cruise ship employee taxes

Do Cruise Ship Crew Pay Taxes?

You’re on the other side of the world, sailing in international waters, and so far from home you don’t even know which way around the world would be faster to fly to get there. You’re still working though and most places in the world income tax income. So, how does that work? Do cruise ship crew pay taxes?

There are so many questions floating around about cruise ship crew and a big one seems to be about whether or not cruise ship crew have to pay income taxes. Let’s talk about that.

First Off – Big Disclosure: I am not a lawyer, solicitor, tax advisor, or accountant. The information that follows is for general information purposes only. This information is based off of my experience, those experiences of people I know, and research. You should always ensure that you are paying the proper taxes for your home country/state/district. If you are unsure whether taxes are taken out of your pay talk to the cruise company you work, if you are unsure about how to go about paying/filing your taxes in your home country, speak to a licensed accountant.

Do Cruise Ship Crew Pay Taxes on their Wages?

Why yes, of course…

Actually, it’s more complicated than that (isn’t everything?). Cruise ships have crew members from all around the world. On any given cruise ship you will likely find crew members from 40+ countries. That’s not an exaggeration either, on the bigger ships you are likely to find even more than that. Keeping track of the tax requirements for employees from 40+ countries (just on one ship) would be incredibly challenging.

Just like in the rest of society, people are responsible for making sure they have paid their required taxes. While cruise ships are part of giant corporations, the crew members, those people working so hard to ensure that passengers have a great vacation – aren’t any different than people living in regular society. At the end of the day each crew member is responsible for making sure that they pay the appropriate taxes for their country/state/district.

Still though, it’s not quite as simple as that.

Do Cruise Lines Take Any Taxes Out Of Your Paycheck?

That answer is different depending on which cruise line you work for, where you are from, and even what contract type you have. Do cruise ship employees pay taxes? It’s about as complicated as Avril Lavigne was in the early 2000’s.

There Are Different Types of Contracts

Did you know that cruise ship employees aren’t always hired by the cruise line? There are a few different types of contracts out there. Primarily there are contracts where you are hired directly from the cruise line and those where you are hired through a recruitment agency or brand partner of some sort. Whether or not taxes get directly taken out isn’t entirely dependent on what contract type your on, but it can play a role in it. What country you are from can also play a role both in your contract type and in whether or not taxes are taken out. Confused yet?

If You’re From the US Working for a US Cruise Line

A lot of questions about whether or not cruise ship employees pay taxes come from people from the United States. I can’t speak for all cruise lines, but I worked for a cruise line that was a part of one of the biggest cruise corporations in the world. The company had headquarters in the United States and I am a US citizen. I was also hired directly by the cruise line and not a recruitment agency or brand partner.

In the United States when you file taxes you have to file a federal tax return and a state tax return (for most states, a few states do not have income taxes). When working for the cruise line they would withhold any federal taxes that I owed but not any state taxes. So, out of each paycheck there would be the typical federal deductions – including things like social security, but, there would be no state tax taken out.

As I am from Vermont – a state that taxes income – and the cruise line did not take any money out of my paycheck for state taxes, I am still responsible for paying my fair share as a Vermont resident. While working on the ship if I had moved and become a legal resident in a state that didn’t tax income I wouldn’t have owed additional money, but that wasn’t the case in my particular situation. At the end of the year I would get my W-2 from the cruise line and when I filed my taxes I would owe money to the state of Vermont.

So, while in this instance the cruise line is taking out some taxes from my paycheck, as with all crew members, as with all adults, I am still responsible for making sure I have paid my required taxes.

If You’re Not From the Same Country Your Company Is And You’re Hired Directly By Them

There is no one size fits all for how cruise ship workers pay their taxes. Most of the time if you are working onboard, are hired directly by the company, but aren’t from the same country that your company is headquartered out of you will have to handle paying all of your taxes and they will not withhold any towards your taxes.

This is not always strictly the case though as if your company has another branch or headquarters in another country you may be hired by that branch (still directly through the cruise line, but the side of the company that is the same country as you). In that case most likely they will withhold tax on each paycheck.

Most of the time though nothing will be withheld from your paycheck towards taxes though. At the end of each pay period you would be issued a pay-stub (of sorts, it may be a full page print out) detailing your earnings. You would then use this information when you file/report your income for the purpose of taxes with your government.

Important to Note: Many crew members are paid through direct deposit (the money is transferred directly into their bank account). There are some positions and contract types that are paid in cash. Yes, you read that correctly – they are paid in cold hard cash. Most people in these positions will find places like Western Union ashore to then transfer the money home. Bank Cards : In recent years cruise companies have partnered with various banks to have bank cards ( Brightwell is currently a popular choice) issued to crew members that their pay is loaded onto.

What If You’re On One of Those Other Contract Types?

All those other contract types – well, let’s say 99/100 times – you will not have any taxes withheld from your paycheck. So do cruise ship workers pay taxes? Each crew member is responsible for paying the taxes in their own country.

Interestingly, you can have people doing the same job that are on different contract types. One may have been hired through a recruitment agency (and from a country where the cruise line uses that recruitment agency), whereas another may have been hired directly through the cruise line (and most likely not from a country that has an agreement with a recruitment agency).

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Does The Cruise Line Enforce Crew to Pay Their Taxes?

Not anymore than any other corporation enforces their employees to pay taxes. If you hire a contractor, say they are going to replace the roof on your house. You are employing them – they’re offering a service that you’re paying for – do you then make sure they file their taxes? No, you trust that they will pay the necessary taxes.

Crew members are kind of like the contractor fixing your roof. They do a job, the cruise line pays them for it, then the cruise ship workers pay the taxes on it. As members of society in general we assume that if people don’t pay their taxes then their respective governments will handle it. This is pretty much how it is for cruise line employees.

But, I’ve Heard About Crew Saying They Don’t Have to Pay Income Taxes So Is Working on a Cruise Ship Tax Free?

There are some countries where if you are outside of the country for more than half of the year you are not required to pay tax on your income.

Most people that work on cruise ships are away from their home country for half the year. For many that is literally one contract.

There are also some countries that don’t tax any income earned outside of the country (any foreign income).

Let’s strongly clarify something though:

Do you pay tax working on a cruise ship? You are responsible to file your taxes. Even if you live in a place that doesn’t require you to pay income tax if you are out of the country for a certain amount of time each year, and even if you are out of the country for more than that amount of time each year – even if you are from a country that doesn’t require you to pay tax on any foreign earned income –

You are still liable and responsible to properly report and file your taxes with your government.

You don’t get to determine that you aren’t required to pay your taxes, it’s the government that determines that when you file your taxes. If you don’t have to pay income taxes that particular year it really means that when you file your taxes the government says, “nope, you’re good, you aren’t required to pay X,Y, or Z”.

When this happens you get excited – thank the accountant you’re working with for filing everything correctly – and maybe enjoy an extra pint at the pub.

Want a bit more info on cruise ship pay? Check out this article from cruiseshipjobs.com .

Do Cruise Ship Crew Pay Income Taxes?

Yes, but it mostly depends on where you are from. Whether it is withheld out of their paycheck depends on where they are from; whether cruise ship workers have to pay taxes on their income earned while at sea depends on where they are from.

And, just like adults around the rest of the world – they’re responsible for filing their taxes and if what they owe hasn’t been withheld throughout the year then they’re responsible for paying.

Can You Work On a Cruise Ship With a Child?

Wondering about working on a cruise ship with a kid ? Here’s a run down of how that works.

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Cruise Ship Salary, Wages, Banking & Savings

Each crew member has an employment contract that specifies their salary, but how do you really get paid when you work on board a cruise ship? What are the taxes and deductions for cruise ship crew? How do you get your salary from the ship to your bank account and is it possible to save money while working on a cruise ship? Here are some answers.

Cruise Ship Employee Contract and Agreements

Each crew member must sign an employment agreement or an employment contract before starting each contract. They may do this before they leave home or once onboard their ship. The contract lists the crewmember’s position, the length of the employment agreement and how much they will be paid.

The employee’s employment contract also states the expected hours that will be worked. For example an employment agreement may state that you can expect to work an average of 11 hours per day, seven days per week. Alternatively, the contract may state that the employee may work up to 70 hours per week, seven days per week.

Some contracts may pay overtime. In the case of Royal Caribbean, their Getting Onboard Employee Handbook states, “You may be required to work more than 70 hours per week, or overtime. If so, non-management employees will be paid for the overtime hours worked.” Check with your recruiter if overtime is paid and at what number of hours is considered overtime.

Cruise Ship Jobs Salary

Not all employees that work in the same department and in the same position make the same salary. Each employment contract is different depending on crewmember’s nationality. For example, a youth counsellor from the Philippines makes less than a youth counsellor from Canada. This also explains why some cruise lines hire a limited amount of counsellors from North America. Each employee must sign their employment agreement, agreeing to the specified salary.

How Are Tips Paid?

Cruise lines generally do not make any promises as to how much tips or gratuities will actually be paid. Some all-inclusive cruise lines (where tips are included on cruise fare for passenger) pay a higher wage for cabin stewards and waiters because there is no tip pool. Alternatively, many cruise lines pay a lower wage because passengers do pay tips.

Generally speaking, during each cruise on each ship, passengers pay gratuities which go into a “pool” that is divided between the crewmembers that are part of the hotel and dining pool. For many cruise lines, the gratuities are automatically deducted from the passenger’s onboard account to be paid out to the crew at the end of the month.

Taxes on Cruise Ship Employment Income

Crew members are responsible for any taxes due to their country of origin. Only United States citizens or employees that reside in the USA will have US federal taxes deducted from their pay. Depending on your employment contract and the country where you are a citizen will determine how you are paid onboard also.

Some countries do not require their citizens to pay taxes on employment income if they are a seafarer. On the other hand if you are a citizen of a country that requires you to report your worldwide income on your tax return, you may have to pay taxes when you file your tax return at the end of the year. The bottom line is that taxes will not be deducted from your payroll, but some nationalities will be responsible to remit taxes at the end of the year.

Seafarers need to educate themselves about their own countries tax rules. Here two useful links:

UK’s HR Revenue and Customs Website- Seafarer’s Earnings Deduction and Nationa l Insurance for Mariners
Canadian Seafarers – Canadian Seafarer Blog and Canadian Seafarer and Taxes

How Cruise Ship Crew Members Get Paid

Crew members are paid on a monthly basis at the end of each month. Depending on your nationality and what you have organized with your hiring partner or human resource recruiter will determine what currency you will be paid in, if you will be paid in cash, or if you will be paid by direct deposit.

If the crew member starts their contract halfway through the month they may have to wait until the end of the next full month to be paid. This depends on the cruise line you work for and your employment agreement.

Many cruise lines have a direct deposit option for their employees working on cruise ships. This is typically set up before the crewmember even leaves home. Crew members may also choose to wire transfer money to their land-based bank account for a fee. Make sure to bring a void check and a bank statement that shows the bank account number and the name on the account. Alternatively, crew members can obtain a crew safety deposit box onboard some cruise ships to keep their money secure.

Be aware of how much cash you want to travel with on your way home. Most countries make you declare how much currency you have in your possession. Plus, you may not to want to make any large one lump sum once you get to your home bank. Most banks must report single deposits in excess of $10,000.

The Crew Office

The Crew Office on a cruise ship is managed by the Crew Purser or Crew Administrator. This office looks after the crew payroll including the payment of gratuities. They also collect crew expenses (ie. bar bills) at the end of each month. While working onboard, the crew office is your link to head office and all correspondence about payroll issues need to be sent through the crew office.

How to Save Money Working on a Cruise Ship

The best way to save money is to not have the cash on board. By either direct deposit or wiring your money home, having no access to the cash virtually eliminates the temptation to spend it. You have very few expenses working onboard since your normal monthly expenses (like rent, food, etc.) are covered or inexpensive. If you want to end your contract with a large amount of savings, you’ll need to learn to resist shopping in the ports and in the shops on board.

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Onboard Employment FAQ

Are you interested in joining the thousands of worldwide employees who are proud to be part of the Princess Cruises family? We are committed to being an employer of choice and understand that our Consummate Hosts need to be supported, empowered, and recognized.

We also understand that working at sea can be a challenging new opportunity. Here are answers to some essential questions you might have when considering cruise ship employment.

What are the requirements to work onboard?

What is a C1/D visa?

How do i get a medical certificate, which ship will i be assigned to, how do i get to and from the ship i am assigned to, do i need travel insurance, how long will i be onboard, can i get off and go home during the contract, will i have my own room, what is the power voltage in my cabin, can i drink alcohol onboard, is there a drug policy, is there a curfew, can i bring a family member or friend onboard, will i have access to guest areas and amenities during my time off, once onboard, how do i stay in touch with my friends and family back home, can i have mail delivered to the ship, is there an atm onboard to use, will i have to pay taxes, can i send money home from onboard, how do i pay for items onboard, how do i do laundry, what if i miss the ship in port, what happens if i get sick while working onboard, can i visit the ports while working onboard, how do i apply to work onboard, what are the requirements for onboard employment.

While specific position requirements depend on the job you are interested in, there are some essential requirements that all crew must meet to work onboard:

Be 21 years of age or older
Be able to pass a criminal background check
Hold a valid passport
Have a US C1/D visa (if you are not a Canadian or US citizen/resident)
Have a Princess-specific pre-employment medical exam certificate
Meet the English fluency requirements relevant to your position

Also known as a seaman's visa, some nationalities need this to work onboard a ship and travel to certain countries. This visa normally lasts between two and five years. You will be required to make an appointment at your nearest US Embassy to gain this visa; all paperwork for the appointment will be supplied by your manning agency.

