# Considering moving from USA, have questions



## SLM (Oct 17, 2009)

Hello, I was considering moving to Dubai from the US to accept a position there. However, I had some questions. I'm mostly concerned about the financial aspect of it. I see the information thread at the top of the page states that a one bedroom apartment normally goes for about 70,000AED per year and up. However, I've also seen lower figures as well, as low as 40,000/yr. What should I realistically expect to pay?

My job would offer a salary of about 60,000USD per year, or a little over 220,000AED. It also comes with a company car. I am not sure if fuel is included with the car, but I don't think it would be a huge issue either way since it is so cheap in the middle east. Does this sound like a livable salary there? One of the draws of going there would be the salary, so ideally I'd like to have a significant amount of that left over after living expenses.

Since I would have a company car, I was considering living in Sharjah to save money and commuting. Is this common? Would it be tolerable since I've heard the traffic in Dubai has decreased significantly? My only concern there is that I think that would definitely limit my ability to go out at night in Dubai, since if I had anything to drink I would not be able to drive home. Does Sharjah also have anything enjoyable to do that I would possibly not need my car to go to?

The other concern I have is that it seems that Dubai is currently experiencing a slow economy, and my employment contract would be for three years. Should I expect to pay significantly more than 70,000AED per year for rent as Dubai's economy rebounds? I don't want to be out-paced by inflation towards the end of my time there. Also, does three years seem like an excessively long time to live in Dubai? It would be just me, no family. I would get one paid trip home per year for about two weeks. I know this is mainly a personal issue more than anything, but I really have no idea what I'm up against with three years in Dubai.

Are there any signs that the US tax exemption of up to $87,500 earned each year is going away? To me, having to pay taxes on my earnings may be a deal breaker, because $60,000USD is not a whole lot more than I make now, but without taxes, it would be.

Is the healthcare system adequate there? I would hate for something to happen but not be able to get decent care.

Are the beaches really as polluted as I have heard they are, as in, to the point of being unsafe to go into the water?

Thank you.


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## mrbig (Sep 10, 2009)

you need to find out if housing allowance is given. If not than request it.
yes the prices for the apartments are correct. the 40k is going to be in a older and overcrowded part of town like karama or diera. the 70k is going to be in a nicer place like marina. yes you will save living in sharjah but it all depends on where you work if that would be good or not. if you worked in jebel ali that would really suck to have to drive all the way there during rush hour. I cant give to much night scene info on sharjah, sorry.
housing is allready on the rebound, has been for a couple of months now. 
3 years will be a great exp for you in dubai, but it is what you make of it.
doctors and hospitals ect.. no worries, just as good as the states.
and the beaches are great. couple of isolated incidents with truckers making stupid stupid stupid mistakes. we go to the beach every week at least 2 times, and I have kids ages 5 and 7, I wouldnt let anything bad happen to them.

couple more things
rent is usually 1 check at the begining of the lease. some landlords will let you do 2-3 checks.
most everything is much more exspensive than in the states. ex polo shirts in usa can be had for 40-50 dollars, here they are 100. all clothes are more $$$. the only things cheaper here are gas and maids.


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## SLM (Oct 17, 2009)

There is a housing allowance, but I _believe_ that is factored into the salary of about 18,300 AED/mo. Obviously I really need to clarify that, because it makes a big difference.

So would you be saying that a total salary of a little over 18,000/mo (housing allowance and all) is probably not going to make it desirable or worthwhile to do?


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## mrbig (Sep 10, 2009)

honestly it depends on your style of living.

lets say you picked a 1 bed marina apartment that is 70000 aed a year 
divide by 12 = 5833aed a month in rent. that leaves 12000aed roughly which is 3269$. You need to pay everything else with that. water, elec, cable, internet, eating out, intertainment, groceries, clothes, ect.. then whatever you have left you save. Which I think would be roughly 5-800 usd$ a month.


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## SLM (Oct 17, 2009)

So you're saying savings would probably come out to $500-800USD/mo. So basically, I wouldn't be living like a king, but it's doable. Sounds like I could manage.

