Quick ques about DR vs US employment

CarpeDReam

New member
Feb 17, 2006
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Hi all,

I've been living here in the DR working remotely for a US based company as a 1099 worker. I get paid in US dollars to my US account. My employer just found out that I now need to be a W2 worker because my duties as a 1099 do not fit the requirements. But they cannot pay me as a w2 worker living outside the US. They found a company here in the DR that they can pay and that company here will pay me as a DR employee paying DR taxes. The dollar amount will not be affected in terms of salary. Here are my questions:

1. About what % of taxes can I expect to be taken out?

2. Any pros to this? Do I get DR SS at least?

3. I have student loans and other obligations in the US--any crazy way I can still get direct deposits on the US account?

4. Anyone know of a very very good accountant here in the DR?


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windeguy

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Jul 10, 2004
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Can you describe what it is that made them unable to pay you as a 1099 worker?
Also why can a W2 worker not be outside the USA?

Those answers cold be beneficial to others with jobs "in the USA" but they work here.

If they have to pay you directly in the DR for some reason, then you would have to send checks, wire the money or use some other method to fund US based accounts.

There is a family member who is an accountant, but it would be better if you mentioned where you were located, if you speak Spanish fluently, so better recommendations could be made.
 

CarpeDReam

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Feb 17, 2006
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Can you describe what it is that made them unable to pay you as a 1099 worker?
Also why can a W2 worker not be outside the USA?

Those answers cold be beneficial to others with jobs "in the USA" but they work here.

If they have to pay you directly in the DR for some reason, then you would have to send checks, wire the money or use some other method to fund US based accounts.

There is a family member who is an accountant, but it would be better if you mentioned where you were located, if you speak Spanish fluently, so better recommendations could be made.

Thanks Winde,

Here are my answers. I'm quoting...out of respect i'm omitting the company they use for payroll and mentioned. Also note that I used to live in the states and worked for them as a W2:

The first message was:
XXX (payroll company) reviewed the facts around your being a consultant and did some more research, and since your responsibilities are the same as they were when you were an employee, it seems we were not supposed to hire you as a consultant to do the very same work ? according to both NYS law and the law in the DR. So, now we are trying to figure out how to hire you as an employee, and it seems the only option is to find a PEO (like XXX) that can cover you for Worker?s Compensation, etc.

A day later (today) they told me they've found some. But now I have all these other questions. Some they are looking into but others like the banking and the % taxes they wont be able to answer that for me...I guess the PEO company would but not them. I'm also afraid my salary is very high here and I might be put into a diff tax bracket. Do people even declare taxes here?--I doubt I can get any tax returns...??

As per the $99K...I do not meet that threshold but that's something I had looked into already when I was becoming a 1099.

Anyone have a job in the DR?--how much is taken out in taxes?

by the way I speak fluent spanish. Born in the US but to dominican parents. I have dual citizenship and I live in Jarabacoa.

I'm a bit concerned that perhaps this cannot happen; they (my employer) assured me it will be fine but they do not normally do this and don't know the DR. Perhaps it's just me thinking this whole thing was too good to be true anyway. But then I started to think: foreign companies with call centers here are able to pretty much do the same thing so I see no reason why it can't work.

Anyway, any advice or suggestions are welcome.
 

islandhopping

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Nov 11, 2014
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Thanks Winde,

Here are my answers. I'm quoting...out of respect i'm omitting the company they use for payroll and mentioned. Also note that I used to live in the states and worked for them as a W2:

The first message was:
XXX (payroll company) reviewed the facts around your being a consultant and did some more research, and since your responsibilities are the same as they were when you were an employee, it seems we were not supposed to hire you as a consultant to do the very same work ? according to both NYS law and the law in the DR. So, now we are trying to figure out how to hire you as an employee, and it seems the only option is to find a PEO (like XXX) that can cover you for Worker?s Compensation, etc.

A day later (today) they told me they've found some. But now I have all these other questions. Some they are looking into but others like the banking and the % taxes they wont be able to answer that for me...I guess the PEO company would but not them. I'm also afraid my salary is very high here and I might be put into a diff tax bracket. Do people even declare taxes here?--I doubt I can get any tax returns...??

As per the $99K...I do not meet that threshold but that's something I had looked into already when I was becoming a 1099.

Anyone have a job in the DR?--how much is taken out in taxes?

by the way I speak fluent spanish. Born in the US but to dominican parents. I have dual citizenship and I live in Jarabacoa.

I'm a bit concerned that perhaps this cannot happen; they (my employer) assured me it will be fine but they do not normally do this and don't know the DR. Perhaps it's just me thinking this whole thing was too good to be true anyway. But then I started to think: foreign companies with call centers here are able to pretty much do the same thing so I see no reason why it can't work.

