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Military spouses network with prospective employers on Sep. 15, 2022, at the MilSpo Career Expo at Fort Bragg, N.C . The tax threshold is currently EUR 9,408 for a single individual and EUR 18,816 for those married filing jointly. Here are tips for finding free military moving services, getting OCONUS allowances and budgeting for daily living expenses. 2 0 obj Editorial Disclosure: Editorial content on The Military Wallet may include opinions. Since you're overseas on accompanied US government orders you probably won't be eligible for Foreign Earned Income Exclusion, but look into it anyways. However, until that happens it is up to you to do the research before you arrive OCONUS. In short, SOFAs dictate the conditions under which military spouses can work, how they pay taxes, and what must be done to comply with the local laws and procedures under a foreign jurisdiction.. Allowable expenses are equivalent to 30% of tuition fees, along with child allowance and childcare costs for children under the age of 14. In return, the German IRS will issue a Tax Certificate on the basis of tax class I ( 38b para. This should have been assigned to you by the tax office when you first registered for tax, but it is largely dependent on your marital status. If you are submitting a tax return voluntarily, you can apply for refunds for up four previous tax years. Working while living outside the Continental U.S. OCONUS) can be a tough adjustment for those used to the structure (and hours) of their office job, but there are ways to excel in your position from across the globe. For country-specific SOFA guidance or to speak to the employment readiness specialist at your future station for more information, check out the Institute for Veterans and Military Families (IVMF) whitepaper, A Portability Roadmap for Military Spouses and Their Employers. Since the 2009 Military Spouses Residency Relief Act, military spouses have also been able to maintain their domicile, and pay taxes in that location, "if the residence or domicile, as the case . There are some organizations, like National Military Spouse Network, that are asking for increased transparency asking the State Department to publish a centralized resource for military members and their families. MilTax, Military OneSource's tax service, provides online software to electronically file a federal and up to three state tax returns for free, regardless of income. However, certain foreign areas allowances, cost of living allowances, and travel allowances are tax free. Depending on your business, this can include things like work-related travel, stationery, and the services of an accountant. Because they are not posted via the State Department these items are subject to change. This is most useful for those who have residency in states that do not charge personal income taxes like, Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Military spouses can work on the economy, but may be required to pay Japanese taxes in addition to U.S. tax requirements. If working on the economy a work visa must be obtained and the income is subject to Korean taxes in addition to US taxes. Learn more. Spouses may work on the economy and on base. Sometimes a military spouse will live in a different state than the active-duty service member. Under the Status of Forces Agreement (SOFA), spouses may find employment on the German economy, but it can be nearly impossible if you don't speak German. 1 b) EStG). %bE3u%+TK|"%`X!zyZ?F5'Lpg2n1/+]v My wife is currently working but will quit prior to 180 days in country. Copyright 2023 Military.com. Three Creeks Media, LLC 2023. Person A lived in Georgia all their life until they joined the Army in Atlanta at age 18. IMPORTANT:When living in a non-resident state, the spouse needs to check the state laws to determine if they need to declare their non-residency for withholding purposes. Since the 2009 Military Spouses Residency Relief Act, military spouses have also been able to maintain their domicile, and pay taxes in that location, "if the residence or domicile, as the case may be, is the same for the service member and the spouse.". Find out how much home you can afford today. A state of legal residence (SLR) is also considered their "domicile" or "resident" state. The spouse is in that state solely to live with the service member. The military spouse residency rules state that if you're the spouse of a service member, you don't lose or . Both the service member and spouse have the same resident state. Stay professional and open-minded, answering any questions your employer has. Contact the human resources office at your new duty station or visit Military OneSources MilitaryINSTALLATIONS to apply for the Priority Placement Program for military spouses. View solution in original post 0 Reply 1 Reply DanaB Intuit Alumni If you are an employee of the U.S. Foreign Service and your position requires you to establish and maintain favorable relations in foreign countries, you may receive a nontaxable allowance for representation expenses. Find programs and services at your local installation. Military spouses must fulfill their states residency requirements. My spouse lives with me under SOFA status, working at a German company. If you are owed money back, it will be paid directly into your bank account. You can request a copy of the Department of Defenses Treaties in Force: A List of Treaties and Other International Agreements of the United States in Force by calling (202) 512-1205 or emailing [emailprotected] and requesting the document (ISBN: 9780160807121). If you owe tax, youll be given four weeks to pay it. Savings and investments are subject to tax in Germany. 