This extensive examination is at the employee's expense and can be conducted through one of Princess's recommended medical facilities—you'll be advised which one is closest to you. Once this is completed and approved by our corporate Medical department, you are cleared to travel and work onboard.

Shipboard employees are scheduled to vessels based on operational need. This means you could be assigned to any one of our vessels in the fleet depending on where a position is open at the time you are travel-ready. After your first assignment, we will be able to provide details about the next assignment after your leave period.

At the beginning of each contract Princess Cruises will provide flights from your designated airport to your assigned ship. At the completion of your contract, Princess will arrange for your travel back home as well. It is your responsibility to get to the airport from your home, but from there we will provide any necessary accommodations and/or transportation to and from the ship.

While you are covered medically in Los Angeles and onboard the vessel, we suggest you purchase basic travel insurance to cover the cost of lost luggage or injuries that could result from shoreside activities.

Contract lengths vary by position but range between four and ten months. After each contract you will receive approximately 60 days of vacation before your next assignment. Your daily work schedule while onboard will depend on your particular position, but you can expect to work seven days a week and anywhere between 10-13 hours per day.

Time off during the contract is not permitted. In case of family emergencies, Princess Cruises does understand that additional time at home may be needed and does accommodate these requests on a case-by-case basis.

Accommodations vary depending on the ship and position. Those in non-management positions generally share a cabin with one to three other roommates whereas those in most management positions are entitled to a single cabin. Cabins include a storage space, TV, and DVD player.

All vessels have 120v US power and some vessels also have 220v European power.

Yes, alcohol is available for purchase during time off. However, Princess Cruises has a strict alcohol limit and at no time can a crew member be intoxicated.

Princess has a zero-tolerance drug policy. All crew are subject to random and reasonable-suspicion drug testing. Violation of these policies will result in termination.

There is no set curfew. However, crew who are out late should be respectful of other crew members and guests nearby.

Crew members who meet specific length-of-service criteria have the option of requesting "relatives travel," a benefit that allows family members to sail onboard for a limited period of time. Some restrictions may apply.

While some officer-level positions do allow restricted access to guest areas, most facilities are for guests only. However, we have a variety of crew-only facilities, such as a crew pool, whirlpool, gym, bar, and Crew Club, which is a communal room where you can gather to watch movies, play games, sing karaoke, and much more!

Postal mail services are available while onboard. You will also have access to computers in the crew training areas. Wi-fi Internet is also available in the crew areas if you choose to bring your own laptop or tablet. Princess offers discounted rates for phone and Internet cards so you can stay in touch with those at home. But remember that satellite capabilities are sometimes limited while the ship is at sea.

You will be provided with mailing addresses for ports where mail can best be delivered.

There is an ATM in the guest areas; an ATM charge will apply. You can also cash checks in the Crew Office onboard to get cash.

US citizens will have federal taxes automatically deducted and may be required to pay state taxes, if applicable. All other nationalities are responsible for filing their own tax forms upon returning to their home countries (as they are self-employed).

You can wire money via the Crew Purser's office. Details are available onboard and rates may vary.

You will be provided with a bar account number, which is your personal number for the duration of your contract onboard each ship. As the entire vessel is cashless, even for guests, you will provide your account number at the bars, salon, and shops in guest areas. In the Crew Bar you can purchase a CrewCard and add money onto it for purchases. At the end of every month you will be required to settle your account.

There are crew laundry facilities where the washers and dryers are free of charge—you just provide the soap. You can also use the dry cleaning onboard, but there is a nominal cost.

Crew members who miss the ship should contact the ship's Agent who will be at the port (the address and phone number are always in the Princess Patter, a daily newsletter for our guests). The Port Agent will arrange transportation to the ship's next port of call. However, it is the responsibility of crew to pay these transportation costs. Crew may be disciplined for the offense and could be terminated. Depending on the port all crew members are required to be back onboard half an hour to an hour prior to sailing time.

While onboard, all crew are medically covered and can visit the Medical Clinic for health concerns. If you need to be medically disembarked during your contract, Princess will provide transportation to a land-based medical facility and repatriate you back home.

If you are not scheduled to work during the time the ship is in port, you can disembark the ship with your supervisor’s approval. Occasionally, there are crew-specific activities or tours to participate in.

Safety requirements dictate that a certain number of crew members be present on each vessel at all times. As such, there may occasionally be times when, although not scheduled to work, you will be required to remain onboard while the ship is in port.

Princess Cruises recruits globally through authorized hiring partners. Find a hiring partner located near you.

Once you contact the authorized hiring partner, you can get answers to questions regarding the application process and which positions are currently open in your region.

Impartial training and careers advice

Call us: +441983 280 641

+441983 280 641

Is working on a cruise ship tax free?

Have you recently finished school and are unsure what step to take next? Or perhaps you are about to graduate and are looking for a varied and exciting career?

Or maybe you just feel like you’re in the wrong job and are after a change. Whatever your reason for considering working on a cruise ship, you’ve probably got a number of questions buzzing in your brain, from where to begin your job search to what type of positions are available and even if you need to pay tax when you work on the ocean.

Well, if you’ve got questions, we’ve got the answers – so read on to discover our answers to your ultimate financial questions about life on board a cruise ship.

Is working on a cruise ship right for me?

First things first, you might be wondering whether or not working on a cruise ship is right for you. Well, if you want to travel to amazing places, meet awesome people, and get paid for doing so, then working on a cruise ship could be perfect for you.

Working on a cruise ship is great fun, and it also provides the opportunity to pick up a whole host of transferable skills for your future. Plus, with so many different types of jobs available on board, whatever you’re interested in, you’re sure to find a role that works for you. But what about tax?

Your questions about tax whilst working on a cruise ship answered

So, do I have to pay tax?

“ Do you pay tax when working at sea ?” is one of the questions we are asked the most here at Flying Fish. And we’re happy to say that as a general rule of thumb, the answer is, no. When you work onboard a ship, you are actually exempt from paying UK income tax, as long as you meet the qualifying criteria and fill in your tax return correctly!

When you work as a seafarer, you are paid without any tax or national insurance being deducted. This is because cruise ships and other vessels employ their crew from all over the world, so it is up to each individual seafarer to declare their income to their country.

So, whilst you most likely won’t have to pay any tax due to a legislation known as the Seafarers’ Earning Deduction (more on that below!), HMRC will still expect you to declare your income by completing a seafarers’ self-assessment tax return .

What is a seafarers’ self-assessment tax return?

When you work on board a cruise ship – or any other vessel – you will be classed as a seafarer and will need to complete a seafarers’ tax return in order to declare your income to HMRC so they can calculate the amount of tax you owe (if any!).

Although the Seafarers’ Earning Deduction means your earnings will most likely be exempt from income tax, you must still complete your tax return if you’re going to avoid any nasty penalties. Discover how to complete your tax return in this helpful blog .

Am I eligible for SED if I work on a cruise ship?

If you work on board a cruise ship, are employed by the vessel, and are a resident of the UK, you may not need to pay tax on your earnings.

The three basic rules to qualify for SED are that you must have spent more than 183 days outside of the UK during a 365-day period, your qualifying period has at least one voyage that begins and ends at a foreign port, and that you are employed to work on a ship. You won’t qualify for the deduction if you are a Crown employee (for example, a Royal Navy sailor), not a UK resident, or if you are self-employed.

Find out everything you need to know about the Seafarers’ Earning Deduction and how to claim it in this ultimate guide to SED .

What do I need to apply for SED?

In order to complete your seafarers’ self-assessment tax return and apply for SED, you’ll need to submit the following records to HMRC:

Photocopy from your discharge book
If not shown in your discharge book, proof of a foreign port
Boarding cards if you flew out to join your vessel earlier than the date shown in your discharge book, the same with returning back to the UK
Details of any courses or holidays abroad, such as flight tickets, boarding cards, accommodation receipts, or visa/credit cards receipts
P60/P45 from any PAYE employment during the tax year
Wage slips or bank statements showing the gross amounts received
Employment contract

How can Flying Fish help with my tax?

If you’re worried about completing your seafarers tax return or are confused with all the information out there, we can take the weight off your shoulders. The Flying Fish seafarers’ tax service is available for just £210, and we’ll complete and file your tax return for you – so you can enjoy your career at sea, completely stress free!

Get ready to sail away into the sunset with Flying Fish

We hope that answers all your questions on paying tax when you work on a cruise ship!

In addition to tax advice, here at Flying Fish we also offer a range of specialist courses to help you set sail into your dream job.

The SCTW Basic Safety Training Course is a requirement for all crew who want to work at sea on all commercial vessels, including cruise ships, ferries, and Superyachts – so be sure to sign up for our six-day training course and kick-start your cruise ship career here .

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Cruise News

Fact Check: Do Cruise Lines Pay US Taxes?

Ashley Kosciolek

June 15, 2020

As many states prepare to reopen after three months of self-isolation and social distancing, cruisers are finding the travel itch a bit difficult to scratch.

Whether or not cruise lines will return to service this summer is still up in the air, but as the mainstream media’s cruise line finger-pointing dies down, we’d like to continue dispelling some of the wild misreporting that’s been happening since February.

This second installment of Cruise Radio’s “Fact Check” series will address whether cruise lines — which largely source customers from North America — do, in fact, pay taxes in the United States and, if so, how much and to whom.

Do Cruise Lines Pay Taxes in the U.S.?

The short answer is yes, but there’s a bit more to it. Provisions under the U.S. Internal Revenue Code allow foreign corporations — like cruise lines — to do business in America without being taxed federally, as long as they are registered in countries that have reciprocal agreements with the U.S.

A big misunderstanding is the manner in which international shipping is handled under the tax code is not a “tax shelter.” It is how international shipping – long before there was a cruise industry – has been taxed. It is memorialized in numerous treaties that the U.S. has with other countries. Countries have not been able to find an equitable way to tax shipping that traverses international boundaries constantly.

READ MORE: How Much Are Port Fees and Taxes?

So to put it simply, the agreement is, “You don’t tax our ships and we won’t tax yours.”

It’s a mutual policy that equally benefits U.S. corporations that are, in return, able to do business internationally without being taxed in those countries.

Carnival Corp. — which operates Carnival Cruise Line, Princess Cruises, Holland America Line, Costa Cruises, Cunard Line and Seabourn Cruises — is registered in Panama; Royal Caribbean Cruises, Ltd. — operating Royal Caribbean International, Celebrity Cruises, Azamara Cruises and Silversea Cruises — is registered in Liberia; and Norwegian Cruise Line Holdings — which comprises Norwegian Cruise Line, Regent Seven Seas Cruises and Oceania Cruises — is registered in Bermuda.

A representative from Carnival Corp. told Cruise Radio that, in addition to the taxes it paid to the U.S. Federal Government in 2019, the corporation shelled out an additional $600 million in port taxes and fees directly to port cities in the United States.

According to the Internal Revenue Service (IRS), Panama, Liberia and Bermuda are all countries that have reciprocal tax agreements with the U.S. , so none of the aforementioned cruise lines pay federal taxes in the U.S.

However, they do pay docking fees to the U.S. ports they visit. They also pay per-passenger head taxes that range from about $5 to $15 per person in certain ports; on a midsize ship carrying 3,000 passengers, that amounts to between $15,000 and $45,000 per port call.

Further, cruise lines are subject to state income taxes, as well as various other taxes, such as a 33% tax on all gambling revenue generated while in Alaska waters.

Additionally, more than 420,000 U.S.-based employees or people associated with cruise industry pay federal and state income taxes.

How much do cruise lines pay in taxes?

In 2019, Carnival Corp. paid $71 million in taxes on $3.06 billion in income. In the same year, Royal Caribbean Cruises, Ltd. paid $25.5 million in taxes on $1.8 billion in income , and Norwegian Cruise Line Holdings paid $18.9 million in taxes on more than $911 million in income.

That works out to a tax rate of 2.32% for Carnival Corp., 1.4% for Royal Caribbean Cruises, Ltd . and 2.07% for Norwegian Cruise Line Holdings.

According to PricewaterhouseCoopers , the federal tax rate for foreign corporations that are not tax-exempt is 21%; when combined with state and local taxes, that rate goes up to 25.75% for non-tax-exempt foreign corporations.

Did cruise lines ask for a bailout from the U.S. Federal Government?

No. Despite many media outlets’ gleeful announcements that the cruise industry was excluded from U.S. bailouts, what they haven’t mentioned is that the cruise lines never asked to be included in the first place.

According to the Cruise Lines International Association (CLIA), the organization that collectively represents passenger cruise lines, the lines and their parent companies did not request federal assistance.

Although all three of the major cruise line parent companies were able to secure enough non-government funding to sustain themselves for the short term, they all imposed some variation of layoffs, furloughs and/or salary cuts on their employees .

It’s also important to recognize that cruise lines aren’t the only ones benefitting from U.S. tax law loopholes.

Many profitable Fortune 500 companies — including International Business Machines (IBM), Amazon, Molson Coors, Netflix, Apple and even General Motors, which did receive a government bailout in 2008 — also avoid paying federal taxes, according to a 2019 report by the Institute on Taxation and Economic Policy (ITEP).

Want more cruise line fact-checking?

Take a peek at our first installment, which addresses cleanliness standards on cruise ships , and stay tuned to Cruise Radio for additional coverage.

