Meet the Co-chairs - TIAG
Mercer & Hole
Cohen & Company (Ohio)
Fineman West & Co. LLP
Meet the Co-chairs - TAGLAW
Williams Mullen (VA)
Any person or persons residing temporarily or permanently in a country that is different from their home country or country of citizenship is referred to as an expat. Taxation of such expat employees involves a slightly different computation than the tax computed for a regular employee of an Indian organization.
Author: Evan Fox, J.D., LL.M.
Under Internal Revenue Code (IRC) Section 1366, shareholders of S Corporations report their share of net income as if it were directly earned. Included in the computation of net income is a deduction for wages (and withholding taxes) paid to the shareholder(s), along with related payroll taxes. Conversely, the shareholder reports these wages as ordinary income. For a variety of reasons, taxpayers and the IRS have been engaged in a tussle over what level of wages are appropriate. Following the enactment of IRC 199A (see Section 199A Pass: Treasury Regulations Answer Many Questions by Joseph Most for a detailed description of IRC 199A), taxpayers have a new and extremely important variable to consider in determining their “reasonable compensation.” And much to the chagrin of the IRS, the economics will typically suggest a further trend towards wage reductions.
As a result of the OECD Base Erosion and Profit Shifting (BEPS) project to minimise tax leakage, amendments have been proposed to Double Tax Agreements (“DTA’s”) through use of a Multilateral Instrument (MLI). The changes impact a large number of countries across and its impact can vary from DTA to DTA.
British Columbia Budget 2018 included the announcement of a new payroll tax called the Employer Health Tax (the “EHT”). Preliminary details were released over the summer, with additional details being released in recent months. The EHT came into effect on January 1, 2019; employers should be aware that the EHT may result in a significant new tax liability for 2019 and future years.
The EHT is intended to replace the existing Medical Services Plan (“MSP”) premiums, which will be phased out on January 1, 2020. Both the EHT (paid by employers) and the MSP (paid by individuals or, in some cases, their employers) will be in effect during 2019.
Many businesses hired in 2017, and more are planning to hire in 2018. If you’re among them and your hires include members of a “target group,” you may be eligible for the Work Opportunity tax credit (WOTC). If you made qualifying hires in 2017 and obtained proper certification, you can claim the WOTC on your 2017 tax return.