# UK to Seattle



## vimsemplay (Mar 23, 2015)

Good Afternoon All, 

I have been offered a job in Seattle as a Expat for 2 years. Sounds like a great opportunity for me and my wife. The first offer in short what has been offered is the following is $43k per year. Along with this full health care for the both of, Car hire( I will only pay for fuel), We will only pay $300 towards rent & utilities the rest will be covered by them (nothing greater than a 2 bed apartment). 1 trip including per 12 months, all personal belongings shipped over @ no cost

The intention is for my wife to also work out there, however the biggest question is that are we getting a good deal for us to be able to enjoy ourselves whilst out there and also come back with a good saving at the end of it. 

I need advice on what is the average weekly spend on groceries, going out etc. We are both in our mid 20s so want to enjoy the time we are out there.


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## BBCWatcher (Dec 28, 2012)

You can certainly make that budget work. However, beyond the "headline" numbers, bear in mind that, unlike the U.K. (particularly for the car), the value of the car lease(*) and the housing benefit you receive will be largely or entirely U.S. taxable because it'll be considered part of your wage/salary compensation. True, it's non-cash compensation, but that doesn't matter, it'll still be largely or entirely taxable. I think you'll even have to pay your share of U.S. payroll tax (7.65%) on the value of those two items unless you're able to stay on U.K. national insurance. If so, the U.K. rules will govern, and you won't pay U.S. payroll tax. (Though I wouldn't stay on the U.K. system for those two years if you have a choice, and you probably do if I understand the U.S.-U.K. social security treaty correctly. Two years of participation in the U.S. system, plus your U.K. participation in other years, will be enough to qualify for some modest U.S. Social Security retirement benefits, in addition to your U.K. benefits. I'd take that deal. The U.S. has the more generous system.)

So let's suppose, just to keep the math simple, that you choose an apartment with a monthly rent of $2000 (including utilities), and your employer pays $1700 of that. Let's suppose the car lease is worth $300 per month. So along with your $43K in salary you're also getting $24K ($2000 per month) in non-cash, taxable compensation in my example. That means your total taxable salary will be $67K. (We'll leave your wife's employment compensation out for now since that's more speculative.) Washington State has no state income tax, but you will pay U.S. federal income tax. For a married couple filing jointly, no kids, and no other income you should owe about $7300 in federal income tax. You'll pay another $5125 in U.S. payroll tax, thus your total tax bill should be about $12425 in this example. That'll leave you with $30575 in after tax income to pay for everything else -- food, gasoline, unreimbursed medical expenses (deductibles and co-pays, and there likely are some), entertainment, the $300 per month in rent you need to cover, etc.

....And that's not bad! But you can see how it's a bit less than the "headline" figures suggest. Employer-provided medical insurance is not considered taxable income, fortunately.

(*) It's a little more complicated. As I understand it, the IRS lets you apportion the employer-paid vehicle lease between personal and business use. The personal use share is then taxable income. Business use is generally use of the vehicle for business purposes in excess of your normal office commute. A figure of $300 per month would be a pretty reasonable, rough guess for the personal use/taxable income share, I would think.

Housing is very rarely U.S. tax favored. If your employer is putting you on an oil rig offshore, for example, then there probably is a U.S. tax benefit if your employer just provides living quarters directly, on the rig, since then it probably wouldn't be considered taxable compensation.

And therein lies some advice: cash is superior when you're receiving taxable income. If your employer is willing to spend $500 per month on a vehicle for you, but you're willing to settle for a $300 per month vehicle, take the cash instead. Same thing with the housing. Cash in lieu of non-cash taxable compensation allows you to downgrade if you wish and keep the difference. If your employer provides the housing and car, you don't have that downgrade option. You have to look at U.S. rules, not U.K. rules, to understand what's taxable and what's not. Company cars are quite common in the U.K., for sensible tax reasons. They're very rare in the U.S., for equally sensible tax reasons. Unless you're taking a job driving a hot dog wagon or refrigerated ice cream truck (as examples), and that's your employer-provided vehicle. (Though you'd still likely have to treat the personal use portion as taxable income.)


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## Crawford (Jan 23, 2011)

1. 43K is not a fantastic salary, but seeing that your employer is paying the majority of your housing costs and utilities this makes it somewhat more lucrative.

2. Health cost - while your employer says they are paying full health costs you need to ascertain whether this is ALL i.e premiums per month AND deductibles, co-pays, prescriptions costs. Most employers do not pay all premiums and all out of pocket costs. Most pay only part of the premiums and no out of pocket costs.