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Crew Compensation: What to Know for Your U.S. Taxes

This tax advice is not intended, and cannot be used, to avoid any penalties as a result of taking any position from this column. Thomas Andrews is a CPA and a principal of AvMar Accounting Services. +1 954 764 0404; www.avmaraccounting.com

As a crewmember on a foreign-flagged vessel, you are probably being paid in one of three ways:

You’re issued a W-2 with taxes withheld.
You’re working as a “contractor” and receive a 1099 at the end of the year.
The employer is simply depositing funds to your bank account without providing a W-2 or 1099.

The purpose of this column is not to opine on the proper payroll procedures of your employer and whether or not the employer is compliant with United States payroll tax law. Compliance is a discussion between your employer and their attorney/accountant. It’s important to stress just how important it is for the taxpayer to understand their relationship with the vessel.

It’s important to stress just how important it is for the taxpayer to understand their relationship with the vessel.

You should be asking yourself if you are an employee or contractor — the difference between the two will affect how much tax you ultimately owe. In most cases, your crew contract will clarify the nature of your services as employee or contractor. However, there are instances in which the contract is vague or you don’t have a contract. If it’s unclear whether you’re an employee or contractor, you may refer to www.irs.gov for guidance on the criteria that the IRS uses to make this determination.

Another layer to crew compensation occurs when you’re a crewmember of a foreign-flagged vessel employed by a foreign entity. Under these circumstances, you MIGHT not be required to pay Social Security and Medicare taxes. The exemption from Social Security tax is attributed to a section of the Internal Revenue Code that addresses American crew of foreign-flagged vessels. The dilemma occurs when you’re trying to prove your status, as you will want to be able to provide documentation supporting your claims.

Assuming that you have properly filed your tax returns, there are situations in which you must prove that you were in fact a crewmember of a foreign-flagged vessel. These situations include, but are not limited to, an IRS audit, state employment tax audit, or income verification as part of a home loan. If you’re ever faced with having to prove you were crew on a foreign-flagged vessel it will probably occur after you have left the employment of that vessel. Trying to track down documents after you have left a vessel can be difficult and should be acquired prior to leaving the vessel. These documents include but are not limited to the following: Vessel Certificate of Registry, crew manifest on vessel letterhead, and a letter from the employer confirming status as a crewmember of a foreign-flagged vessel.

Employment in the yachting industry is not a traditional career. Sometimes outsiders will not understand the differences between this industry and mainstream employment, which makes having supporting documentation all the more important when dealing with individuals who are tasked with understanding the nature of your employment.

This article originally ran in the October 2020 issue of Dockwalk.

Cruise Line Employee Pay, Benefits, and other Compensation

Pay is a big factor for cruise ship employees. If you’ve found yourself wondering how much you can earn and how much you can save while working on a cruise ship, you’re not alone. Here we discuss in greater detail some of the earning potential and pay-related issues that cruise ship employees commonly ask about.

Crew Member Sarah Poses before Reboarding Cruise Ship

The pay you can earn by working on a cruise ship is largely determined by your position. There are, however, a number of other factors that can contribute to your earnings. The size of the ship, the type of ship, the clientele, the cruise liner, tips earned and your job experience will all affect your earning potential. How much you earn will also depend on whether or not your pay is salary or commission-based. Each of these factors should be taken into account when trying to forecast the money you can earn or save by working in the cruise industry.

As a paid cruise ship employee you will have to pay all the income taxes you would normally pay working at a land-based job. Keep in mind though, that there are some big differences to land-based jobs. For example, in most cases, on a cruise ship, your cabin is free. Additionally, for the duration of your contract you will likely have no grocery bills, and in many cases, uniforms are provided by the cruise line. Some companies will even pay laundry expenses. This means that it is possible to bank nearly all your earnings, especially if you don’t have too many land-based expenses.

“I would have saved virtually everything, but I had a lot of shore -based bills, like a car and student loan payments. Before you go, definitely get rid of expenses you don’t need while on board, like car and rent payments. Practically everything was paid for, we really didn’t have any living worries at all. No cooking, no laundry, and our rooms were cleaned for us every day; we even got free dry-cleaning. We did have to pay our room steward ten dollars per week, and that was pretty much it. Of course, alcohol and restaurant stuff is really expensive on the ship. For instance, a beer cost almost four bucks, so if you go over your bar allowance (which I always did), it can cost you a lot.”

A gift shop employee offers this insight:

“I managed to save some money during my six-month contract since I had no expenses and my commissions [tips] started adding up. I could have saved a lot more, though, if I hadn’t done so much shopping in the different ports of call that I went to. Unfortunately, we visited Hawaii right before the end of my contract, and I really spent a lot of money there. I knew someone who worked in a gift shop on a ship and came back after ten months with $12,000 in the bank, but most people don’t make close to this much. Commissions varied a lot, and the most I ever got was $800 a month. A lot of it depends on what kind of passengers you have. Our line was kind of a budget one that offered lower prices. We jokingly called it ‘K-Mart Cruises.’ The passengers tended to be cheap, but that’s not true on all lines. Some of them are really upscale.”

It is true that compensation can vary greatly from cruise line to cruise line. However, on large lines, staff and entry-level positions such as aerobics instructors, youth counselors, junior purser , disc jockeys, and hosts, will receive an industry-standard wage around $1,200-$1,500 per month. Casino workers, waiters, and bartenders depend heavily on tips, which can sometimes double salaries.

Positions such as these tend to be in high demand because of the increased earning potential, and not surprisingly, are harder to procure.

Raises are relatively rare for people who remain the cruise staff, although wages will increase with experience on some ships. Wages increase dramatically when a staff member takes on a new position like that of a cruise director or assistant cruise director. In positions like these, cruise ship employees can make as much as $4,500 a month. Keep in mind though, that these positions are very competitive. One of the top-earning positions onboard is that of a cruise director, a position that can command as much as $80,000 per year! Although, the average cruise ship director salary is $50,000 annually. Of course, competition for these positions can be fierce, with many qualified applicants competing for only two or three positions per ship.

Luxury Cruise Ship off of St. Thomas, VI Photo

So what can you expect to make? The majority of positions are based on an hourly wage and most employment opportunities on a cruise ship earn $1,200-$1,500 a month. There are though, a large number of positions that can make as much as $2,500 a month equating to $13 an hour. Because work weeks on a cruise ship are typically longer than your typical work week, a cruise ship employee can expect to work over 45 hours in a week on average. Some cruise ship employees will work closer to 60. While this may seem long and arduous, the earning potential of all those hours worked is an excellent payoff.

Again, earnings will vary depending on the cruise line you are contracted with, but in general, you can expect to at least secure a comfortable existence while on board, and have money in your pocket when you depart. Most cruise ship employees do.

Almost every cruise line offers a cruise discount for employees who have been with the company for over a year. Taking your family on a cruise for as little as $15 a day can add up to thousands of dollars in saved vacation expenses, and give your family the chance to see places they might not be able to otherwise experience. While you probably won’t become a million by going to sea , it is possible to enrich your life with a healthy sum of money, and, perhaps more importantly, fond memories.

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Tax Free Income

Connie Motz
26 September 2010

The allure of the tax free income offered by cruise line employment is almost too much for job seekers to resist. But before you get too excited, it might 'pay' to conduct a little research into your country of residence and any maritime laws that may apply in regards to income.

In most cases, it's the responsibility of the individual worker to report any monies earned as income to their respective governments as declared by law. But in many cases, when a cruise ship employee works outside of his or her own country onboard a vessel where the employment contract is six months or more in duration, any income earned by that employee is not taxable by their country of origin.

Here are some examples of tax free income laws:

If you are an Australian citizen, you are required by law to pay tax on any foreign income earned. The Australian Government does provide an Exempt Foreign Employment Income policy (23AG), however, strict conditions apply regarding the type of employment and the policy does not generally apply to cruise line employment.

Canadian citizens are required to report all of their income regardless of the country of origin of that income and are expected to pay income tax accordingly. Technically, there is an Overseas Employment Tax Credit (IT-497R4) available, however, this tax credit only applies if the employee is working for a Canadian company overseas and within certain industries specified.

United Kingdom

When a person receives an income above the provided personal allowance, and is a resident of the UK or is based in the country for tax purposes, he or she is required to pay tax regardless of whether a part of that work is carried out abroad or overseas, such as the case of cruise ship employees.

Read more about UK Income Tax for employees on-board cruise ships .

United States of America

All U.S. citizens working for a U.S. based cruise line such as Norwegian Cruise Lines or Carnival Cruise Lines, will automatically have income tax deducted from their paychecks as per federal and state laws. Depending on individual circumstances, regulations within the Internal Revenue Service (IRS) Foreign Earned Income and Housing Exclusions/Deductions (Publication 54) may apply.

If you're concerned about whether or not you'll be able to earn tax free income while working onboard a cruise ship and since laws can be confusing, it's best to consult a professional certified accountant who will provide you with tax advice and an interpretation of the law in regards to your own specific overseas employment situation.

Do cruise ship employees pay US taxes?

Faqs about taxes for cruise ship employees:, 1. are there any tax benefits for cruise ship employees, 2. how much income can i exclude using the feie, 3. what is the fica tax, 4. who qualifies for fica tax exemptions, 5. do non-us citizens working on cruise ships pay us taxes, 6. can i claim deductions for expenses related to my work on a cruise ship, 7. how do i file my us tax return as a cruise ship employee, 8. can i receive a tax refund as a cruise ship employee, 9. are there any penalties for not paying taxes as a cruise ship employee, 10. can i still contribute to social security while working on a cruise ship, 11. can i deduct my travel expenses to and from the cruise ship, 12. how can i ensure i am compliant with us tax laws as a cruise ship employee.

Yes, cruise ship employees do pay US taxes. However, the taxation process for cruise ship employees can be quite complex and can vary depending on a range of factors, including the individual’s citizenship, the cruise line they work for, and the duration of their employment. In general, if you are a US citizen or a permanent resident, you are required to pay taxes on your worldwide income, including earnings from working on a cruise ship.

The Internal Revenue Service (IRS) considers cruise ship employees as working abroad, and therefore, they may qualify for certain tax benefits, such as the Foreign Earned Income Exclusion (FEIE) or the Foreign Housing Exclusion (FHE). These exclusions allow individuals to exclude a certain amount of their foreign earned income from being taxed. For the tax year 2021, the FEIE amount is $108,700.

Additionally, cruise ship employees may also have to pay Social Security and Medicare taxes, known as the Federal Insurance Contributions Act (FICA) taxes. However, there are certain exceptions and exemptions available for individuals who perform services on foreign-flagged vessels, which may reduce their FICA tax liability.

It is important for cruise ship employees to consult with a tax professional or seek guidance from the IRS to ensure they meet their tax obligations and take advantage of any available deductions or credits.

Yes, cruise ship employees may qualify for tax benefits such as the Foreign Earned Income Exclusion (FEIE) or the Foreign Housing Exclusion (FHE). These exclusions allow individuals to exclude a certain amount of their foreign earned income from being taxed.

For the tax year 2021, the FEIE amount is $108,700. This means you can exclude up to $108,700 of your foreign earned income from being taxed.

The Federal Insurance Contributions Act (FICA) tax consists of Social Security and Medicare taxes. Cruise ship employees may have to pay FICA taxes, unless they qualify for certain exceptions and exemptions.

Cruise ship employees who perform services on foreign-flagged vessels may qualify for FICA tax exemptions. It is important to understand the specific rules and conditions for these exemptions, as they can vary depending on the individual’s situation.

Non-US citizens working on cruise ships may still be subject to US taxes, depending on various factors such as the country they are from, the cruise line they work for, and the length of their employment. It is advisable for non-US citizens to consult with a tax professional to determine their specific tax obligations.

Yes, as a cruise ship employee, you may be eligible to claim deductions for certain work-related expenses, such as uniforms, equipment, or travel expenses. It is recommended to keep detailed records of these expenses and consult with a tax professional to ensure you are claiming all eligible deductions.

Cruise ship employees can file their US tax return using Form 1040 or Form 1040NR, depending on their residency status. It is recommended to seek guidance from a tax professional or use tax preparation software specifically designed for international workers.

Yes, it is possible for cruise ship employees to receive a tax refund if they have paid more in taxes than their actual tax liability. This typically happens if they qualify for certain deductions, credits, or exclusions.

Failure to pay taxes or comply with tax obligations can result in penalties imposed by the IRS. It is important to fulfill all tax obligations and seek professional advice if you are unsure about the requirements.

Cruise ship employees may still be required to contribute to Social Security, depending on their employment contract and the cruise line they work for. However, there may be exceptions and exemptions available for individuals who perform services on foreign-flagged vessels.

Depending on your specific circumstances, you may be eligible to deduct travel expenses related to your work on a cruise ship. It is recommended to consult with a tax professional to understand the rules and requirements for claiming such deductions.

To ensure compliance with US tax laws, it is advisable for cruise ship employees to seek guidance from tax professionals who specialize in international taxation. They can assist in understanding your tax obligations, maximizing deductions, and filing accurate tax returns. Additionally, keeping detailed records of income and expenses related to your work on a cruise ship can help support your compliance efforts.

Please note that tax laws and regulations can change, and it is essential to keep abreast of any updates or changes that may affect your specific tax situation.

About The Author

Kevin Johnson

Answered: How Much Money Do Crew Members on a Cruise Earn?

If you’re like many passengers, no matter what the crew members aboard a cruise ship earn, you still might not think it’s enough. One constant in cruising is an overall appreciation for the hard work that crew do to provide passengers with a great vacation.

The crew that you encounter on the cruise — such as the cabin stewards, dining staff and more — have jobs that are unlike what many of us have ever experienced.

