Salary vs Allowances

Thanks Dweller - you've confirmed my speculations. I'm feeling pretty positive about the career opportunities afforded by this relocation. I'm actually remaining with my current company - just transferring to a different division. The over all renumeration is on par with my current salary and although the taxing particulars are still an open issue, I am reasonable confident that my take-home pay will increase.

Can anyone recommend a tax consultant well-versed in U.S. expat tax codes?

suggest that there is an established relationship between basic and allowances. In fact I am fairly sure that the % breakdown basic/allowances has altered considerably of late due to additional allowances for housing and other increasing costs.

By the way, my suggestion that "Allowances can be reduced or removed (although they often are)" was not what I intended to imply, in fact the opposite they are rarely reduced or removed (my apologies for that).

Whether you are asked to "prove" spending in line with allowances depends on the organisation but I suspect not. On such as business expenses you will more than likely have to provide receipts.

What you must ensure is that the total remuneration (inclusive of allowances) is satisfactory to you and compares favourably with your pay in the US given that you are moving out of your home country and possibly quitting a solid career with prospects.

I am sure that the organisation even if it is a new position will have some idea of the "going rate" for the job using market rate comparisons.

Thanks for your input Dweller - yes - I did mean allowances when I said allocations - sorry for the confusion. My particular company does not operate in terms of salary grades - and my position is a newly created one. Therefore - everything is negotiable at this point. One thing I hadn't considered is that an allowance can be adjusted at any time.

In your experience - what is a reasonable ration of base to allowance? My company is telling me its about 60:40. They haven't specified what will make up the allowances - I don't think it matters to them. Should it matter to me? Will I ever be asked to demonstrate spending in line with any allowances?

Thanks

answer you on the tax implications but I assume that when you say "allocations" you mean allowances.

Allowances do not form part of the basic salary and therefore do not count towards ESB. This limits the accruing cost of ESB as allowances often increase at a faster rate than base pay.

Allowances can be reduced or removed (although they often are). In my recollection I remember allowances being reduced only once in QP when housing costs droppped (yes at one time they dropped).

That method of operation allows companies to react to such as increased cost of housing without the hassle of having to increase base pay.

Depending on the company it may or may not be possible to negotiate higher allowances. Many companies operate fixed allowances based on job grade.

Hope this helps.