No, you do not need to notify the Federal IRS or state tax system when you move to an international location. However, Reliant must be notified any time you travel to or from the US so that we can report your taxes accurately. Use the Travel Notification Form for notifying us of all travel outside your home country.
Once you are Released to Assignment and have moved to your location, Reliant makes note that you are in a foreign location and don't have to pay state taxes.
Since you are no longer residing in one of the 50 states, Reliant does not pay taxes for you. If for any reason you need those paid, you'll need to ask Reliant for that. If you have state tax obligations after you leave the U.S., you may need to attend to those on your own.
A U.S. citizen is ALWAYS responsible to report and file their tax returns EACH year, no matter where they live. When residing outside of the U.S., the deadline for filing is June 15.
Many who live outside of the U.S. for more than a year qualify for the Foreign Earned Income Exclusion; this greatly reduces the amount of tax that needs to be paid for many people. You may qualify. In 2022, an eligible foreign worker can exclude up to $112,000 of income from federal income taxes. Read about the Foreign Earned Income Exclusion and speak with your tax advisor for more details. Be sure to submit an accurate W-4 form to Reliant to avoid having too much federal income taxes withheld from each paycheck and receiving a large income tax refund when living on a needs-based salary.
The current international SGW assumes you will not be liable for federal income taxes. The default is for Reliant to pay Federal Income Tax according to what you have submitted on your W-4 during New Staff Training.
Withholding from your paycheck happens regardless of whether you make a budget category in your Support Goal Worksheet for Federal Income tax or not. Part of the reason that is done is because most missionaries begin their employment while still in the U.S., and taxes would be due on that employment. In addition, those who qualify for the exclusion receive the money back in their tax return, and it becomes “salary.”
Reliant strongly urges all missionaries to consult a tax specialist regarding these matters. IRS tax forms 2555 and 2555EZ guide the qualification and reporting of this exclusion.
In most cases, a foreign worker first establishes foreign residency using the Physical Presence Test. Physical Presence requires the worker to reside and work outside the US 330 days within a year. Once a foreign worker establishes residency, they are "Bona Fide Residents". A Bona Fide Resident is no longer required to pass the Physical Presence test and stay in US for longer than 35 days. Their residence began when they first started their foreign residence.
Furlough is a temporary work assignment in the US. It does not constitute a change in residence in most circumstances. Therefore, it does not interrupt "Bona Fide Residence" of someone utilizing the Foreign Earned Income Exclusion.
IRS form 2555 will ask how many days you worked in the US, and you will need to report that. Technically, earnings for work in the US are taxable; however, due to the standard deduction level, a Reliant missionary rarely owes more tax during a furlough.
If you are ordained or commissioned, you may be eligible to receive parsonage. For many international staff who qualify for the Foreign Earned Income Exclusion, the parsonage does not typically lower their tax liability since the Foreign Earned Income Exclusion exempts them from paying federal income taxes on any earned income under $112,000 (for tax year 2022).
For more information, see Parsonage
Reliant employees are eligible for the 401(k) plan after one year of service. Employees will be auto-enrolled in the 401(k) plan at the quarterly enrollment date following their one year eligibility date. Reliant does offer an employer match. Reliant matches up to 5% of your eligible wages (salary and bonuses) in a contribution that comes from the MTD account (if you contribute at least that much through payroll deductions). The source of the employer match is from funds raised to the MTD account that funds your ministry (so you have to raise the match). Reliant allows you to choose whether funds contributed from your paycheck are “Pre-Tax” or Roth. The match contribution will always be Pre-tax. There is a conversion process if you want your employer match converted to Roth funds. You can find more information at 401(k) Retirement Plan.
Reliant encourages all international employees to seek tax counsel regarding IRS ruling 70-491 when determining if the Roth option is something they should utilize for their retirement savings. There may be tax implications of selecting Roth for your retirement funds while filing under the Foreign Earned Income Exclusion to consider and discuss with your tax counsel. |
Reliant can not make recommendations about tax decisions, so it is the missionary's responsibility to seek that input from a financial advisor or tax specialist. Below is a tax specialist that other international missionaries with Reliant have consulted:
For information about reimbursing tax services see - Professional Fees. |
Missionaries are free to use any bank they'd like! In the event that a missionary is looking for bank recommendations, below are banks Reliant has heard of that market toward international missionaries.
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