For one, crew members work lengthy shifts. It’s not unusual, for instance, to see your cabin steward making his or her first rounds early in the morning and then doing another round to tidy up rooms late in the evening. And this pace happens day in and day out across all sorts of positions.

Not only is the work hard, but the crew is also doing it far from home. You’ll notice that large portions of the crew are from places like the Philippines, India, and China, among many other countries. Often, they are literally from places halfway around the world while families and friends are still back home.

And that distance isn’t just a factor for a few weeks. Crew operate under contracts that last for months. That means they can often stay and work on the ships for six months at a time before returning home.

To be sure, working on a cruise ship isn’t for everyone. Yet many do it for the opportunity to earn a living making more than what they would back home while also seeing parts of the world that many others never get the chance to visit.

So exactly how much do workers on a cruise ship earn?

“Median Employee” Earning Disclosure Required

First, there is no set rate that every person working on a cruise ship earns. Different positions on the ship will make different amounts. And on a modern cruise ship there are dozens if not hundreds of different roles, from the captain of the ship to kitchen staff.

That means there is no set compensation list for every cruise line that shows what different positions make (at least publicly).

But we do have the next best thing…

Major cruise lines like Carnival, Princess, Royal Caribbean, Celebrity, and Norwegian are actually part of larger public companies that trade on major stock exchanges. As a result, the parent companies are subject to certain SEC filing requirements.

Along with quarterly and annual reports, part of that requirement is a “Pay Ratio Disclosure” as part of the Dodd-Frank reform. Here, a company must detail the ratio of pay for a company CEO compared to the “median employee.”

That gives us not only a glimpse into how much the top brass at the company makes in total, but also what those who work on the ship earn as well.

How Much the Crew Makes on a Cruise

There are three major cruise companies that trade on public exchanges: Carnival Corporation, Royal Caribbean Group, and Norwegian Cruise Line Holdings. Each shares the “median employee” wages via the CEO Pay Ratio disclosure in its filings.

Carnival Corporation includes lines like Carnival, Princess, Costa, and others. In 2022, the cruise company reported that its median employee earned $14,496 in total compensation. With a CEO total compensation of over $8 million, that comes to a pay ratio of 553:1.

Royal Caribbean Group includes names like Royal Caribbean, Celebrity, and more. In 2022, the company stated that its median employee earned $15,264 . Given total compensation to the CEO of $10.7 million, the pay ratio comes in at 705:1.

Finally, Norwegian Cruise Line Holdings , which includes NCL, Oceania and Regent Seven Seas filed that its total compensation for 2022 was $24,484 . Meanwhile, that company’s CEO took home compensation of more than $21 million. That is a pay ratio of 866:1.

For comparison, hotel company Hilton Worldwide Holdings reports a median employee compensation of $43,702 compared to over $23.5 million in compensation for the CEO. That’s a ratio of 539:1.

And according to the Economic Policy Institute, the average CEO-to-worker ratio reached 399:1 in 2021 , a new high.

Some More Things to Know About The Crew’s Compensation

There is little argument that if you want to get rich, then working on a cruise ship likely isn’t the path. That said, there is some context with these figures that bears mentioning.

First, as mentioned, the crew are internationally sourced, often from places where the cost of living is significantly lower than what we see in the United States. That can make the earnings — though low by American standards — more attractive.

Second, this compensation figure is based on what the “median employee” was paid over the course of the year. However, many employees do not work the entire year . According to Carnival Corporation’s disclosure, “our workforce includes a large number of ship-based employees who typically work six to eleven months of the year and we did not annualize the pay for our employees when identifying our median.”

Finally, when working on the ship, cruise crew are also provided with some benefits like room and board that aren’t usually included in regular jobs. As Norwegian stated, “our shipboard employees receive certain accommodations that are not typically provided to shoreside employees including housing and meals while on the ship and medical care for any injuries or illnesses that occur while in the service of the ship. These accommodations are free of cost to each shipboard employee.”

Even with that, however, there’s no doubt that by American standards, shipboard crew work extremely hard and for wages that many of us would not be willing to take.

And while the cruise lines make clear that this compensation figure includes wages and gratuities billed to passengers, they do not include any extra money paid to crew directly by guests . So the next time you’re feeling generous on a cruise, the crew would likely be happy to accept any extra gratuity.

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This is a typical crap article from cruise ship apologists. So really most people don’t get a good wage and saying maybe Americans won’t work for this, but they do. Relying on tips is a cop out. These hardworking people should be paid for every hour they work. I wouldn’t trust a metric 400-600:1! ; it’s a nonsense number. They pick overseas workers as they know they will just do the work.

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Airline and cruise ship employees: how income earned in international waters may lead to double taxation for (only) americans abroad.

Oliver Wagner, CPA and John Richardson – January 16, 2022

Americans abroad and the presumption of double taxation

Prologue: For whom the bell tolls …

Whether a US citizen lives in (and is a tax resident of) Mexico and works on a ship in international waters

International waters are not a foreign country. https://t.co/hnhfCddLb1 — John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 15, 2022

Or Whether A US citizen lives in (and is a tax resident of) Holland and is an airline pilot …

OMG imagine if @Ronald77171496 had known that he was a US citizen while he was flying planes across the Atlantic! Read this article which describes the nightmare imposed on "US citizen" airline pilots who have @taxresidency in other countries. (Applies to cruise ship people too!) https://t.co/gW8G30W9Vq — John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 17, 2022

That US citizen, because and only because of the combination of US citizenship-based taxation coupled with living outside the United States, is likely to be subject to double taxation. The following discussion explains why.

Part A: Introduction – About Citizenship-based Taxation Part B: How the Internal Revenue Code is designed to mitigate the effects of double taxation in certain circumstances Part C: Determining what is “foreign source” income Part D: The problem of international waters … Part E: The effect of sourcing to the US income earned in international waters by dual tax residents Part F: Deducting “foreign taxes” paid – although income from international waters may not be foreign, it is still subject to the payment of “foreign taxes” Part G: Can a US citizen living abroad be saved by a tax treaty? Maybe if he/she lives in Canada **** Part H: Conclusion and the need for “Pure Residence-Based Taxation”

Part A: Introduction – About Citizenship-based Taxation

Whether they live in Mexico, France, Canada, Brazil or even on a yacht, US citizens are taxable on their worldwide income. Worldwide income means income of all kinds, from all sources and wherever earned. US citizens are taxable an ALL income sources. It doesn’t matter whether the income has a source in Mexico, France, Canada, Brazil or even on a yacht. For example, a US citizen living in France who has ONLY French source income is required to treat that income as taxable in the United States. The fact that the income is also taxable in France is irrelevant!

The Internal Revenue Code is based on a presumption of double taxation. The presumption of “double taxation” is reinforced by the “ saving clause ” in US tax treaties where the treaty partner country agrees that the US retains the right to tax US citizens regardless of the tax treaty. The treaties themselves typically contain a small number of specified exceptions that mitigate against the effects of double taxation in certain narrow circumstances.

Relief from double taxation is available either domestically under the Internal Revenue Code or through provisions in international tax treaties (or possibly both). Each avenue of mitigation will be considered separately.

Part B: How the Internal Revenue Code is designed to mitigate the effects of double taxation in certain circumstances

It is commonly understood that the Internal Revenue Code provides for two distinct mechanisms to mitigate the effects of double taxation.

First – S. 911 – EXCLUDING Foreign Earned Income

US Taxation of Americans Abroad: Does the FEIE (Foreign Earned Income Exclusion Work)? – Sometimes yes and sometimes no https://t.co/jyphB9sz4T — John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 17, 2022

This is referred to as the FEIE and allows US citizens (and Green Card holders in treaty partner countries) to exclude up to $107,000 USD of “foreign SOURCE” earned income. There are a number of rules and it is more complicated than meets the eye. The key point is that only “foreign SOURCE” “earned” income is eligible for the exclusion. The FEIE exclusion is generally considered to be less advantageous for Americans abroad than using the foreign tax credit rules.

Second – S. 901 – INCLUDING Foreign Earned Income And Paying The US Tax By Taking Credit For Foreign Taxes Paid On Foreign Income

US Taxation of Americans Abroad: Do The Foreign Tax Credit Rules Work? – Sometimes yes and sometimes no https://t.co/HPkGH3st9Q — John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 17, 2022

This is referred to as the FTC “Foreign Tax Credit Rule”. The foreign tax credit rules continue to evolve in their complexity.

The Internal Revenue Code grants relief from double taxation only with respect to “foreign source” income

Relief from either the FEIE option or the FTC option is dependent on having foreign source income!!

Part C: Determining what is “foreign source” income

The “source rules” are found in § 861 – § 865 of the Internal Revenue Code . § 861 prescribes income sources that are sourced to the United States and over which the US has primary taxing rights. § 862 prescribes income sources that are foreign to the United States where the foreign country has primary taxing rights. § 863 prescribes special rules for determining source including income earned in international waters.

(d)Source rules for space and certain ocean activities (1)In general Except as provided in regulations, any income derived from a space or ocean activity— (A)if derived by a United States person, shall be sourced in the United States, and (B)if derived by a person other than a United States person, shall be sourced outside the United States.

Since income earned by a US citizen in “international waters” is not foreign, it follows that neither the FEIE nor the FTC rules can be used to offset double taxation. In other words, in the absence of treaty relief, income earned by a US citizen in international waters will be subject to taxation by both the United States and any other country of tax residence.

Of course American citizens who live in the United States are subject to tax by ONLY the United States and are not subject to double taxation. Americans citizens living abroad are tax residents of both the United States and their country of actual residence and are subject to double taxation.

Part D: The problem of international waters …

Q. What is meant by the term “international waters”?

A. According to Wikipedia …

“International waters” is not a defined term in international law. It is an informal term, which most often refers to waters beyond the “territorial sea” of any country.[2] In other words, “international waters” is often used as an informal synonym for the more formal term high seas or, in Latin, mare liberum (meaning free sea). International waters (high seas) do not belong to any state’s jurisdiction, known under the doctrine of ‘mare liberum’. States have the right to fishing, navigation, overflight, laying cables and pipelines, as well as scientific research.

The article goes on to suggest that “international waters” begin approximately 370 km (200 miles) from the shoreline of a country:

The Convention on the High Seas was used as a foundation for the United Nations Convention on the Law of the Sea (UNCLOS), signed in 1982, which recognized exclusive economic zones extending 200 nautical miles (230 mi; 370 km) from the baseline, where coastal States have sovereign rights to the water column and sea floor as well as the natural resources found there.[4]

The claim of tax jurisdiction over international waters (a specific location) – ridiculous

NO country should be able to claim tax jurisdiction over “international waters”. Presumably, no country could justifiably claim that income earned in “international waters” could/should be sourced to any one country.

The claim of tax jurisdiction over individuals who are tax residents – the international standard

All countries may claim tax jurisdiction over their tax residents . Therefore, countries which follow the “residence-based taxation” model would impose taxation on the income earned by their residents in international waters. For example, all Canadian tax residents who earn income in “international waters” are taxable on that income. The US employs “citizenship-based taxation”. Therefore, All US citizens earning income in “international waters” are taxable on that income, etc.

The Internal Revenue Code and international waters

While retaining tax jurisdiction over US tax residents, the US goes one step further and claims tax jurisdiction over income earned in international waters, to the extent that the income is earned by US citizens. Rather than simply presume that income earned in international waters is taxable income to US tax residents (under IRS S. 61 or other sections), the Internal Revenue Code specifically defines income earned in international waters as:

– US source income if earned by “United States persons”*; and

– NOT US source income if earned by a person other than a “United States person”.**

Part E: The effect of sourcing to the US income earned in international waters by dual tax residents

Q. What is the effect of deeming income earned by US citizens in international waters as US source income?

A. The effect is that if a US citizen earns income in international waters that income is NOT foreign source income and therefore cannot be excluded under the 911 FEIE or be treated as foreign under the 901 FTC rules. In other words, US citizens who are tax residents of other countries will get NO RELIEF (under the Internal Revenue Code) from double taxation!

The significance of this was explored in the 2004 case of Francisco, John A. v. Cmsnr IRS, No. 03-1210 (D.C. Cir. 2004) ***

US Citizen Airline Pilots And Cruise Ship Employees Living Outside The USA – What percent of the work takes place in “international waters”?

It’s obvious that some work time is spent in “international waters” and some is spent in “non-US AKA foreign countries”.

The income attributable to work in the foreign (“non-US”) country is eligible for either the FEIE or FTC.

The income attributable to “international waters” is NOT eligible for the either the FEIE or FTC rules!

Think of the record keeping and compliance burden!

Part F: Deducting “foreign taxes” paid – although income from international waters may not be foreign, it is still subject to the payment of “foreign taxes”

Internal Revenue Code § 164 allows for the deduction of “foreign taxes” as an itemized deduction.

(a)General rule Except as otherwise provided in this section, the following taxes shall be allowed as a deduction for the taxable year within which paid or accrued: (1)State and local, and foreign, real property taxes. (2)State and local personal property taxes. (3)State and local, and foreign, income, war profits, and excess profits taxes.