3. The ability of your wife to work will depend on your visa. On an L visa she certainly would be able to but you say you have a job offer and not a job transfer so probably not an L visa. With an H1 visa she will get an H4 and NOT be able to work so you need to confirm which visa you are getting.


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## BBCWatcher (Dec 28, 2012)

How would disability insurance coverage work, by the way? Unemployment insurance? Any life insurance, to protect the lifestyle of your spouse in reasonable fashion? When you move across borders these concerns move with you, but how you address these concerns may need to change. The tax implications may also change.

To pick one of these three issues, the premium value of any employer-provided life insurance for any death benefit amount above $50,000 is considered taxable income in the U.S. The first $50K of employer-provided life insurance is U.S. tax free. ("Joke" insurance, such as accidental death insurance, isn't even considered insurance by the IRS and is thus not taxable. It doesn't actually matter _how_ you die when you have dependents.) There's still nothing wrong with employers providing benefits, even if they are taxable, as long as you value the benefits at least as much as the tax cost. Employer-provided life insurance is often a great deal since employers can negotiate large group premium rates, and often you can continue coverage on the same policy (at your own expense) after your employment ends.


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## twostep (Apr 3, 2008)

Have you ever been to Seattle and it's wet gloomy seasons? How do you recognize natives? They grow moss between their toes. And they sure do.

Read that contract with a very fine tooth. What is really covered? 
Is there a ceiling towards rent?
Will you be able to use the car for non-work related trips; will your wife be able to use it? 
What does full health care cover? Premiums and what else? What kind of a network is available? What are your copays/deductibles/catastrophic cap and other pitfalls?
The difference between intention for your wife to work and a jb is a pay check to say it bluntly.
Who will pay for shipping your household back - a) after a fulfilled contract b) in case of lay off/getting fired?
Have working days and hours been captured in the contract? How about overtime, sick time, paid holidays and vacation? 
Renters insurance, second car/insurance for wife, deposits for utilities, parking, gas, life insurance, odds and ends, groceries - unless your wife works there will not be much play money left.


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## vimsemplay (Mar 23, 2015)

BBCWatcher said:


> You can certainly make that budget work. However, beyond the "headline" numbers, bear in mind that, unlike the U.K. (particularly for the car), the value of the car lease(*) and the housing benefit you receive will be largely or entirely U.S. taxable because it'll be considered part of your wage/salary compensation. True, it's non-cash compensation, but that doesn't matter, it'll still be largely or entirely taxable. I think you'll even have to pay your share of U.S. payroll tax (7.65%) on the value of those two items unless you're able to stay on U.K. national insurance. If so, the U.K. rules will govern, and you won't pay U.S. payroll tax. (Though I wouldn't stay on the U.K. system for those two years if you have a choice, and you probably do if I understand the U.S.-U.K. social security treaty correctly. Two years of participation in the U.S. system, plus your U.K. participation in other years, will be enough to qualify for some modest U.S. Social Security retirement benefits, in addition to your U.K. benefits. I'd take that deal. The U.S. has the more generous system.)
> 
> So let's suppose, just to keep the math simple, that you choose an apartment with a monthly rent of $2000 (including utilities), and your employer pays $1700 of that. Let's suppose the car lease is worth $300 per month. So along with your $43K in salary you're also getting $24K ($2000 per month) in non-cash, taxable compensation in my example. That means your total taxable salary will be $67K. (We'll leave your wife's employment compensation out for now since that's more speculative.) Washington State has no state income tax, but you will pay U.S. federal income tax. For a married couple filing jointly, no kids, and no other income you should owe about $7300 in federal income tax. You'll pay another $5125 in U.S. payroll tax, thus your total tax bill should be about $12425 in this example. That'll leave you with $30575 in after tax income to pay for everything else -- food, gasoline, unreimbursed medical expenses (deductibles and co-pays, and there likely are some), entertainment, the $300 per month in rent you need to cover, etc.
> 
> ...



Thank you for the swift response... in terms of tax I will taxed under UK tax laws, any tax I pay in the US will be funded back to me by the company.

I will get more information on health care as per your thread, it has given me a lot more questions that I need answering. So that I am clear does that mean I may have to pay tax on the car even though they are providing the car?