6kRycilCOh(U!p]]]S}v>Nv9=qF]^WN;VoO[v'/{cgo_/^[,eI*q^zEV-G!4I\x6')qx\93E&:iX> Because these laws are very complicated and often not a primary concern when preparing to move OCONUS, spouses have earned income here and there under the table, unknowingly breaking the law. and even the postal service. These include: Read about filing your taxes while living abroad for more information. You may also live chat 24/7/365. Overseas pay and allowances Korea While your individual situation may be different, one incredibly effective way to maintain your career while living abroad is to work remotely. Military pay benefits are constantly changing. This material may not be published, broadcast, rewritten or redistributed. Individuals are responsible for learning and obeying German laws, carrying an official ID card issued by the sending state, registering vehicles with U.S. Army Europe, and having a SOFA certificate. Your email address will not be published. Military spouses can work on the economy and for US-based companies. No one is exempt from paying tax in Germany if their income exceeds the tax-free personal allowance (10,347 in 2023). Learn how to find portable employment overseas. Planning on living and working in Germany? Consider Chris, who lived in South Carolina when they joined the military in 2010. IMPORTANT: The Military Spouse Residency Relief Act (MSRRA) describes where spouses of military service members can file state income taxes. Yep, it can be different in each country and over time as each status of forces agreement (SOFA) is a separate agreement and updated periodically. You cannot use both. Understand what concerns your employer may have and how youll work through them together. The progressive tax rate is based on income and the first cap is 42% at EUR 57,051. For most civilians, their state of legal residence is the place where they live. Military spouse employment is significantly impacted by Status of Forces Agreements and complicated tax laws. Their salaries are taxed as they would be in any other location, paying federal and state taxes. Departments of Defense or Veterans Affairs. Also under the NATO SOFA. You can learn more in this guide produced by the US Army. I will be staying with my current employer, a private Boston-based company, while in Germany. Expatica helps make your expat journey the experience you've always wanted. To calculate the German income tax you owe on your wages, you can use the SteuerGo tax calculator. Before applying for jobs: Be open to the possibility of working a nontraditional career: Moving overseas could open up new and exciting opportunities. There are strict rules about hiring foreign workers, and if you do get a contract with a German company, you'll have to pay German taxes. Married couples in Steuerklasse 3 or Steuerklasse 5 who have unequal salaries can save money on their overall tax bill. If you have questions about Veteran programs offered through or by the Dept. For more info, see What is my state of residence as a military spouse? When you start searching for a job, keep these six tips in mind: Keep an open mind: Be willing to think outside of your current career. If all goes well, youll have that insight to lean on once you make the move. Highlight the benefits Be prepared to share the benefits that remote work can offer. Your spouse's German income may qualify for the foreign earned income exclusion or she might be able to use the foreign tax credit for taxes paid to Germany. A top rate of 45% is also present for those with very high earnings. Everyone submitting a tax return must fill out a general tax form (Mantelbogen). Another way self-employed workers can reduce their tax bill is to offset work-related outgoings against their overall tax bill. If you need help finding a point of contact at your future station, MilitaryINSTALLATIONS is a great resource for military spouses looking for location-specific information. We hope to shed some light on some of these complications to make the process of working abroad more accessible. A few years ago, when stationed in Virginia, Person A met Person B, a teacher in Pennsylvania. Possessions. Income earned on the economy is subject to "limited German taxation." Those who are self-employed should contact their legal office to confirm requirements as they vary depending upon the services offered. The service member