Although not perfect, this may be helpful to certain individuals. This provision converts “foreign taxes” into a deduction for US tax purposes. The following IRS commentary is helpful:

Choice Applies to All Qualified Foreign Taxes As a general rule, you must choose to take either a credit or a deduction for all qualified foreign taxes. If you choose to take a credit for qualified foreign taxes, you must take the credit for all of them. You cannot deduct any of them. Conversely, if you choose to deduct qualified foreign taxes, you must deduct all of them. You cannot take a credit for any of them. Why Choose the Credit? The foreign tax credit is intended to relieve you of the double tax burden when your foreign source income is taxed by both the United States and the foreign country. The foreign tax credit can only reduce U.S. taxes on foreign source income; it cannot reduce U.S. taxes on U.S. source income. It is generally better to take a credit for qualified foreign taxes than to deduct them as an itemized deduction. This is because: A credit reduces your actual U.S. income tax on a dollar-for-dollar basis, while a deduction reduces only your income subject to tax; You can choose to take the foreign tax credit even if you do not itemize your deductions. You then are allowed the standard deduction in addition to the credit; and If you choose to take the foreign tax credit, and the taxes paid or accrued exceed the credit limit for the tax year, you may be able to carry over or carry back the excess to another tax year.

https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit-choosing-to-take-credit-or-deduction

In summary:

While a foreign tax credit is not possible to offset the tax arising from US-sourced income, another benefit is available.

While of much limited use, an alternative is to claim the foreign tax as an itemized deduction. This will only reduce taxable income by the amount of taxes paid. But in a case such as this in which the US sees the income as US-sourced and the foreign country sees it as foreign-sourced, the taking the foreign tax credit as an itemized deduction might be the only option.

Part G: Can a US citizen living abroad be saved by a tax treaty? Maybe if he/she lives in Canada ****

It’s clear that the Internal Revenue Code does NOT offer relief from double taxation. Might a tax treaty provide relief? The answer appears to depend on the treaty. Most treaties do NOT. But, the Canada/US tax treaty may offer relief. Note specifically Paragraph 4 of Article XXIV of the Canada/US tax treaty:

4. Where a United States citizen is a resident of Canada, the following rules shall apply: (a) Canada shall allow a deduction from the Canadian tax in respect of income tax paid or accrued to the United States in respect of profits, income or gains which arise (within the meaning of paragraph 3) in the United States, except that such deduction need not exceed the amount of the tax that would be paid to the United States if the resident were not a United States citizen; and (b) for the purposes of computing the United States tax, the United States shall allow as a credit against United States tax the income tax paid or accrued to Canada after the deduction referred to in subparagraph (a). The credit so allowed shall not reduce that portion of the United States tax that is deductible from Canadian tax in accordance with subparagraph (a).

How this treaty provision works …

The way it works is that the Canadian tax authorities will only grant a foreign tax credit for taxes paid to the US to the extent that the taxpayer would have been liable for those had he not been a US citizen .

In this instance, since the income would not have been US-source had the taxpayer not been a US citizen, no foreign tax credit would have been afforded on the Canadian side.

The US-Canada tax treaty (in a clause that is not typically found in other tax treaties) provides that in such an instance, the US will provide a foreign tax credit on that income that would otherwise not be eligible for the foreign tax credit because it was treated as US-sourced income.

Part H: Conclusion and the need for “Pure Residence-Based Taxation”

It is obvious that the combination of US citizenship-based taxation and the sourcing to the United States of income earned in International waters creates double taxation for Americans abroad. In this case it is particularly pernicious because the Internal Revenue Code does not allow for the application of either the 901 FTC rules or the 911 FEIE rules.

Interestingly the sourcing of income earned in international waters to the United States means that the problem of double taxation can be solved ONLY if Americans abroad cease to be tax residents of the United States . Amendments to the FEIE or the FTC rules will not solve this problem.

_______________________________________________________________________

Appendices:

*Note that “United States person” is defined in 7701(a)(30) as follows:

(30)United States person The term “United States person” means— (A)a citizen or resident of the United States, (B)a domestic partnership, (C)a domestic corporation, (D)any estate (other than a foreign estate, within the meaning of paragraph (31)), and (E)any trust if— (i)a court within the United States is able to exercise primary supervision over the administration of the trust, and (ii)one or more United States persons have the authority to control all substantial decisions of the trust.

_____________________________________________________________________________________

** A close look at Internal Revenue Code 863(d) reveals …

(d)Source rules for space and certain ocean activities (1)In general Except as provided in regulations, any income derived from a space or ocean activity— (A)if derived by a United States person, shall be sourced in the United States, and (B)if derived by a person other than a United States person, shall be sourced outside the United States. (2)Space or ocean activity For purposes of paragraph (1)— (A)In general The term “space or ocean activity” means— (i)any activity conducted in space, and (ii)any activity conducted on or under water not within the jurisdiction (as recognized by the United States) of a foreign country, possession of the United States, or the United States. Such term includes any activity conducted in Antarctica. (B)Exception for certain activities The term “space or ocean activity” shall not include— (i)any activity giving rise to transportation income (as defined in section 863(c)), (ii)any activity giving rise to international communications income (as defined in subsection (e)(2)), and (iii)any activity with respect to mines, oil and gas wells, or other natural deposits to the extent within the United States or any foreign country or possession of the United States (as defined in section 638). For purposes of applying section 638, the jurisdiction of any foreign country shall not include any jurisdiction not recognized by the United States.

___________________________________________________________________

*** For a lucid judicial decision exploring the consequences of income being earned in “international waters” and therefore becoming US source income see Francisco, John A. v. Cmsnr IRS, No. 03-1210 (D.C. Cir. 2004)

https://cases.justia.com/federal/appellate-courts/cadc/03-1210/03-1210a-2011-03-24.pdf?ts=1411132061

II. ANALYSIS As is, we think, evident from the discussion above, the question before us is straightforward. So is its resolution. Section 863(d)(1)(A) provides: ‘‘Income derived from a[n] ocean activity’’ as defined therein shall, for a ‘‘United States person TTT be sourced in the United States.’’ Section 7701(a)(30)(A) of the Code defines a ‘‘United States person’’ as including ‘‘a citizen or resident of the United States.’’ The parties agree that Francisco is a citizen of the United States. His residence in the specified possession is immaterial to the statutory definition of a United States person, which would include him as a citizen even if he lived in a foreign country. The international waters in which he fished during the tax years fit precisely the statutory description of ‘‘water not within the TTT jurisdiction TTT of a foreign country, possession of the United States, or the United States.’’ § 863(d)(2)(A)(ii). Therefore, the Tax Court properly held § 863(d) to be the section governing Francisco’s tax liability. Francisco argues that the waters within which he fished are not governed by § 863(d). He claims that for purposes of the Tax Code, those waters should be considered as being within the jurisdiction of a possession of the United States. He bases that argument on the American Samoa Code, the governing law of the possession, which adopts a so-called ‘‘mirror image tax code.’’ Under a mirror-image code, the possession’s statute adopts the United States Internal Revenue Code but replaces ‘‘the United States,’’ where necessary, with ‘‘American Samoa.’’ Thus, the possession, like the United States, taxes worldwide the income derived from ocean sources of its taxable ‘‘persons.’’ From this, taxpayer reasons that the international waters upon which he fished were within the ‘‘tax jurisdiction’’ of the United States’ possession and therefore outside the reach of § 863. We have little trouble rejecting this argument.

______________________________________________________________________________

**** Article XXIV – Canada/US Tax Treaty

Article XXIV Elimination of Double Taxation 1. In the case of the United States, subject to the provisions of paragraphs 4, 5 and 6, double taxation shall be avoided as follows: In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a citizen or resident of the United States, or to a company electing to be treated as a domestic corporation, as a credit against the United States tax on income the appropriate amount of income tax paid or accrued to Canada; and, in the case of a company which is a resident of the United States owning at least 10 per cent of the voting stock of a company which is a resident of Canada from which it receives dividends in any taxable year, the United States shall allow as a credit against the United States tax on income the appropriate amount of income tax paid or accrued to Canada by that company with respect to the profits out of which such dividends are paid.

2. In the case of Canada, subject to the provisions of paragraphs 4, 5 and 6, double taxation shall be avoided as follows: (a) subject to the provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) (i) income tax paid or accrued to the United States on profits, income or gains arising in the United States, and (ii) in the case of an individual, any social security taxes paid to the United States (other than taxes relating to unemployment insurance benefits) by the individual on such profits, income or gains shall be deducted from any Canadian tax payable in respect of such profits, income or gains; (b) subject to the existing provisions of the law of Canada regarding the taxation of income from a foreign affiliate and to any subsequent modification of those provisions – which shall not affect the general principle hereof – for the purpose of computing Canadian tax, a company which is a resident of Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate which is a resident of the United States; and (c) notwithstanding the provisions of subparagraph (a), where Canada imposes a tax on gains from the alienation of property that, but for the provisions of paragraph 5 of Article XIII (Gains), would not be taxable in Canada, income tax paid or accrued to the United States on such gains shall be deducted from any Canadian tax payable in respect of such gains. 3. For the purposes of this Article: (a) profits, income or gains (other than gains to which paragraph 5 of Article XIII (Gains) applies) of a resident of a Contracting State which may be taxed in the other Contracting State in accordance with the Convention (without regard to paragraph 2 of Article XXIX (Miscellaneous Rules)) shall be deemed to arise in that other State; and (b) profits, income or gains of a resident of a Contracting State which may not be taxed in the other Contracting State in accordance with the Convention (without regard to paragraph 2 of Article XXIX (Miscellaneous Rules)) or to which paragraph 5 of Article XIII (Gains) applies shall be deemed to arise in the first-mentioned State. 4. Where a United States citizen is a resident of Canada, the following rules shall apply: (a) Canada shall allow a deduction from the Canadian tax in respect of income tax paid or accrued to the United States in respect of profits, income or gains which arise (within the meaning of paragraph 3) in the United States, except that such deduction need not exceed the amount of the tax that would be paid to the United States if the resident were not a United States citizen; and (b) for the purposes of computing the United States tax, the United States shall allow as a credit against United States tax the income tax paid or accrued to Canada after the deduction referred to in subparagraph (a). The credit so allowed shall not reduce that portion of the United States tax that is deductible from Canadian tax in accordance with subparagraph (a). 5. Notwithstanding the provisions of paragraph 4, where a United States citizen is a resident of Canada, the following rules shall apply in respect of the items of income referred to in Article X (Dividends), XI (Interest) or XII (Royalties) that arise (within the meaning of paragraph 3) in the United States and that would be subject to United States tax if the resident of Canada were not a citizen of the United States, as long as the law in force in Canada allows a deduction in computing income for the portion of any foreign tax paid in respect of such items which exceeds 15 per cent of the amount thereof: (a) the deduction so allowed in Canada shall not be reduced by any credit or deduction for income tax paid or accrued to Canada allowed in computing the United States tax on such items; (b) Canada shall allow a deduction from Canadian tax on such items in respect of income tax paid or accrued to the United States on such items, except that such deduction need not exceed the amount of the tax that would be paid on such items to the United States if the resident of Canada were not a United States citizen; and (c) for the purposes of computing the United States tax on such items, the United States shall allow as a credit against United States tax the income tax paid or accrued to Canada after the deduction referred to in subparagraph (b). The credit so allowed shall reduce only that portion of the United States tax on such items which exceeds the amount of tax that would be paid to the United States on such items if the resident of Canada were not a United States citizen. 6. Where a United States citizen is a resident of Canada, items of income referred to in paragraph 4 or 5 shall, notwithstanding the provisions of paragraph 3, be deemed to arise in Canada to the extent necessary to avoid the double taxation of such income under paragraph 4(b) or paragraph 5(c).

7. For the purposes of this Article, any reference to “income tax paid or accrued” to a Contracting State shall include Canadian tax and United States tax, as the case may be, and taxes of general application which are paid or accrued to a political subdivision or local authority of that State, which are not imposed by that political subdivision or local authority in a manner inconsistent with the provisions of the Convention and which are substantially similar to the Canadian tax or United States tax, as the case may be.

8. Where a resident of a Contracting State owns capital which, in accordance with the provisions of the Convention, may be taxed in the other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the capital of that resident an amount equal to the capital tax paid in that other State. The deduction shall not, however, exceed that part of the capital tax, as computed before the deduction is given, which is attributable to the capital which may be taxed in that other State.

9. The provisions of this Article relating to the source of profits, income or gains shall not apply for the purpose of determining a credit against United States tax for any foreign taxes other than income taxes paid or accrued to Canada.

10. Where in accordance with any provision of the Convention income derived or capital owned by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on other income or capital, take into account the exempted income or capital.

The Reality of U.S. Citizenship Abroad

My name is John Richardson. I am a Toronto based lawyer – member of the Bar of Ontario. This means that, any counselling session you have with me will be governed by the rules of “lawyer client” privilege. This means that:

“What’s said in my office, stays in my office.”

The U.S. imposes complex rules and life restrictions on its citizens wherever they live. These restrictions are becoming more and more difficult for those U.S. citizens who choose to live outside the United States.

FATCA is the mechanism to enforce those “complex rules and life restrictions” on Americans abroad. As a result, many U.S. citizens abroad are renouncing their U.S. citizenship. Although this is very sad. It is also the reality.

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Cruise Ship Central

Essential information to enjoy your cruise.

Do Cruise Ship Residents Need to Pay Taxes?

Living on a cruise ship may sound like a dream come true, but have you ever wondered if the residents aboard these floating paradises need to pay taxes? It’s a question that has piqued the curiosity of many, and in this article, I will explore the intriguing world of cruise ship residency and shed some light on the tax implications for those who choose to call these luxurious vessels their home. From international laws to individual circumstances, let’s unravel the mystery surrounding the tax responsibilities of cruise ship residents.

Table of Contents

Do Cruise Ship Residents Need to Pay Taxes?