Right now (converted to keep things as simple as possible) I only make about 10,700AED/mo. Of course my rent is only 38,500AED/yr (3213/mo). Even with 3213AED of rent, leaving me with about 7500AED for everything else, I can normally manage to put away about 3600AED of that every month.

So, even with a 70,000AED/yr apartment, that still leaves me with 1832/mo more than I have in the US before I even pay the rent.


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## mrbig (Sep 10, 2009)

if its better than what you have right now then yeah do it. give me a holler when you get in town and I will show you around if you like. dubai is a great place, I love it.


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## Dubiased (Sep 24, 2009)

If you live outside of the USA for 11/12 months, you don't pay income tax. Make sure you keep all your documents, IRS will ask.


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## SLM (Oct 17, 2009)

Yeah, I know that right now there is no tax on anything below $87,500USD, but I just wanted to make sure that it doesn't appear that exemption is going away any time soon.

I've read that the legislature has threatened this in the past.


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## Bevdeforges (Nov 16, 2007)

SLM said:


> Yeah, I know that right now there is no tax on anything below $87,500USD, but I just wanted to make sure that it doesn't appear that exemption is going away any time soon.
> 
> I've read that the legislature has threatened this in the past.


They've just announced the overseas earned income exclusion for 2009, and it's up to $91,500 or something in that vicinity. There is also a housing exemption that can add a bit more onto that. (See the instructions for form 2555 for the details.)

But you're right to be concerned about the overseas earned income exclusion. Every few years, some Congressman or woman gets the bright idea that eliminating what are called the "section 911" provisions in the tax law might plug the holes in the Federal deficit. There's nothing in the pipeline at the moment, but there is talk of plugging various loopholes for "overseas residents" - which means they'll get around to section 911 sooner or later.

If section 911 goes away, you're left with income tax credits against your US tax liability - and given Dubai's lack of income taxes, you'd wind up paying your usual US tax bill, with nothing to offset against it. There are a number of US expat groups that lobby against any calls to do away with section 911, and so far they've been successful.

So, you play the game and you take your chances.
Cheers,
Bev


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## Bevdeforges (Nov 16, 2007)

Dubiased said:


> If you live outside of the USA for 11/12 months, you don't pay income tax. Make sure you keep all your documents, IRS will ask.


No. If you live outside the US for 12 consecutive months or establish "bona fide" residence in another country, you may exclude up to about $90K from your earned income (i.e. salary) for US tax purposes.

Still have to file returns to claim the exclusion and you still pay US tax on all earned income above the exclusion amount, and on all other forms of "unearned" income (i.e. interest, investments, rents. etc.).
Cheers,
Bev


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## vincetruong (May 10, 2009)

*Foreign Earned Income Exclusion*



Bevdeforges said:


> No. If you live outside the US for 12 consecutive months or establish "bona fide" residence in another country, you may exclude up to about $90K from your earned income (i.e. salary) for US tax purposes.
> 
> Still have to file returns to claim the exclusion and you still pay US tax on all earned income above the exclusion amount, and on all other forms of "unearned" income (i.e. interest, investments, rents. etc.).
> Cheers,
> Bev



The current Foreign Earned Income Exclusion is $91,400 for 2009 and that gets indexed annually for inflation. You have to file for it in order to take advantage (Form 2555 as others have noted). It's not automatic. It does not include the housing exclusion, which varies depending on the city, but usually works out to about a very rough 30% of housing allowances. 

There are two tests to establish foreign residence. Bona Fide Residence - establishing a bona fide residence in a foreign country for a full tax year. Trips home for business or personal are allowed. Second test is the physical presence test. You must be out of the US for at least 330 days during any twelve month period. If you meet either of these tests as a US Citizen or resident, you're eligible for the FEIE.

Congress is always threatening to take away the FEIE and though changes in US international tax law are imminent, they're more likely to apply to US companies.

Expat Americans living overseas who are concernd about their rights may want to consider supporting American Citizens Abroad. They are protecting our rights such as the FEIE.

Questions? Email me at vince at holbornassets period com. I'm the only American Certified Financial Planner in the UAE.


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