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## vimsemplay (Mar 23, 2015)

Crawford said:


> 1. 43K is not a fantastic salary, but seeing that your employer is paying the majority of your housing costs and utilities this makes it somewhat more lucrative.
> 
> 2. Health cost - while your employer says they are paying full health costs you need to ascertain whether this is ALL i.e premiums per month AND deductibles, co-pays, prescriptions costs. Most employers do not pay all premiums and all out of pocket costs. Most pay only part of the premiums and no out of pocket costs.
> 
> 3. The ability of your wife to work will depend on your visa. On an L visa she certainly would be able to but you say you have a job offer and not a job transfer so probably not an L visa. With an H1 visa she will get an H4 and NOT be able to work so you need to confirm which visa you are getting.


Thanks for the reply back, I will be getting more information ref healthcare. 

In terms of visas I will be getting a L visa along with my wife.


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## Crawford (Jan 23, 2011)

vimsemplay said:


> Thanks for the reply back, I will be getting more information ref healthcare.
> 
> In terms of visas I will be getting a L visa along with my wife.


So you are being transferred by your current company? - or to be more precise, since it is a 2 year assignment sounds like you are being seconded over to the US.

In which case your wife will receive an L-2 and WILL be able to work.


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## vimsemplay (Mar 23, 2015)

Yes, I am being sent over my current company.


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## BBCWatcher (Dec 28, 2012)

vimsemplay said:


> Thank you for the swift response... in terms of tax I will taxed under UK tax laws, any tax I pay in the US will be funded back to me by the company.


You'll be "tax equalized," you mean?(*)

Are the figures you cited before or after U.K. tax (and tax equalization)?

(*) You will be taxed in the United States -- that's for certain. Your work will be performed there, and you will owe tax there. The U.K. might or might not tax you above that. So when you say "I will be taxed under UK tax laws," that's not quite how it works, or at least it's not how it all works. Your employer can choose to adjust your total compensation in certain ways to make your _financial outcome_ resemble at closely as possible a hypothetical U.K.-based outcome. That's called "tax equalization." As it happens, tax equalization in this case might mean your employer saves money (and you just tread water), because they probably don't have to allocate as much budget to achieve the same financial outcome for you as they would if you were working in the U.K.


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## Crawford (Jan 23, 2011)

vimsemplay said:


> Yes, I am being sent over my current company.


Am no expert on this but have heard of people on assignments who have had what they called an 'expat contract' i.e they _apparently_ paid taxes in the UK, paid NIC in the UK and did not pay into Medicare and/or Social Security in the US. Their employers did, however, pay their medical insurance while in the States. They definitely had an 'end date' to their contract.

You should review your contract carefully to see what it is you are being offered.


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## BBCWatcher (Dec 28, 2012)

I think you're correct, Crawford. Income taxes will be owed in the U.S., and they are personal liabilities. It's important to understand that basic principle when going on an assignment to the U.S. (or to another country). Yes, the U.K. employer can offer to adjust compensation -- downward in this case, quite possibly! -- to achieve (or at least come close to simulating) a particular U.K.-like end state _financial outcome_ for the employee. That set of adjustments to compensation is called "tax equalization." Tax equalization is often part of an "expat package," another term of art. Tax equalization normally also includes tax preparation assistance. The value of employer-provided tax preparation assistance is generally considered U.S. taxable income, factored into tax equalization.

Tax equalization is not the same thing as lifestyle equalization, which is really impossible. Washington State is different than the United Kingdom, and it's not possible to duplicate an exact lifestyle a continent away. Also, genuine tax equalization isn't 100% achievable in all circumstances. For example, if you work in another country you may become ineligible to contribute to a home country's tax-advantaged retirement account -- or the tax equalization itself pushes you over the income limits for making contributions to that tax-advantaged account. That tax-advantaged account ordinarily yields multi-decade timescale tax benefits. How can an employer (and their tax accountant) possibly calculate the value of the loss of that tax-advantaged retirement account contribution? It's at least very difficult. In practice, and with proper tax equalization, the employer/tax accountant takes a "best guess" and then increases salary to try to roughly compensate for the loss of that tax benefit.

....OK, this might be more information than you wanted to know, but it's probably better to know how tax equalization works "in the background" since it's not _really_ in the background. When you work and earn in the U.S. you, personally, assume U.S. tax liabilities. The IRS comes after you if you don't pay, not anybody else. Your employer can (and should) _assist_, but it's important to understand the shape and contours of that assistance (including tax equalization if offered) to understand whether they're making a good offer or not.


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