Living on a cruise ship may seem like a dream come true for many. The idea of sailing the seas, exploring new destinations, and enjoying all the amenities and activities that a cruise ship has to offer is incredibly appealing. However, when it comes to taxes, things can get a bit more complicated. In this article, I will explore the topic of cruise ship residency and whether or not residents need to pay taxes.

Introduction to Cruise Ship Residency

Cruise ship residency refers to the practice of living on a cruise ship for an extended period of time. Instead of owning or renting a traditional home, individuals choose to make a cruise ship their permanent residence. This lifestyle allows for a unique blend of travel, adventure, and luxury.

Definition of Cruise Ship Residency

Cruise ship residency is not recognized as an official residency by most countries. Instead, it is usually considered as a temporary or transient status. While cruise ship residents may spend a significant amount of time on the ship, their legal residency is still typically tied to a land-based address.

Advantages and Disadvantages of Living on a Cruise Ship

Living on a cruise ship certainly has its perks. Residents have access to a wide array of amenities, including restaurants, entertainment venues, fitness centers, and pools. They also get to travel to different destinations without the hassle of packing and unpacking.

However, there are also some disadvantages to consider. Limited space and privacy, the need to constantly adapt to new surroundings, and the potential for seasickness are just a few of the challenges that cruise ship residents may face.

Increasing Popularity of Cruise Ship Residency

In recent years, there has been a growing interest in cruise ship residency. Some individuals, particularly retirees, are drawn to the idea of an all-inclusive lifestyle with minimal responsibilities. The appeal of exploring new places and forging new social connections has contributed to the rise in popularity of this unique form of residency.

Residency Status for Tax Purposes

Determining residency status is crucial when it comes to taxation. Your residency status determines which country’s tax laws apply to you and whether or not you are required to pay taxes. However, for cruise ship residents, establishing a clear residency status can be challenging.

Importance of Residency Status

Residency status is important because it determines your tax obligations, including the reporting of worldwide income, eligibility for tax credits and deductions, and the need to file tax returns. It is essential to understand the rules and regulations surrounding residency status to ensure compliance with tax laws.

Different Residency Definitions

Each country has its own criteria for determining residency status. Common factors include the number of days spent in the country, the purpose of the visit, and ties to the country such as property ownership or family connections. It is important to consult with a tax professional or refer to the specific tax laws of the country in question to determine residency status.

Impact of Residency on Tax Obligations

Residency status significantly impacts your tax obligations. For example, if you are considered a resident of a particular country, you may be required to report and pay taxes on your worldwide income. Non-residents, on the other hand, may only need to report income earned within the country’s borders. Understanding your residency status is essential for determining your tax obligations as a cruise ship resident.

Determining Factors for Tax Obligations

Determining your tax obligations as a cruise ship resident relies on several key factors. These factors help to establish your presence in a particular country and whether or not you are liable for paying taxes.

Physical Presence Test

The physical presence test is a common method used to determine tax obligations. It typically involves counting the number of days spent in a specific country within a given tax year. Different countries may have different requirements for how many days must be spent within their borders for tax residency purposes.

Substantial Presence Test

The substantial presence test is another tool used to determine tax obligations. It takes into account both the number of days spent in a country and the overall presence over a three-year period. This test aims to determine whether an individual has a significant presence in a country and is therefore subject to its tax laws.

Tax Treaties and International Agreements

Tax treaties and international agreements between countries can also impact tax obligations for cruise ship residents. These agreements often outline specific provisions for individuals who may be subject to taxation in multiple countries. It is important to review the relevant tax treaties and agreements to understand how they may impact your tax situation.

Residency Rules for Different Countries

Tax regulations for cruise ship residents vary depending on the country. Here, we will explore the residency rules and tax requirements for residents of the United States, Canada, and the European Union.

Tax Regulations for United States Residents

For residents of the United States, tax residency is primarily determined by the number of days spent within the country. The Internal Revenue Service (IRS) requires U.S. citizens and resident aliens to report their worldwide income, regardless of where they live. However, there are certain exclusions and deductions available for income earned overseas.

Tax Laws for Canadian Residents

In Canada, residency is determined by several factors such as the length and frequency of visits to the country, residential ties, social ties, and economic ties. Residents of Canada are generally required to report their worldwide income, including income earned on a cruise ship, to the Canada Revenue Agency (CRA).

Tax Requirements for European Union Residents

The tax requirements for residents of European Union (EU) member states can vary depending on the country. Some EU countries adopt the physical presence test, while others may consider factors such as the purpose of the visit or the individual’s intention to establish a permanent home in the country.

Taxation of Earnings while on Cruise Ships

Cruise ship residents may earn income through various means while onboard the ship. Understanding how these earnings are taxed is essential for complying with tax laws.

Income Sourced within the Cruise Ship Industry

If you are employed directly by a cruise ship company, the income you earn while working onboard is considered sourced within the cruise ship industry. This income is typically subject to income tax and should be reported accordingly.

Taxation Laws for Earnings from Cruise Ship Employment

The taxation of earnings from cruise ship employment can be complex. It may depend on factors such as your residency status, the country in which the ship is registered, and any applicable tax treaties. Consulting with a tax professional is recommended to ensure compliance with tax laws and to understand any potential tax credits or deductions that may be available.

Taxation of Income from Onshore Activities

While living on a cruise ship, residents may engage in onshore activities to supplement their income. Understanding the tax implications of these activities is important for remaining in compliance with tax laws.

Tax Considerations for Onshore Work while Living on a Cruise Ship

Income earned from onshore work is generally subject to taxation and should be reported accordingly. It is important to keep thorough records of any income earned from onshore activities and consult with a tax professional to determine the appropriate reporting and tax obligations.

Tax Exemptions for Income Earned Offshore

Some countries offer tax exemptions for income earned offshore, particularly if the income is not sourced within the country’s borders. However, the availability of these exemptions may depend on your residency status, the specific country’s tax laws, and any applicable tax treaties. It is important to research and understand the tax laws and exemptions of the country in which you reside as a cruise ship resident.

Tax Benefits for Cruise Ship Employees

Cruise ship employees may be eligible for certain tax benefits offered by cruise ship companies. These benefits can help reduce tax obligations and increase the overall financial well-being of employees.

Employee Benefits Offered by Cruise Ship Companies

Cruise ship companies often provide employee benefits such as accommodation, meals, healthcare, and transportation. These benefits can greatly enhance the quality of life for cruise ship employees and may be provided tax-free or with certain tax advantages.

Tax Implications of Employee Benefits

While some employee benefits may be provided tax-free, others may be subject to taxation. It is important to understand the tax implications of these benefits and consult with a tax professional to ensure compliance with tax laws and to take advantage of any available tax deductions or credits.

Tax Exemptions for Long-Term Cruise Ship Residents

Long-term cruise ship residents may be eligible for certain tax exemptions and incentives. These exemptions can help reduce or eliminate tax obligations, providing additional financial benefits.

Criteria for Qualifying as a Long-Term Cruise Ship Resident

Each country has its own criteria for determining long-term residency. Some countries require a specific minimum number of days to be spent within their borders, while others consider factors such as intent to establish a permanent home or ties to the country. It is important to research and understand the specific criteria for long-term residency in the country in which you reside as a cruise ship resident.

Tax Exemptions and Incentives for Long-Term Residents

Long-term cruise ship residents may be eligible for various tax exemptions and incentives. These can include exemptions on certain types of income, deductions for living expenses, or reduced tax rates. It is important to consult with a tax professional or refer to the specific tax laws of the country in question to understand the available exemptions and incentives for long-term residents.

Common Tax Issues for Cruise Ship Residents

Cruise ship residents may encounter several common tax issues. These issues can range from determining residency status and reporting income accurately to understanding tax obligations in multiple countries.

Some common tax issues for cruise ship residents include:

Determining the correct residency status.
Understanding and complying with reporting requirements for global income.
Navigating tax laws and obligations in multiple countries.
Determining the tax treatment of employee benefits.
Identifying and utilizing available tax credits and deductions.

To navigate these tax issues effectively, it is highly recommended to consult with a tax professional who specializes in international taxation and understands the specific challenges faced by cruise ship residents.

Reporting Requirements for Cruise Ship Residents

Cruise ship residents are generally required to meet certain reporting obligations. These obligations ensure transparency and compliance with tax laws.

Tax Filing Obligations

Depending on your residency status and the country in which you reside, you may be required to file tax returns. Filing obligations can vary in terms of frequency and complexity, so it is essential to understand the specific requirements of your country of residence.

Forms and Schedules for Reporting Income

Cruise ship residents may need to use specific forms and schedules when reporting their income. These forms and schedules are designed to capture relevant information about worldwide income, deductions, and any tax credits or exemptions for which one may be eligible. It is important to consult with a tax professional to determine the appropriate forms and schedules to use when filing your tax returns.

Recordkeeping Requirements

Maintaining accurate and thorough records is essential for cruise ship residents. This includes keeping receipts, employment contracts, and bank statements, as well as documenting travel dates and destinations. Adequate recordkeeping is crucial for accurately reporting income and ensuring compliance with tax laws.

In conclusion, cruise ship residents may need to pay taxes depending on their residency status, the country in which they reside, and the specific tax laws of that country. Determining residency status, understanding tax obligations and exemptions, and meeting reporting requirements are all essential for cruise ship residents. Consulting with a tax professional who specializes in international taxation is highly recommended to navigate these complexities effectively and ensure compliance with tax laws.

Will the Cruise Industry Navigate Around the Minimum Tax?—Part 1

The cruise industry is in the process of recovering from Covid-19. Royal Caribbean Cruises Ltd., a Liberian corporation that is publicly traded and is the world’s second-largest cruise ship operator, reported financial accounting income of approximately $2 billion in 2019. The company reported a $6 billion financial accounting loss in 2020, a $5 billion financial accounting loss in 2021, and a $3 billion annualized financial accounting loss in the first half of 2022. But in a September 2022 8-K filing, Royal Caribbean reported that its bookings have exceeded 2019 levels since its Covid-19 restrictions were eased in August.

Section 883

Royal Caribbean’s 202110-K acknowledges that the company and several of its principal subsidiaries, which also are incorporated in Liberia, are, in connection with operating cruises between US and foreign ports, engaged in a trade or business in the US and deriving US source income. The 10-K observes that Section 883 generally provides corporations a statutory exclusion from gross income and, as a practical matter, provides a US corporate income tax and US corporate branch tax exemption, for the shipping income of foreign corporations whose country of incorporation provides US corporate shipowners a reciprocal exemption.

Specifically, Section 883 provides that qualifying shipping income “shall not be included in gross income of a foreign corporation, and shall be exempt from taxation under this [income tax] subtitle.” Conversely, IRS Rev. Rul. 80-147 and Treas. Reg. 1.883-1(j) imply that expenses attributable to such exempt income are not deductible and cannot create a US net operating loss carryforward against effectively connected non-exempt, non-shipping income.

The IRS, relying on an exchange of diplomatic notes between Liberia and the US, concluded in Rev. Rul. 2008-17 that Liberia is such a reciprocating country. Accordingly, for regular US corporate income tax purposes, Royal Caribbean and its financial-accounting-consolidated Liberian subsidiaries appear to have relatively little US effectively connected income or loss from their shipping activities.

Royal Caribbean’s 10-K notes that the Treasury Regulations—namely Treas. Reg. 1.883-1(h)(2) —disqualify certain income from the Section 883 tax exemption. Such disqualified income includes providing tours of the city of Miami before or after cruises end there.

Corporate Alternative Minimum Tax

Beginning in 2023, the Inflation Reduction Act of 2022 can impose a US corporate minimum income tax on certain foreign-parented corporate groups whose average worldwide adjusted financial statement income exceeds $1 billion.

However, CAMT only applies in a limited fashion to such foreign-parented groups. Section 56A(c) states that in determining the amount of a foreign corporation’s AFSI, “the principles of Section 882 shall apply.” CAMT generally only applies to a foreign-parented group if the group’s AFSI is at least $100 million, considering the application of limitation of Section 56A(c)(4) to foreign corporate members of the group. A foreign-parented group, even one with worldwide AFSI exceeding $1 billion, must have a minimum of $100 million in AFSI to be subjected to CAMT, excluding US net income of foreign group members excluded under the principles of Section 882 and 56A(c)(4).

If a foreign-parented group, apparently including Royal Caribbean, has more than $1 billion of worldwide AFSI, it will not be subject to CAMT if the group’s income that is not exempted under Section 56A(c)(4), such as non-exempt income described in Treas. Reg 1.883-1(h)(2), is less than $100 million. Even if such a group has $1 billion of worldwide AFSI and at least $100 million in Section 56A(c)(4)-limited AFSI, the AFSI tax base of the CAMT is limited by Section 56A(c)(4).

The cruise industry faces some ambiguity on the interaction of Section 883 with Section 56A(c)(4). For example, several of Royal Caribbean’s cruises sail from Fort Lauderdale, Miami, or Port Canaveral, Fla., to Nassau, Bahamas, and then return to Florida. Under Section 863(c)(3) , 50% of the passenger revenue of such cruises is treated as US source effectively connected income described in Section 882. See TAM 9348001 . However, Section 883 can exempt this 50% from regular US corporate income tax and branch profits tax. For purposes of the $100 million AFSI threshold, and the CAMT tax base if such $100 million is exceeded, would AFSI include 100%, 50%, or none of such Florida–Bahamas cruise income?