Anyway, any advice or suggestions are welcome.

Did your consulting work designate you as an independent contractor? Did you have a state and city business license. Did you consider working for another firm and you be the account manager on the contract for you old job?

Can your old job be reclassified? There is similar issue with retirement in some areas. You can't work the same position and receive a pension for which you retiree from.

I suggest finding advice from a labor attorney to check out some case law on the issue.

Some how military people do it all the time. Retire and work for a company doing the same job or working on the same project from their previous employment.
 

Jaime809

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Aug 23, 2012
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Get yourself set up as a corporation, either LP or LLC. Have the corporation bill them for your services. Thus the company gets the 1099 at the end of the year.

Or find a consulting firm that will bill you to them as 100% pass-through, and will issue you either a 1099 or W2 (preferred).
 

CarpeDReam

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Feb 17, 2006
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Get yourself set up as a corporation, either LP or LLC. Have the corporation bill them for your services. Thus the company gets the 1099 at the end of the year.

Or find a consulting firm that will bill you to them as 100% pass-through, and will issue you either a 1099 or W2 (preferred).

This isn't a bad idea at all; my employer would probably be open to that. However, after looking at bob S's link, I'm thinking that i'd actually end up paying less in taxes if I get paid as a DR employee (capped at 25%) then a US employee even under the 1099 scheme. Then again I'd lose an opportunity to have things like a Roth IRA, etc...

What would you do? just curious. You seen well informed about these things.
 

Jaime809

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Aug 23, 2012
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This isn't a bad idea at all; my employer would probably be open to that. However, after looking at bob S's link, I'm thinking that i'd actually end up paying less in taxes if I get paid as a DR employee (capped at 25%) then a US employee even under the 1099 scheme. Then again I'd lose an opportunity to have things like a Roth IRA, etc...

What would you do? just curious. You seen well informed about these things.

I'm in a similar situation; brought my US job with me to Bavaro, but I'm an employee of a consulting firm and they do the billing. All my important communications are via email, but I can print and scan documents if physical signatures are needed for anything. I xfer my weekly money to myself via Western Union (cheaper than the bank ATM fees and the foreign transaction fees).

If the day comes where I have to incorporate to keep things going, I'll figure out which is the right corp model, and bill my client directly. It'll be a bump of $100k/year, and if I incorporate here in DR I won't pay US taxes at all. I already have an IRA, so I wouldn't shut that down.
 

shorts

Member
Dec 3, 2012
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You state you don't meet the 99k threshold.

Set up an S-Corp in Nevada, Wyoming, some place that doesn't have State income tax. With the S-Corp your federal income tax burden is directly passed down to you, of which the first 99k you're exempt from.

There are services that form Nevada corps for you for less than 200 bucks. Then you have to pay the S-Corp filing (another $75 or 125, can't remember exactly) and you're good to go.
 

windeguy

Platinum
Jul 10, 2004
42,211
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I see the good ideas are coming on this. Hope the OP gets one that works. This is a good thread with some new information I have never seen posted before on DR1.
 

CarpeDReam

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Feb 17, 2006
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I'm in a similar situation; brought my US job with me to Bavaro, but I'm an employee of a consulting firm and they do the billing. All my important communications are via email, but I can print and scan documents if physical signatures are needed for anything. I xfer my weekly money to myself via Western Union (cheaper than the bank ATM fees and the foreign transaction fees).

If the day comes where I have to incorporate to keep things going, I'll figure out which is the right corp model, and bill my client directly. It'll be a bump of $100k/year, and if I incorporate here in DR I won't pay US taxes at all. I already have an IRA, so I wouldn't shut that down.

Thank you for this. Just an FYI in terms of how you bring your dollars here. I did a lot of research and asked a lot of ppl here and indeed the cheapest way to do it is actually to get a good relationship with a casa de cambio and write out checks with your US checkbooks and write it out in US dollars. They don't charge any fees...they make their money in the exchange. My dad has been doing it for 3yrs and I've been doing it since I got here. Works like a charm.


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CarpeDReam

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Feb 17, 2006
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You state you don't meet the 99k threshold.

Set up an S-Corp in Nevada, Wyoming, some place that doesn't have State income tax. With the S-Corp your federal income tax burden is directly passed down to you, of which the first 99k you're exempt from.

There are services that form Nevada corps for you for less than 200 bucks. Then you have to pay the S-Corp filing (another $75 or 125, can't remember exactly) and you're good to go.

Thanks. Great info. I would be paying taxes to the corp and to myself as the corps employee right? I guess now I'm just debating which of these two options would take the least taxes out. If I set myself up as a corp I would be paying taxes twice if I understand correctly but if I let my employer carry out their plans and put me as a DR employee I pay a max of 25%. My salary will always be based in dollars so the risk in an unstable peso is not as big of a concern. In a financial sense would this not make more sense? The only major con I see is that I wouldn't be eligible for US IRAs and things like that...not sure if this reason alone is worth paying more taxes...am I wrong in my assumptions? Am I missing something?


