Taxing situations for expatriates

Workforce, June, 2003 by Sarah Fister Gale

Lyman used a firm that specializes in expatriate tax law, which helped her avoid some costly mistakes. For example, she initially wanted to go with an "easy fix;' raising the expatriate's salary to accommodate all of her financial needs in the U.K., but quickly learned it was not the right approach. "We found out that it was better to set the salary at what it would be in the U.S. and add living adjustments." That way, the compensation expectations for the employee's return were managed, and Lyman can justify the package if other employees want to know why they aren't receiving the same amount.

Because they got the expertise early on, the assignment was a success, so much so that the expatriate asked to extend her stay an additional two years, Lyman says. "It changes the tax situation, but we trust that our tax person will make it work."

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For more info on: Expats

Two tax experts answer your questions about expats and related issues at workforce.com/03/06/feature6