Section 59(k)(2)(A) treats Section 56A(c)(4) as inapplicable to foreign-parented groups only to determine whether the $1 billion worldwide AFSI threshold is met, not to determine whether the $100 million threshold is met or, if so, what the CAMT tax base is. Therefore, it seems that the IRS could not include 100% of Royal Caribbean’s Florida–Bahamas round trip passenger income in AFSI in determining whether the $100 million threshold is met or, if so, what the CAMT tax base is.

With respect to inclusion of 50% of Royal Caribbean’s Florida–Bahamas round trip passenger income in AFSI, the situation is less clear. As noted, Section 56A(c)(4) states that “in the case of a foreign corporation, to determine [AFSI], the principles of Section 882 shall apply.” Some IRS rulings are unclear on the question, which was academic before the enactment of the CAMT, as to whether such reciprocally exempt shipping income should be viewed as effectively connected income under the principles of Section 882 but excludable under the independent application of Section 883, or as excludable from Section 882 consideration in the first instance. Compare Rev. Rul. 87-15 —which states that “[a] portion of [the shipping company’s] income [is] effectively connected with a United States trade or business....Such income, however, is exempt from United States tax under the reciprocal shipping exemption of Section 883(a)(1)”—with PLR 8129051 , in which the IRS National Office notes, without adverse comment, that the shipping company concluded that its revenue was excluded from its “gross income under Section 882(b) by reason of the ‘reciprocal exemption’ provisions of Section 883(a)(1).”

Under the cruise-line-unfavorable view that Section 56A(c)(4) only incorporates the exceptions in Section 882 and not those in Section 883, the 50% of the passenger net revenue characterized as effectively connected income could be includable in AFSI. In the short term, the application by Section 59A of a three-year average in determining applicable corporation status, and the allowance to applicable corporations by Section 56A(d) of an unlimited carryforward of post-2019 financial statement losses to offset up to 80% of current year AFSI, could reduce the CAMT exposure to Royal Caribbean and other cruise lines, whose businesses were harmed by Covid-19 between 2020 and 2022. Under the cruise-line-favorable view that Section 56A(c)(4) also incorporates the exceptions in Section 883, 0% would be includable in AFSI.

Some cruise lines companies, such as Royal Caribbean, have ship-owning subsidiaries that lease the ships to affiliates who operate the cruises. These ship-owning subsidiaries apply Section 883 to avoid being subject to the otherwise applicable Section 887 4% gross transportation tax on their US non-effectively connected source income. The analogous issue exists as to whether such income is exempted from inclusion in AFSI under Section 56A(c)(4). Another analogous issue exists as to whether any shipping or other income that is exempt from US corporate income tax and US transportation tax under the terms of an income tax treaty is likewise excepted by Section 56A(c)(4).

A source of optimism to the cruise line industry is that in former Treas. Reg. Sections 1.56-1(b)(6)(ii)(B) and 1.56(g)-1(m)(4), dealing with the analogous repealed corporate alternative minimum tax on book income and adjusted current earnings preferences, the Treasury favorably excluded earnings of a foreign shipping company attributable to its Section 883 or treaty income that was exempt from regular US corporate income tax.

Part 2 of this article will consider whether the OECD Pillar Two minimum tax can apply to cruise line income.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Alan S. Lederman is a shareholder at Gunster, Yoakley & Stewart, P.A. in Fort Lauderdale, Fla.

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Ask a Cruise Question

Federal Income Tax

By TNSTUD , June 15, 2009 in Ask a Cruise Question

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Cruise ship employees are paid while the ship is at sea and pay no US taxes. Of course they get no Social Security or Medicare when that time comes.

Crew, officers, cooks, dancers and even the doc gets paid at sea.

Assuming they are not US citizens, they owe no tax to the US. Whether they pay to their home country would depend on its laws.

Even if they were US citizens how could they owe US taxes when they are working not in the US?

It does not matter where the income is earned, if you are a US citizen, you owe taxes on the income. Nw, there may be no way for the government to find out about the income, but legally, it is taxable.

Why is it important to know that? They are not US citizens, and don't pay taxes to the United States--the ship isn't registered to the US, either....they don't pay taxes and are not bound by our laws.

I was reading a story about that awhile back. There are US citizens who have lived overseas for decades and they have to pay Federal Taxes, plus the taxes in the country they live in now.

US citizens are required to pay US income taxes on their worldwide income regardless of where they live. (Most other countries with an income tax are not so grabby.) That said, they are probably entitled to claim a "foreign tax credit" for income taxes paid to other countries (thereby minimizing double taxation) and they MIGHT be entitled to claim a "foreign earned income exclusion" with respect to a certain amount of job earnings in foreign countries (although I am not sure whether working on a foreign flagged cruise ship would qualify for that).

Nope. Cruise ships are not registered in the U.S. and are therefore exempt from U.S. taxes and all Labor laws, including minimum wage, and other laws of the U.S. They are, however, subject to the laws and tax codes of the country in which they are registered.

I don't think Liberia, Panama, Bahamas and others care much.....

Nope. Cruise ships are not registered in the U.S. and are therefore exempt from U.S. taxes and all Labor laws' date=' including minimum wage, and other laws of the U.S. They are, however, subject to the laws and tax codes of the country in which they are registered. I don't think Liberia, Panama, Bahamas and others care much.....[/quote'] Its true Cruise lines don't pay taxes on ships registered outside the US but US companies do pay taxes on all income earned anywhere unless there is an exclusion or they pay taxes elsewhere. They do pay registration fees there. Also foreign flagged cruise ships are not exempt from all US laws for instance the US disability law DOES apply to ships that call on the US and must obey coast guards rules and health laws. Don't believe me....its in this case against NCL.... http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=03-1388 oh and the cruise lines have to pay taxes on the income they earn on Casino's when in Alaska waters....

The employees on cruise ships are not liable for US income taxes unless they are citizens of the US.

Passengers, who are US citizens, owe taxes on winning from things like bingo and the casino.

patseacruiser

i did have a conversation with one of the australian dealers and they are supposed to claim their income when they come home or something but now that tips are on your s&s card in a lot of cases, it's a record of what they are earning.

Don't forget that any non-US Citizen who holds a US Green Card must pay US Income Taxes on money he earns anywhere on Earth. Most ship's crew do NOT want a US Green Card.

US Citizens who live permanently outside the USA are not taxed on their first $85,000 or so of income - regardless of where it is paid. But they must still file a US Tax Return every year.

If this topic is interesting to you, and you have NOTHING else to do today, here is some extra credit reading:

Individual Foreign Earned Income/Foreign Tax Credit - IRS Statistics

Tax Topic 856 - Foreign Tax Credit

Foreign Tax Credit - Choosing to take Credit or Deduction

There will be a pop quiz on Monday. ;)

If this topic is interesting to you, and you have NOTHING else to do today, here is some extra credit reading: Individual Foreign Earned Income/Foreign Tax Credit - IRS Statistics Tax Topic 856 - Foreign Tax Credit Foreign Tax Credit - Choosing to take Credit or Deduction There will be a pop quiz on Monday. ;)

At least I have a week to study (or come up with an excuse to stay home sick). :)

I'm calling in sick ahead of time. No tax test for me!

I think I am having a bad dream...I come to this site to read up on cruise stuff, give myself a little bit more to think about & look forward to for our next cruise, and to have a brief respite from work (I am a CPA)...and, POW, income taxes comes up! :eek: eek! somebody please wake me!

Are you sure about that?

It is my understanding that cruise ship winnings under $10,000 are not taxable.

It is my understanding that there is no difference between a cruise ship casino & a vegas casino, except for the fact that you get a 1099 from Vegas, but not from a ship. However, I could be mistaken. I have not had the problem trying to decide how much of my winnings to report.

Are you sure about that? It is my understanding that cruise ship winnings under $10,000 are not taxable.

nope that is wrong. All winnings are taxable. The issue is whether the cruise line reports them or not. But tax advice on here is about as accurate as medical advice.....

Things must have changed in the last few years. In 2004, my brother-in-law won the jackpot bingo for $6500. According to the purser, he was not obligated to report it because it was won at sea. He paid no taxes on it.

I'll check with some CBP buddies of mine and get back.

Yep, I was correct. Winnings, or "monetary instruments" of less than $10,000 do not have to be declared.

that is a different issue. yes cash in excess of $10,000 whether won or just carried needs to be declared. All winnings by US citizens or nationals is taxable. Ask the IRS not the CBP its a different rule.

Its true Cruise lines don't pay taxes on ships registered outside the US but US companies do pay taxes on all income earned anywhere unless there is an exclusion or they pay taxes elsewhere. They do pay registration fees there. Also foreign flagged cruise ships are not exempt from all US laws for instance the US disability law DOES apply to ships that call on the US and must obey coast guards rules and health laws. Don't believe me....its in this case against NCL.... http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=03-1388 oh and the cruise lines have to pay taxes on the income they earn on Casino's when in Alaska waters....

The question was about shipboard employees and if they pay U.S. taxes. It was not about U.S. tax laws in general, who pays what to whom and what U.S. laws are enforceable on a cruise ship.

The question was about shipboard employees and if they pay U.S. taxes. It was not about U.S. tax laws in general' date=' who pays what to whom and what U.S. laws are enforceable on a cruise ship.[/quote'] 1. you answer the questions you want to I'll answer the questions I want to. 2. You really don't know anything about US tax law. US national employees(US citizens or permanent residents) are required to report all income where ever earned. There are special exemptions and whether they pay taxes depends on their individual returns.

This topic is now archived and is closed to further replies.

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Cruise-ship workers reveal how much money they make

There's a big gap between the highest-paid and lowest-paid cruise-ship workers.

Business Insider spoke with 35 current and former cruise-ship employees, who reported monthly earnings between $500 and $10,000.
Some 40% of the workers Business Insider spoke with said their monthly earnings were equal to or less than $2,000.
Sign up for Business Insider's transportation newsletter, Shifting Gears, to get more stories like this in your inbox .
Visit Business Insider's homepage for more stories .

Business Insider spoke with 35 current and former cruise-ship employees, who reported monthly earnings between $500 and $10,000. Some 40% said their monthly earnings were equal to or less than $2,000.

A former Carnival Cruise Line galley worker had the lowest monthly earnings, while a former Royal Caribbean International first officer had the highest. The workers' tenures range from 2004 to this year.

Read more: A former Royal Caribbean employee reveals the one question you should always ask cruise ship workers

Many cruise-ship workers, particularly those in lower-paid positions, come from regions with lower median incomes than the United States, like the Caribbean, South America, Eastern Europe, and parts of Asia. A former bartender for Royal Caribbean who made between $1,600 and $1,800 a month said the pay was better than what he had made in Chile, his home country.

A cruise-ship employee's living costs can be much lower than those of a land-based worker, since they don't have to pay rent or buy food. But cruise-ship employees also have demanding and unconventional schedules that can lead them to work more hours than those with more traditional five-day, 40-hour-a-week schedules.

Watch: The world's largest cruise ship just landed in Miami — here's what it's like on board

Main content

Cruise Tips For Families & Single Cruisers

Things to Know Before You Cruise

Cruise Ship Salaries: How Much Do Workers Really Make?

As someone who loves to travel, I’ve always been curious about how much money cruise ship workers make. It’s easy to assume that they earn a lot, given the luxurious nature of the industry. But as I delved deeper into the topic, I realized that the answer is not as straightforward as I thought.

In this article, I’ll be breaking down the salaries of different cruise ship staff, including captains, waiters, chefs, bartenders, doctors, nurses, and entertainers, and discussing the employee benefits that come with the job.

While the median average salary for cruise ship workers may be less than that of the average American, it’s important to consider the unique nature of the job. Cruise ship contracts can last anywhere between 2 and 11 months, with most lasting 4 to 8 months, meaning that employees have the opportunity to earn a significant amount of money in a short amount of time.

Additionally, the employee benefits that come with the job, such as free room and board, can be a major perk. So, let’s take a closer look at the earning potential and benefits of working on a cruise ship.

The median average salary for a cruise ship worker is less than that of the average American, but more than the average salary of many other countries.
Cruise ship employees usually work on contracts that can last between 2 and 11 months, with most lasting 4 to 8 months, and they get to go home for a couple of months in between contracts.
Cruise ship staff do not get access to free wifi, but they may receive benefits such as accommodation, food, laundry, training, flights to and from the ship, medical care, health insurance, dental insurance, retirement plan, life insurance, and cruise discounts for family members.
Salaries of cruise ship staff vary greatly depending on their position and level of experience, with the average salary of a cruise ship captain being $98,000 and the average cruise director salary being $58,887. Cruise ship waiters can make anywhere from $1,200 to $5,000 per month, while cruise ship doctors can earn between $7,500 and $12,000 per month depending on their level of experience.

Earning Potential

As I read about the earning potential of different cruise ship staff, I noticed that salaries can vary greatly depending on the position and level of experience, with some employees earning as little as $1,200 per month and others making up to $177k per year.

It’s worth noting that cruise ship contracts can last anywhere between 2 and 11 months, with most lasting 4 to 8 months. During this time, living expenses such as accommodation and food are usually covered by the cruise line, but employees may not have access to free Wi-Fi.

It’s clear that there is a significant range in earning potential for cruise ship staff, with some positions offering much higher salaries than others. However, it’s important to consider the duration of contracts and the fact that living expenses are often taken care of by the cruise line.

Ultimately, it’s up to each individual to weigh the pros and cons of working on a cruise ship and decide if the earning potential is worth the time and effort required.

Salary Breakdown

Let me break down the different pay scales for various positions on a cruise ship. While the average salary of a cruise ship worker may be less than that of the average American, it’s important to note that the earning potential varies greatly depending on the position held.

