Re: Foreign Health Tax and Social Security Tax

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Subject Author Date Re: Foreign Health Tax and Social Security Tax Larry Israel 05-28-2009  Re: Foreign Health Tax and Social Security Tax brew.one 06-02-2009  Re: Foreign Health Tax and Social Security Tax brew.one 06-02-2009
Posted by Larry Israel on May 28, 2009, 10:34 am Please log in for more thread options >> Although I am a long-term foreign resident, this is the first year that >> the following question might affect the tax. >> >> A US citizen residing in a foreign country and employed by a foreign >> company has to pay income tax, health insurance tax, and social security >> tax. The latter two are only paid on income up to a certain amount. The >> medical services you get from the health tax are the same for everybody, >> even those who were had no income to pay on. Social Security payments >> are based on years worked, and not on income earned. There is no Social >> Security totalization agreement with the US. >> >> Now for the question. Are these taxes considered as taxes that can be >> used for the foreign tax credit? Is the health tax considered as a valid >> expense for calculating the personal deduction in figuring the US tax? > >It appears to be an income-based tax, so I would say yes. I compare it to >California's SDI, which is accepted as a state income tax for purposes of a >deduction under IRC 164. > I thought that I had already asked the following, but I never saw it. In light of what is written above about the health tax, it could be used as a foreign tax credit, but NOT as a medical deduction. Did I read this correctly? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by brew.one on June 2, 2009, 3:57 pm Please log in for more thread options On May 28, 10:34 am, VSLA...@weizmann.ac.il (Larry Israel) wrote: > >> Although I am a long-term foreign resident, this is the first year that > >> the following question might affect the tax. > > >> A US citizen residing in a foreign country and employed by a foreign > >> company has to pay income tax, health insurance tax, and social security > >> tax.  The latter two are only paid on income up to a certain amount.  The > >> medical services you get from the health tax are the same for everybody, > >> even those who were had no income to pay on.  Social Security payments > >> are based on years worked, and not on income earned.  There is no Social > >> Security totalization agreement with the US. > > >> Now for the question.  Are these taxes considered as taxes that can be > >> used for the foreign tax credit? Is the health tax considered as a valid > >> expense for calculating the personal deduction in figuring the US tax? > > >It appears to be an income-based tax, so I would say yes.  I compare it to > >California's SDI, which is accepted as a state income tax for purposes of a > >deduction under IRC 164. > > I thought that I had already asked the following, but I never saw it. In > light of what is written above about the health tax, it could be used as > a foreign tax credit, but NOT as a medical deduction. Did I read this > correctly? > The only type of foreign tax that the IRS mentions in Topic 856 is "income" tax (paid), which can be taken as a credit or as a Schedule A deduction. You are speaking of the equivalent of U.S. "payroll" taxes, which is a different matter (IMO). http://www.irs.gov/taxtopics/tc856.html -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by brew.one on June 2, 2009, 3:57 pm Please log in for more thread options I decided to extend my unpaid research by another 30 seconds and saw in Publication 514: "Foreign Taxes for Which You Cannot Take a Credit" http://www.irs.gov/publications/p514/ar02.html#en_US_publink10001513 Cheers, -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Foreign Health Tax and Social Security Tax May 18, 2009, 12:33 pm Social Security and foreign pension March 27, 2007, 1:21 am Foreign wife (MFS) need social security number March 10, 2008, 10:53 am Working in a foreign country, paying into social security. 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