moves to a new location where the spouse could join them, but chooses not to. Both internationals and natives must pay income taxes in Germany on their domestic and worldwide income and assets. Michael Carpentieri, an Army Reserve retiree, took a DoD job in Germany when the opportunity arose unexpectedly, and he enjoys the best of both worlds: he is part of a local German community, but he also has access to all of the services on a U.S. military base. According to the income tax laws, limited taxable employees are not required to file an annual tax return. The Pentagon has not provided any public updates or said when the formal policy will be issued. They can help determine if and how MSRRA and SCRA apply to their specific situations. They can advise you on how your job fits with the Status of Forces Agreement. Become a Member today. Alternatively, check out our business directory to find financial advisors in Germany to help you with your tax returns. xZnG}7hH_ l+ Free face-to-face tax preparation services by volunteers For more information, please see our Advertising Policy. application for the Tax Ce1iificate to the employer's tax office ("Betriebsstattenfinanzamt") ( 41a para. You will need to obtain paperwork in order to work for a U.S. company while living in Italy and you will be subject to Italian taxes. The bands for 2021 and 2022 are the following: Historically, German taxpayers have also been required to pay a solidarity tax (Solidarittzuschlag), but rule changes introduced in 2021 mean the vast majority of workers are now exempt. Does my spouse pay US taxes in addition to German? They have OCONUS networks in Bahrain, Germany, Guam, Italy, Japan, Puerto Rico, South Korea, and Spain. U.S. Agency Reimbursed by Foreign Country Theres a standard annual deduction that can be offset against worldwide investment income; for single taxpayers, thats 1,000 as of 2023, and for couples, its 2,000. If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. If you are a U.S.Government employee paid by a U.S.agency to perform services in a foreign country, your pay is from the U.S. Government and does not qualify for the exclusions or the deduction. Be sure to check the installations website for job listings. The individual SOFAs are lengthy this is just a quick summary of the employment regulations available online. Under the Veterans Benefits and Transition Act of 2018, Person B will be able to claim Georgia as their resident state even though they've never lived there. Jennifer has a BA in Professional Writing/Journalism and is currently studying at the University of North Carolina Chapel Hill in pursuit of her Master of Public Administration, with a concentration in non-profit management. Spouses may vote and pay taxes in their active-duty spouses state of legal residence, according to the Veterans Benefits and Transition Act of 2018. Page Last Reviewed or Updated: 02-Jun-2022, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Publication 54, Tax Guide for U.S.Citizens and Resident Aliens Abroad, Publication 516, U.S. Government Civilian Employees Stationed Abroad, Treasury Inspector General for Tax Administration, U.S. Government Civilian Employees Stationed Abroad. The Military Spouse Employment Partnership, or MSEP, can connect you with employers worldwide that are interested in providing you with long-term meaningful employment opportunities. Try before you buy If your current employer is reluctant to making the switch, ask if you can experiment with working from home 2-3 days per week prior to your move. You do not need to bother about filing a German Income tax return because 50 para. 1 No. For more information, refer to U.S. Foreign Service Employees. Learn more. Youll need to make sure youre fully up to speed on the countrys tax rules to avoid any nasty fines for getting your returns wrong, as well as finding out about any double tax treaties in place. Featured In:: Jennifers writing and reporting have been featured in Military.com, Military Families Magazine, Military Spouse Magazine, Stars and Stripes, We Are the Mighty, The War Horse, and many other publications. In 2009, theMilitary Spouse Residency Relief Act amended the Servicemembers Civil Relief Act. Because the government knows this is a burden faced by military spouses and other US citizens they offer the following tax credits and benefits: The Foreign Tax Credit This policy allows taxpayers to claim a dollar of tax credit for every dollar taxed by the foreign country in which they earn income. endobj Service members and spouses who own businesses should check with their legal and tax professionals. This is true whether they are paid from appropriated or non-appropriated funds. CONUS/International? So you will not owe income tax on income that doesn't exceed that number. There is a lot of contradictory information out on the internet. All Rights Reserved. Both the service member and spouse have the same resident state. For more information, refer to Allowances, Differentials, and Other Pay. <> About the Call