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  #1  
Old 15 February 2018, 20:38
CAVTroop4 CAVTroop4 is offline
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Iraqi income taxes for contractors?

Working on getting a contract in Iraq don’t want to divulge too much info at this point but I’m seeing rumors online about certain companies making their individual contractors pay the tax. Anyone heard of anything?
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Old 15 February 2018, 22:16
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Are you talking about US income tax?
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Old 15 February 2018, 22:20
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Quote:
Originally Posted by CAVTroop4 View Post
Working on getting a contract in Iraq don’t want to divulge too much info at this point but I’m seeing rumors online about certain companies making their individual contractors pay the tax. Anyone heard of anything?
CAV, do you mean certain companies are requiring you to pay your taxes via a 1099 as a contractor, or are you referring to the trend of host countries requiring you to pay THEM taxes off from the income you earned while in their country? If the former, I do not see that as anything new. If the latter, I have seen it and experienced it myself on a short gig in Asia a few years ago. Had to pay $2900. 16 months later I received my money back, but only because the company still had a presence/rep in the country to constantly keep on top of it.

I would never again work in a country that requires me to pay them taxes on top of what agreement I already have with the American company I am working for in their country.

That being said, I was this close to taking a gig in Iraq working directly for an Iraqi company, based in Iraq. They were right up front that in that situation I would have to pay the man (or the haji).
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Old 15 February 2018, 23:25
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If you go to work in PNG you pay 45 % income tax. I left as soon as another gig turned up.
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Old 15 February 2018, 23:57
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If it’s the contract I think it is no. I worked in IQ within the last two years and paid ZERO local taxes.
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Old 16 February 2018, 00:53
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So for WPS and DOS in general both Iraq and Afghanistan are requiring you to pay host country taxes, this is no secret and the recruiters will tell you it up front if you ask.. 1099 are not allowed on WPS anymore everyone is a W2'd employee..

That being said Afgan tax rate is 20% and Iraq is around 10% depending on location and company..

You do get a dollar for dollar credit on your US taxes however for any moneys paid, however whatever you paid to host nation is just gone..
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Old 16 February 2018, 00:55
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Most of the DOD contracts and many of the direct hire stuff you will not pay host country taxes..

But for reason DOS did not get the exemption..
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Old 16 February 2018, 01:00
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...however whatever you paid to host nation is just gone..
Well, whatever I pay to the IRS is also just gone, so...there's that.
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Old 16 February 2018, 01:28
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Well, whatever I pay to the IRS is also just gone, so...there's that.
Well at least when you pay the IRS you can justify that you're paying part of your salary back to yourself.
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Old 16 February 2018, 06:33
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One of the contracts I did in Cambodia, I was required to pay Cambodian federal income tax - taken out of my salary and paid by the employer. But, then you can subtract that amount from what you owe the US govt in taxes. So it all works out the same. Just a matter of if your tax money goes to the USA or host nation. As Gavin states, it is gone either way.

Get a good tax person who understands all the ins and outs of foreign/expat work.
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  #11  
Old 16 February 2018, 08:08
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Dont do it

Good thing you caught that. Stay home and make $45,000.00 a year. Don't go for the 6 figure contract job if you have to pay $20,000.00 a year in Iraqi taxes.
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  #12  
Old 16 February 2018, 09:04
CAVTroop4 CAVTroop4 is offline
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Thanks everyone for your responses. Yes it’s a WPS contract. I’m new to this side of the house so still learning. I asked the recruiter up front about taxes and they wouldn’t even entertain the conversation saying it was up to us to take care of taxes. That being said everything I can find online says the Iraqi tax rate is like 15%. The contract is big numbers until everyone takes their “share”
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  #13  
Old 16 February 2018, 09:21
Hostile0311 Hostile0311 is offline
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Wouldn't paying tax to a foreign entity while you are paying US taxes qualify for a Foreign Tax Credit from the IRS?
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Old 16 February 2018, 10:28
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CAVTroop4

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  #15  
Old 16 February 2018, 11:29
CAVTroop4 CAVTroop4 is offline
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  #16  
Old 16 February 2018, 11:38
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Originally Posted by Hostile0311 View Post
Wouldn't paying tax to a foreign entity while you are paying US taxes qualify for a Foreign Tax Credit from the IRS?
Yes it does. Say for example, in simple lay man's terms, you owe the IRS $20,000 in taxes. But you paid $15,000 in taxes to the host nation you are working in. You would thus get a $15,000 tax credit and owe the IRS only $5000. Either way you still pay $20,000. But you are not getting double taxed. You are not paying 15% to host nation and another 20% to the USA.

As for the above comment, making $45,000 a year in the USA comes out way less than $100,000 a year overseas-even with the taxes. You are still going to pay tax on that $45k....sigh.

Now you may also be able to reduce your taxes you have to pay to the USA, like up to $98k or so now, if you stay out of the USA 330 days within a 365 day period. Which may mean that you spend some of your vacation rotations overseas instead of coming back to the USA. What I paid in Cambodian taxes one year exceeded what I would owe in USA taxes, so I did not have to pay any USA tax. You will still have to pay social security and Medicare though, unless you are working for a foreign company then it is optional.


Some of my married team mates found that flying their family over to meet them in say Thailand for several weeks, was still cheaper than the amount of additional taxes they would have to pay they went back to visit in the USA.

Get a good tax person.
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  #17  
Old 16 February 2018, 12:14
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Quote:
Originally Posted by MedicFL View Post
So for WPS and DOS in general both Iraq and Afghanistan are requiring you to pay host country taxes, this is no secret and the recruiters will tell you it up front if you ask.. 1099 are not allowed on WPS anymore everyone is a W2'd employee.
The 1099 thing was essentially fraud in the first place.
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  #18  
Old 16 February 2018, 12:55
MedicFL MedicFL is offline
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Originally Posted by Massgrunt View Post
The 1099 thing was essentially fraud in the first place.
And the IRS levied alot of fines years later on guys that thought they had it all figured out..

Only thing 1099 was good for was being able to form a business and write alot more things off..
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  #19  
Old 17 February 2018, 03:57
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I hate paying quarterly estimated taxes but you have to do it! I know an American Green Card holder who thought he didn't have to pay his U.S. taxes because he worked OCONUS for a non-American company and he technically was not an American citizen. Uncle Sam thought otherwise and delivered a nice fat tax bill.
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  #20  
Old 17 February 2018, 07:50
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I don't know if it's the same for all companies but for the company I work for it's 10% out of your base pay. It doesn't tax your uplifts. This is WPS in Iraq.
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