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CarpeDReam

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Feb 17, 2006
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I see the good ideas are coming on this. Hope the OP gets one that works. This is a good thread with some new information I have never seen posted before on DR1.

Thanks winde. Glad this info is helpful to others.


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Jaime809

Bronze
Aug 23, 2012
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Thank you for this. Just an FYI in terms of how you bring your dollars here. I did a lot of research and asked a lot of ppl here and indeed the cheapest way to do it is actually to get a good relationship with a casa de cambio and write out checks with your US checkbooks and write it out in US dollars. They don't charge any fees...they make their money in the exchange. My dad has been doing it for 3yrs and I've been doing it since I got here. Works like a charm.

I thought of doing that, but that releases your routing and account number into the wild. With a single forged authentication, your money can be ACHed out from under you. The bank will get you the money back, but the bounced checks and such in the meantime will be a nightmare. And given how many people live on the edge of literally living on the street, offering some cambio worker to make another copy of checks cashed is too simple.

The risk is small, but the impact is high and it's one that takes little effort for me to manage.
 

Jaime809

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Aug 23, 2012
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The corporation thus formed would not be able to be paid by W2. He says the work he performs no longer fits inthe 1099 category, so your idea is not anything he could use. I ran my business for years with my workers forming Corporations and I'd pay their legal corp. That way I was in the clear even if the person didn't have legal papers to be in the USA.
Der Fish

It might not fit the 1099 category for an individual, but any legal/legitimate services rendered can be paid to a company and reported to the IRS via 1099. Then the company has the relationship with the OP, not the client.
 

wuarhat

I am a out of touch hippie.
Nov 13, 2006
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As per the $99K...I do not meet that threshold but that's something I had looked into already when I was becoming a 1099.

I'd be interested in knowing why you don't qualify for the foreign earned income exemption.
 

CarpeDReam

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Feb 17, 2006
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I'd be interested in knowing why you don't qualify for the foreign earned income exemption.

Sorry, i wasn't clear on that--I meant to say that I make less than $99k so I don't have to worry about that tax either way. So yes, I qualify for the exemption. Good catch on my poor wording.


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wuarhat

I am a out of touch hippie.
Nov 13, 2006
1,378
89
48
You state you don't meet the 99k threshold.

Set up an S-Corp in Nevada, Wyoming, some place that doesn't have State income tax. With the S-Corp your federal income tax burden is directly passed down to you, of which the first 99k you're exempt from.

There are services that form Nevada corps for you for less than 200 bucks. Then you have to pay the S-Corp filing (another $75 or 125, can't remember exactly) and you're good to go.
Thanks. Great info. I would be paying taxes to the corp and to myself as the corps employee right? I guess now I'm just debating which of these two options would take the least taxes out. If I set myself up as a corp I would be paying taxes twice if I understand correctly but if I let my employer carry out their plans and put me as a DR employee I pay a max of 25%. My salary will always be based in dollars so the risk in an unstable peso is not as big of a concern. In a financial sense would this not make more sense? The only major con I see is that I wouldn't be eligible for US IRAs and things like that...not sure if this reason alone is worth paying more taxes...am I wrong in my assumptions? Am I missing something?


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I'd be interested in knowing why you don't qualify for the foreign earned income exemption.
Sorry, i wasn't clear on that--I meant to say that I make less than $99k so I don't have to worry about that tax either way. So yes, I qualify for the exemption. Good catch on my poor wording.


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Get yourself set up as a corporation, either LP or LLC. Have the corporation bill them for your services. Thus the company gets the 1099 at the end of the year.

Or find a consulting firm that will bill you to them as 100% pass-through, and will issue you either a 1099 or W2 (preferred).
This isn't a bad idea at all; my employer would probably be open to that. However, after looking at bob S's link, I'm thinking that i'd actually end up paying less in taxes if I get paid as a DR employee (capped at 25%) then a US employee even under the 1099 scheme. Then again I'd lose an opportunity to have things like a Roth IRA, etc...

What would you do? just curious. You seen well informed about these things.
I'm no tax expert, but I think you should talk to one about the S corporation route. It seems to me that the corporation could bill your employer for your services and then pay you practically everything that's left after expenses. The first $99K +/- of this amount would be exempt from US income taxes (0%) under the Foreign Earned Income Exclusion. Do you still have to pay the full 15.3% FICA tax on foreign earned income as a foreign resident? Even if you did it would be less than the 25% Dominican tax, and possibly more beneficial to you in the long run.