blackwater on behalf of thousands of former employees who were mistreated and denied employee benefits, unemployment and other withholding based on a fraudulent misclassification as independent contractors |
Special note: The IRS has been targeting civilian contractors as a result of the improprieties of Blackwater, Ronco Consulting, and others. Pursuant to an IRS internal memo Memorandum Number: AM2009-0003 Also note that the IRS page to which you link has an important note regarding the definition of a foreign tax home (which is necessary to claim the Sec 911 benefit). The IRS has been using this in somewhat of a distorted way to deny the FEIE to contractors working in Iraq and Afghanistan,, not only those who have families in the U.S., but also single people who left home, joined the military and then were hired as contractors. If they did not plan in advance and take all the steps necessary to show that their abode was in a foreign country and not in the U.S. they are disallowing the exclusion. Many have had inexperienced tax preparers or did their own tax return and the case dragged on so long that they lost their administrative appeals rights and facing a substantial tax bill plus penalties cannot afford a good tax attorney to take it to Tax Court. As a result, the IRS is using their muscle to claim that these workers were living on a base and had no contact with the local community and therefore their “abode-which is not clearly defined anywhere) was in the U.S. This is the quote from the IRS page: Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States . However, your abode is not necessarily in the United States while you are temporarily in the United States . Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States , whether or not your spouse or dependents use the dwelling. “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. It does not mean your principal place of business. “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home.” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Example 1. You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. You return to your family residence in the United States during your off periods. You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. You cannot claim either of the exclusions or the housing deduction. Example 2. For several years, you were a marketing executive with a producer of machine tools in Toledo , Ohio . In November of last year, your employer transferred you to London , England , for a minimum of 18 months to set up a sales operation for Europe . Before you left, you distributed business cards showing your business and home addresses in London . You kept ownership of your home in Toledo but rented it to another family. You placed your car in storage. In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London . Shortly after moving, you leased a car and you and your spouse got British driving licenses. Your entire family got library cards for the local public library. You and your spouse opened bank accounts with a London bank and secured consumer credit. You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Your abode is in London for the time you live there. You satisfy the tax home test in the foreign country. Note that the IRS agents examining these returns are not seasoned international agents and their internal directive is to disallow the exclusion regardless of the taxpayer’s defenses and force it to go to Tax Court. I have seen many contractors who came to me for help but by that time it was just too late to help as they needed a tax attorney that they could not afford. |
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