FICA and NZ

[dede]

So, I'm looking right now for a job in NZ....but realistically won't get far 'til I go on the recce and get through PR process. I have the potential, actually a likelihood, of earning a good living working in NZ for a US company and telecommuting. I know there isn't a social security agreement between the two . Does anyone know whether I would have to pay both FICA and Kiwisaver? Looks like we would have to go back to US when we retire to obtain any benefits which seems unfair but we are hoping for a normalization of the treaties by then! I'm hoping to find other people who have been able to do this in NZ. Would really appreciate any advice on taxation etc.

[Azkateaz]

I would love to hear more from anyone who has done this as well as I have potential to work remotely for my current employer part-time, though I would also work contracts in New Zealand for NZ employers separately.

My understanding is that you would need to file and pay taxes in both countries. As part of your US taxes you have FICA. Right now, Kiwisaver is not mandatory so would not be required; however, it seems to be ever-changing and there is a lot of discussion amongst politicians for mandating.

if I've gotten this wrong I apologize in advance. I've spent some time on the IRD and IRS sites and have compiled what I could between them.

[NJ2NZ]

And here's one more in the same position. Our situation is complicated by the fact of OH is working here, making her income taxable in NZ as well as in the US (for income above a certain level).

I may be totally wrong, but here's how I think this works:

1. Taxes including FICA are deducted at source in the US. Tax returns are filed in the US.

2. Tax returns are filed in NZ as well, but no taxes are deducted (hopefully) because you get credit for the taxes paid in US

3. There's no equivalent of FICA in NZ, as NZ superannuation (= social security payments) is not based on contribution as in the US

4. You qualify for superannuation based on your age and residence in NZ, and for Social Security based on your age and contributions. You have to make a choice as to which one you wish to receive

This is my first year in NZ and I'm terrified that come tax time, I'll find out I owe taxes in both jurisdictions.

[IanW99]

...
2. Tax returns are filed in NZ as well, but no taxes are deducted (hopefully) because you get credit for the taxes paid in US
...

This is only true if you pay more taxes in the US than NZ.

As far as IRD in NZ are concerned, they expect you to pay the same amount of tax as everyone else in NZ, so if you would have paid NZ $30,000 in tax and you only paid $20,000 to the US then you would still owe NZ $10,000.

Ian

[dede]

How would that work for the 4 year exclusion rule on foreign taxation? I'm going to have to get myself a decent tax accountant for a while I think.

[IanW99]

How would that work for the 4 year exclusion rule on foreign taxation? I'm going to have to get myself a decent tax accountant for a while I think.

The exclusion does NOT include foreign earned income from work so you would still need to pay appropriate taxes.

Ian