TAX INFORMATION FOR US CITIZENS AND GREEN CARD HOLDERS

The American University of Sharjah was incorporated in the State of Delaware, USA on September 1, 2001.

This means that employees who are US citizens and green card holders are subject to tax withholding for US income tax, Social Security and Medicare. US citizens and Greencard holders are eligible to earn credits in order to receive social security in the future and the university contributes to social security as the Employer.

All US new hires will receive an information pack when they commence their employment at AUS.

This information pack contains:

The Tax Guide for US Citizens and Resident Aliens Abroad: Publication 54, W4, Employees Withholding Certificate Form 673, The Statement for Claiming Benefits Provided by Section 911 of the Internal Revenue Code.

The following additional forms are also included:

Form 2350, Application for Extension of Time to File US Income Tax Return Notice 797, Possible Federal Tax Refund due to the Earned Income Credit (EIC)Form 2555, Foreign Earned income Exclusion

All of these publications and forms as well as others that may be relevant to particular individuals can be downloaded from the IRS web page: http://www.irs.ustreas.gov/prod/index.php

1 Tax Withholding at AUS

AUS has contracted a payroll company in the US to calculate the amount of withholding required and to file tax statements on behalf of AUS. AUS will deduct tax amounts from your salary each month. Your salary will be paid in dirham and transferred to the Sharjah Islamic Bank.

2 Tax Year

The tax year runs from January 1, to December 31. Tax returns are normally filed by April 15, each year for US residents but an automatic extension of time to file is allowed for taxpayers resident overseas on April 15, of any year until June 15. Additional time can be requested by filing form 2350.

3 Specific Information for US citizens who live outside the USA

Publication 54 is an important document for US citizens residing or working overseas. Please read this publication carefully as it is important for you to know what regulations pertain to your specific circumstances. The key regulations which may significantly affect your tax withholding are those pertaining to the Foreign Earned Income and the Housing Exclusion and Deduction.

Note that for 2002, the Foreign Earned Income Exclusion cap is $80,000.

If you meet the requirements of either the Bona Fide Residence or Physical Presence Test, you will qualify for an exclusion for certain foreign earned income. You must complete Form 673 and return to Lavina Hould ext 2230 at HRSD so that withholding amounts can be correctly calculated. Specific instructions on when and where to file are given on the form.

4 FICA Tax and Medicare Withholding

This will be made as a regular deduction from your earned income. The university is required to withhold the mandated amounts. The current deductions are 6.2 percent for FICA (subject to a maximum cap of $84,900), and 1.45 percent for Medicare with no income cap.

No foreign earned income exclusion affects these withholdings.

5 Earned Income Credit

In certain instances you may be eligible for Earned Income Credit. Information for this may be found in Notice 797. Please follow the instructions in this notice to assess any entitlement.

Note that if you claim the foreign earned income or foreign housing exclusion, you will not qualify for earned income credit for the year.

6 What You are Required to do When You Join

Return the following forms to Lavina Hould or Paula Doyle in Human Resource Services Department.
Form W4 - the tax withholding form
Form 673 if applicable
Produce your Social Security Card as we are required to make a copy for your tax file. If you do not have your Social Security card with you, please show us a document which contains your Social Security number.
Notify us if you think you may be entitled to Earned Income Credit

7 Tax Help

If you have any questions on the process, please contact Lavina Hould on extension: 2230, or Paula Doyle on extension 2182.

Human Resource Services Department will issue further notices to you concerning tax withholding as necessary.

If you have any questions about your specific tax circumstances, you should consult tax specialists or obtain legal advice. A list of tax consultants in the UAE can be obtained from Human Resource Services Department. Please note that this is an informational list only and is not a recommendation by AUS to use these tax consultants.

Note: AUS will commence tax withholding on the basis of the information you
provide. If this information changes, you must inform Human Resource Services Department immediately as this may affect your withholding obligations.