EXPAT tax rules

I’ve been trying to do research to no avail about the EXPAT tax laws/exemptions that a mariner working overseas is subject to.
I recently spoke with someone that had mentioned that working in a Korean shipyard on a Seadrill Newbuild that he was exempt from paying any income tax even though he still lives in the states 6 months out of the year. Any and all tax laws I read said otherwise, that you must live out of the country for a 10-11 month period.
Could anybody working on a similar vessel in a similar situation clear this up for me?

I have not found anything to say that someone working overseas would be exempt from taxes… Your friend might have been lead to believe that the korean foreign income tax credit that he will receive will offset US liabilities. I think he will be in for a rude awakening in April. You need to say out 11 months to get the 1st $90k tax free.

That’s what I was thinking. How does that Korean foreign tax credit work?

Was under the impression that you still have to pay taxes but you don’t have to pay social security.

The IRS has an easy to understand publication on the topic so get that - everything you need is right there. Your friend working in Korea isn’t going to be happy - assuming he can read.

[QUOTE=“Kingrobby;122868”]Was under the impression that you still have to pay taxes but you don’t have to pay social security.[/QUOTE]

You have to pay your federal and state. At the year end, you get a tax letter from korea stating how much was paid on your behalf. That amount is then added to your total income, that new amount is what your taxes is based off of now. You then have been paying your taxes throughout the year, and that tax letter for korea will now offset some of your federal taxes. Your refund will be based in what you paid, how much korean tax was paid and your total earned income. Your friend is an idiot for thinking he doesn’t owe taxes.

When I was working overseas a couple of years ago, you had to be outside the US for 330 days per year. There is a specific “Bona fide resident” form in addition to your W4 that declares which country you were living in.
State taxes get trickier, especially if you have a house, car, and driver’s license. Arkansas still required state income tax, although the tax amount paid to the host nation would be deducted. Things may have changed with the new tax structures though.

It is exactly like PDC Mate explained. Your friend will continue to make tax payments to the US government through his payroll tax through out the year. Some companies are obliged to pay foreign tax on income earned in a foreign country, regardless of the nationality of the workers. At the end of the year a foreign tax letter paid on the employee’s behalf is issued to the employ. Often times this foreign tax is added on as income to a US workers W-2. If the country and the US have a tax agreement then you will be eligible to a tax credit. It has to do with being double taxed on the same income. Resident or time abroad are not required to qualify for this. I hear that Korean tax credits are not as good as some other countries. This is all perfectly legal and very nice for countries that require high taxes paid on your behalf by your company. I hope it lasts forever.

[QUOTE=Capt. Lee;122979]It is exactly like PDC Mate explained. Your friend will continue to make tax payments to the US government through his payroll tax through out the year. Some companies are obliged to pay foreign tax on income earned in a foreign country, regardless of the nationality of the workers. At the end of the year a foreign tax letter paid on the employee’s behalf is issued to the employ. Often times this foreign tax is added on as income to a US workers W-2. If the country and the US have a tax agreement then you will be eligible to a tax credit. It has to do with being double taxed on the same income. Resident or time abroad are not required to qualify for this. I hear that Korean tax credits are not as good as some other countries. This is all perfectly legal and very nice for countries that require high taxes paid on your behalf by your company. I hope it lasts forever.[/QUOTE]

Yeah - a sweet deal if you can get it for sure.