Center. However, spouses who seek to find or sustain employment while living OCONUS are subject to SOFA laws. You can learn more in this guide produced by the US Army. You can also make insurance contributions, including: In Germany, self-employed workers are subject to the same 10,374 allowance as other workers, but they also get a 2,800 allowance for health insurance. Will I be subject to and file taxes like normal or will there be other requirements, restrictions, or withholdings? State laws, however, may be more generous than the federal MSRRA. %PDF-1.5 If you find yourself searching for a remote-friendly company, FlexJobs has identified 19 remote-friendly companies that hire military spouses. Any opinions are those of the author alone, and not those of an advertiser to the site nor of The Military Wallet. But, what do you do when you actually get PCS orders overseas? success. This may be required by their employer on an annual basis. Military spouses and service members may be required to file and pay state income taxes on other income in the state where it is earned. Finance office will probably have no idea. The short answer is that you'll be subject to German taxes and should file with the US and Germany but shouldn't get hit with double taxation due to foreign tax exclusions laws. For information about employment opportunities in the Stuttgart area, contact Army Community Service at DSN 314-596-3362 or +49-9641-70-596-3362. Information and support for service members and their families. I am working in Germany for an American employer. FREE Weekly Updates! View calling options. The main thing expats need to consider is whether theyre at risk of paying tax twice both in Germany and in their home country. May 2017 - Mar 20224 years 11 months. Choose AAFMAA for trusted military Life Insurance, Wealth Management, Home Mortgages, Survivor Services, and our unique benefits. Payroll tax is taken out of employed workers salaries, which means their income is taxed automatically. 4. Generally speaking, military contractors working overseas are taxed by the same rules as all other US citizens living abroad. The Military Spouses Residency Relief Act allows military spouses to declare the same state of legal residency as their spouse. Every person has a state of legal residence. The military can help you with the added costs of an international move and living expenses abroad. Currently, you cannot use USPS services or any military-related discounted products in order to conduct on-base businesses (military Exchanges, etc.). Please check with your installations legal office to obtain additional information. 3 0 obj The Military Spouse Residency Relief Act (MSRRA)allows a nonmilitary spouse of a service member to keep the same resident state of the military spouse regardless of which state they live in. Websites such as the International Federation of Accountants can help you find member organizations. Germany has bilateral tax agreements with many countries including Ireland, New Zealand, Australia, the United States, and the United Kingdom. Just remember to do your research, investigate all your options, and choose (or stay with) an employer that will help as you navigate all the changes. Lawmakers propose tax credit to encourage more military spouse employment. As a U.S. citizen/resident your worldwide income is taxable in the US. If you experience any issues, youll have taken some time to learn how to correct them in the future. The content on The Military Wallet is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on The Military Wallet should not be attributed to the Dept. I am an Enrolled Agent. Subscribe to Military.com to receive updates on all of your military pay and benefits, delivered directly to your inbox. Landlords must submit a tax return detailing how much rent they received during the year. I worked for the I.R.S. Charitable donations to German charities are deductible up to 20% of gross income. The US Embassy in Germany has a website page with information on the IRS at this link. If you are a U.S. citizen or resident employed abroad by the U.S. Government and you also receive income from a private employer or self-employment, you may qualify to claim the exclusions or the deduction applicable to this other income. That almost always includes having a physical presence in that state. The SOFA was signed in 1951, and the SA was signed in 1959 and last updated in 1998 at the end of the Cold War. Qualifying for the MSRRA For those outside the United States, call your local emergency number. So you will not owe income tax on income that doesn't exceed that number. To get the conversation rolling in the right direction. Check with the. I am sure you have heard a wide variety of different things from different people, and there is a LOT of misinformation out there. Stay adaptable. Here are some considerations you need to keep in mind if youre a military spouse looking to work remotely while living overseas: The first step in determining if you will be able to work remotely while living overseas is to find out the applicable SOFA regulations for the country to which you may PCS. See Filing State Taxes When You're in the Military and Civilian Pay Earned by Active Duty Military for more details. stream They cover a wide range of topics, but one that has a significant impact on military families is employment laws. For those outside the United States, call your local emergency number. Employed workers dont have to submit a tax return unless they receive income from sources other than their main form of employment. Most payments received by U.S. Government civilian employees for working abroad, including pay differentials, are taxable. 1 0 obj Your email address will not be published. Military OneSource suggests military spouses check out the Military Spouse Employment Partnership as well as installation employment options while reaching out to the installations legal office to confirm the most up-to-date SOFA regulations. (Military contractors are considered to be civilians for tax purposes, not US military personnel.) If youre late paying the tax you owe, youll be fined 1% of the unpaid each month that you fail to pay it. Income tax in Germany is progressive. If you make alimony payments to an ex-partner, up to 13,805 can also be deducted. Make sure the employer understands you have their best interests in mind as well as your own. The Military Spouses Residency Relief Act (MSRRA) lets you keep the same state of legal residence as your service member spouse. The nonmilitary spouse is in that state solely to live with the service member. The same goes for social contributions for various types of mandatory insurance. There is no intent to work on German projects or with German counterparts on anything. Simply choose "Spouse Education, Training, and Careers" from the list of programs and services, enter your new installation or postal code, and select "Search". Department of Defense personnel stationed in or temporarily assigned to Europe may be eligible to use the U.S. Additionally, with the advent of the gig economy, many SOFAs do not address self-employment while living abroad. You can also get expert advice on tax issues from organizations specializing in offering expat financial support and advice, such as Wundertax and H&R Block. However, there are also a growing number of expat-friendly, English-speaking online platforms that help you file your German tax returns. Prior to this Act, the Military Spouse Residency Relief Act of 2009 said that military spouses did not have to change their residency with each military-related move. If you are an employee of an Armed Forces post exchange, officers' and enlisted personnel club, embassy commissary, or similar instrumentality of the U.S.Government, the earnings you receive are paid by the U.S.Government. Any income from the following categories counts as taxable income: Some types of income are tax-exempt but are used to determine the tax rate such as unemployment benefits, maternity leave payments, and income that has been taxed in another country due to a double tax treaty. Compare the rates, fees, and rewards of top credit cards for military servicemembers and veterans, including cards with waived annual fees under the SCRA. For most people, moving means changing your legal residence (domicile), and paying state taxes in the state where they are domiciled. Just remember to do your prep, give yourself time to get settled and investigate all your options. Note for Person A: If they work a nonmilitary job in Virginia, they may have to file a tax return and pay tax in Virginia. Life Insurance, Wealth Management, Home Mortgages, Survivor Services, and more. Therefore, there are only two options for where military spouses can file their state income taxes: in the state where they are domiciled, if it "is the same for the service member and spouse," or in the state where they are physically living. Check your installations website for up-to-date job listings positions. Here is more information about the SOFA agreement with Italy. If you are employed, you can deduct certain income-related expenses that are documented and havent already been reimbursed by your employer. in Mand Been with Intuit for going on 6 years now. This office is open Monday - Friday from 6:00 a.m. to 11:00 p.m. Eastern time and can be contacted at: Phone: 267-941-1000. For more information, refer to Allowances, Differentials, and Other Pay. In this personal interview, part of our Expat Military Retiree Interview Series . Person B takes a job as a teacher. It is compulsory to submit a tax declaration if: The municipality you register with can give additional information on which local tax office you need to report your taxes to. Examples of SOFA rules by country appear below. In addition to rental income tax, you may need to pay a solidarity surcharge of 5.5% on rental income. Your installations legal office can offer these services free of charge. Big base countries like Germany, Korea, and Japan are usually more favorable compared to places lacking SOFAs.