For instance, a cruise ship captain can earn an average salary of $98,000, while a newly-appointed cruise director may make around $45,000. When negotiating pay, it’s important to consider the discrepancies that may exist between different positions.

For example, cruise ship chefs usually have several years of experience working in similar roles in luxury hotels, restaurants or other high-volume food service facilities. The executive chef on a cruise ship can make up to $6,500 per month, depending on the ship. However, cruise ship waiters may only make $1,200 per month for a junior position or $5,000 per month for the head waiter on an ultra-luxury cruise ship.

It’s important to do your research and negotiate based on your experience and the position you’re applying for in order to ensure fair compensation.

Employee Benefits

I’ve always heard that employee benefits can make a huge difference in job satisfaction, and working on a cruise ship is no exception.

When it comes to housing, most cruise ship employees are provided with accommodation while they work on board. The type of accommodation depends on the position and the ship, but it can range from shared cabins to private rooms with a balcony. Some cruise lines even offer housing for employees in between contracts, which is a great benefit for those who want to save money on rent.

Another important benefit for cruise ship workers is vacation time. While contracts can last between 2 and 11 months, most employees get to go home for a couple of months in between contracts. This gives workers a chance to rest, recharge, and spend time with family and friends.

In addition, cruise lines may offer discounts on cruises for family members of employees, which is a great way to enjoy the perks of working on a cruise ship while also spending quality time with loved ones.

Overall, the benefits offered to cruise ship employees can make a big difference in their quality of life and job satisfaction.

Captain Salaries

Honestly, being a captain on a cruise ship seems like a high-paying and prestigious job. According to the table below, the average salary for a cruise ship captain is $98,000. However, this varies depending on the size of the ship and the captain’s experience. A less experienced captain of a small cruise ship can expect to earn around $44,000, while a captain of a mega-ship with over 20 years of experience can earn up to $177,000. Captains can also receive bonuses of up to $40,000 per year, as well as profit sharing of up to $3,000.

To become a captain on a cruise ship, a candidate must have several years of experience as a deck officer and must possess a master’s license from the Maritime and Coastguard Agency. The experience requirements vary depending on the size of the ship, but most captains have between 5 and 10 years of experience before being promoted to the role. It’s important to note that being a captain on a cruise ship is not just about sailing the ship. Captains are also responsible for the safety of the ship and its passengers, managing the crew, and ensuring that the ship runs smoothly.

Cruise Director Salaries

From my research, the cruise director position seems to offer a decent salary with the potential for growth. As the head of the entertainment department, the cruise director is responsible for organizing and overseeing all onboard activities and events.

This includes everything from live performances to trivia games and dance parties. They also play a key role in ensuring that guests have a memorable and enjoyable experience while on the ship.

To become a cruise director, one typically needs several years of experience in the entertainment industry, as well as strong leadership and organizational skills. They must have the ability to manage a large team of staff and work collaboratively with other departments on the ship.

Additionally, good communication and public speaking skills are a must, as the cruise director often serves as the public face of the ship and is expected to interact with guests on a regular basis. Overall, the cruise director role offers a challenging and rewarding career path for those with a passion for entertainment and hospitality.

Waiter and Chef Salaries

Based on my research, waiters and chefs working on luxury cruise ships can earn significantly higher salaries than their counterparts in traditional restaurants and hotels. A junior waiter on a cruise ship can earn up to $1,200 per month, while the head waiter on an ultra-luxury cruise ship can make up to $5,000 per month. These salaries are due to the job responsibilities that come with working on a cruise ship, such as working long hours and being away from home for months at a time.

Additionally, the industry trends show that cruise ship companies are willing to pay more to attract and retain talented staff. Cruise ship chefs usually have several years of experience working in similar roles in luxury hotels, restaurants, or other high-volume food service facilities. An executive chef on a cruise ship can make up to $6,500 per month, depending on the ship.

These salaries are also due to the job responsibilities that come with working on a cruise ship, such as preparing a variety of meals for thousands of guests each day. The industry trends show that cruise ship companies prioritize high-quality food and dining experiences for guests, which means that they are willing to pay more for skilled chefs.

Doctor and Nurse Salaries

I was surprised to learn how much medical professionals on luxury cruise lines can earn, given the importance of their roles in ensuring the well-being of guests. Cruise ship medical staff play a crucial role in providing necessary medical attention to guests who may fall ill or get injured on the ship. They often work long hours and may have to deal with a variety of medical emergencies, but the salaries they earn reflect their expertise and the importance of their work.

The table below shows the salaries of cruise ship medical staff, including doctors and nurses. In addition to competitive salaries, cruise ship medical staff may also receive benefits such as accommodation, food, and medical care. Working conditions on a cruise ship can be challenging, but for those who enjoy cultural diversity, career growth opportunities, and a unique work-life balance, a career as a cruise ship medical professional may be worth considering.

As with any job, there are pros and cons to working as a cruise ship medical professional. On the one hand, the opportunity to travel and work in a unique environment can be a major draw. On the other hand, the long hours and lack of access to certain amenities, such as free wifi, may not be for everyone. Overall, the salaries of cruise ship medical staff reflect the importance of their work and the value they bring to the cruise industry.

Other Cruise Ship Jobs and Services

Now that we’ve covered the salaries of cruise ship doctors and nurses, let’s move on to other jobs and services offered onboard.

One of the most popular amenities on a cruise ship is the spa. Most cruise ships have spas that offer a wide range of services, such as massages, facials, and body treatments. The cost of these services can vary depending on the cruise line and the type of service, but they’re typically more expensive than what you’d pay on land. However, many people are willing to pay the extra cost for the convenience and luxury of having spa services available to them while on vacation.

In addition to spa services, cruise ships also offer a variety of onboard activities. These can range from fitness classes to cooking demonstrations to art auctions. Some cruise lines even have onboard water parks and zip lines. The cost of these activities is usually included in the price of the cruise, but some may have an additional fee.

It’s important to check with the cruise line to see what activities are available and if there are any extra costs associated with them. With so many options for entertainment and relaxation, there’s never a dull moment on a cruise ship.

What are the working conditions like for cruise ship workers?

Living quarters vary depending on one’s job, but most crew members share small cabins with limited privacy. Work-life balance is a challenge due to long hours and being away from home for months. Many find the experience rewarding despite the hardships.

How do cruise ship companies recruit and hire their employees?

The recruitment process for cruise ship employees involves rigorous screening, background checks, and interviews. Qualifications depend on the job, but most require previous experience and certification. It’s a competitive industry, with thousands of applicants vying for each position.

What kind of training is required for cruise ship staff?

To work on a cruise ship, certification requirements vary depending on the position. Language proficiency is important for customer-facing roles. Training is provided on board and may include safety, hospitality, and job-specific skills.

What are some of the biggest challenges that cruise ship workers face?

Working on a cruise ship can be mentally challenging due to long working hours and isolation from friends and family. Mental health support is essential to combat these challenges and ensure a fulfilling work experience.

How do cruise ship workers spend their free time while on board?

During free time, cruise ship workers can participate in various activities such as visiting ports, watching shows, using the gym, or relaxing by the pool. Socializing opportunities include crew parties, bars, and organized events.

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How to cruise a write off? First things first, let’s remember our general rules that before we can deduct a business expense it must be ORDINARY and NECESSARY, meaning “An ordinary expense means it’s typical in your business, both [in terms of] amount [as well as in] frequency and purpose. Necessary means it helps you increase your profits or expand your business. Our Team will guide you, please continue reading below.

Cruise Ships

You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. All ships that sail are considered cruise ships.

You can deduct these expenses only if all of the following requirements are met.

The convention, seminar, or meeting is directly related to the active conduct of your trade or business.
The cruise ship is a vessel registered in the United States.
All of the cruise ship’s ports of call are in the United States or in territories of the United States.
The total days of the trip (not including the days of transportation to and from the cruise ship port),
The number of hours each day that you devoted to scheduled business activities, and
A program of the scheduled business activities of the meeting.
A schedule of the business activities of each day of the meeting, and
The number of hours you attended the scheduled business activities.
You need to be able to show that the convention, meetings, or workshop onboard the Cruise ship directly benefited your business. The days that have a ‘business function’ would be deductible…the days of vacationing or relaxing wouldn’t be a tax write-off.
With really no questions asked, the IRS allows taxpayers to deduct up to $2,000 a year is allowed for attending cruise ship conventions or business trips IF all the ports of call are in the U.S. or U.S. possessions and if the ship is registered in the U.S. (Good luck! Only certain cruise lines going to Alaska would be generally possible). Moreover, a $2,000 deduction may not be enough to cover the cost of a luxury cruise ship.
If the ports are outside the U.S., the best option is to consider the ‘per diem rule’ that allows you to deduct up to 2x the maximum federal per diem rate, per day, on the Cruise. This may not seem like much, but for example, in 2021, the maximum federal per diem rate was $367. Thus, if you were on a cruise for 7 days. The deduction per person would be $367 x 2 x 7, equaling $5,138. (again, being able to show that every day on the cruise had a functional business purpose).
Remember, the cost of travel to get to the Cruise is a different cost all together. It can be considered a separate expense to travel to the Cruise ship convention in the first place.
Also, the cost of the actual education on the Cruise ship (not the cost of the Cruise) should easily be a deduction if it is directly benefiting your business. If worse comes to worst and we can’t deduct the Cruise ship costs, we have a ‘fallback’ position to at least deduct the education or workshop fees.
Assuming the cruise qualifies for a write-off, food and beverage costs are also 100% deductible in 2021 and 2022. Of course, dinings expenses would be separately stated from travel expense for the Cruise or convention statement/invoice.

Conners Additions

If your cruise exceeds a week, you are still eligible to deduct the cost of the cruise as long as your nonbusiness activity does not constitute 25% or more of travel time.
The law hasn’t changed since 1982
In 1982 law stated that you could deduct no more than $2,000 of the expenses incurred by business events held on a cruise ship
My wife and I operate our business as an S corporation. We are thinking of having our stockholders’ meeting in Mexico and taking a cruise ship to and from the meeting destination. Will this trip be deductible?
Yes, but only after we make a couple of changes and add some clarity to this trip. First, we want to change the reason for your trip from “stockholders’ meeting” to “directors’ and officers’ meeting.” As a stockholder, you are an investor, and since investment seminars and meetings are not deductible, you do not want to travel to a stockholders’ meeting. Instead, you are going to have a directors’ and officers’ planning meeting. Directors govern the corporation, and officers manage the corporation. Since you and your wife are both directors and officers, this planning meeting is a strong start to your deductible trip. But it could be better.
As an aside, here’s something to think about: a business reason that we have long liked for a trip to Mexico is to attend an educational program that improves or maintains the skills you need in your business.
Because Mexico is in the tax law–defined North American area, the law says that you need no stronger business reason to deduct your trip to Mexico than you need to deduct a trip to Chicago, Illinois, or Scottsdale, Arizona.
Your trip to Mexico must meet the ordinary and necessary standard. Qualified education is ordinary and necessary. For your directors’ and officers’ meeting, which will address management and planning, your ordinary and necessary business reason could be as simple as needing to leave town so that the ordinary daily claims on your time do not interfere with your planning. The court accepted this “get away from the daily stuff” rationale as an ordinary and necessary business reason in the Heineman case. In this case, the court allowed Mr. Heineman, the chief executive officer of a Chicago corporation, to deduct a $250,000 office that he constructed at his family’s summer home in Wisconsin for his one-month-a-year business planning session away from the Chicago office.
The next thing you must do is to get off the boat for the meeting. If you have the meeting on the cruise ship, you will lose the cost of the cruise as a deduction. Thus, you want the meeting to take place on land, and the ship to be the mode of transportation to and/or from the meeting (you can use an airplane for one leg of the trip or for the entire trip). For the on-land meeting, look for an office building or hotel that rents offices or boardrooms by the day.
Travel Rules to Consider Less-than-one-week rule. If your trip is outside the 50 states but inside the North American area, and if the trip is for seven or fewer days (excluding the day of departure), then the law allows you to deduct the entire cost of travel to and from this business destination. Mexico fits this location rule. Cruise ship transportation. The law authorizes any type of transportation to and from your travel destination, so long as it is not lavish or extravagant. The cruise ship cost is not a lavish or extravagant expense, as the law precludes this possibility by placing luxury water limits on this type of travel. The daily luxury water limit is twice the highest federal per diem rate allowable at the time of your travel.

Luxury Water Travel

If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. The limit is twice the highest federal per diem rate allowable at the time of your travel. (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home within the United States for business purposes.)

Daily limit on luxury water travel

The highest federal per diem rate allowed and the daily limit for luxury water travel in 2022 are shown in the following table.

You are a travel agent and traveled by ocean liner from New York to London, England, on business in May. Your expense for the 6-day cruise was $6,200. Your deduction for the cruise can’t exceed $4,320 (6 days × $720 daily limit).

Meals and entertainment

If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on non-entertainment-related meals and entertainment before you apply the daily limit. For a discussion of the 50% Limit , see chapter 2.

In the previous example, your luxury water travel had a total cost of $6,200. Of that amount, $3,700 was separately stated as non-entertainment-related meals and $1,000 was separately stated as entertainment. Considering that you are self-employed, you aren’t reimbursed for any of your travel expenses. You figure your deductible travel expenses as follows.

Your deduction for your cruise is limited to $3,350, even though the limit on luxury water travel is higher.

Not separately stated.

If your meal or entertainment charges aren’t separately stated or aren’t clearly identifiable, you don’t have to allocate any portion of the total charge to meals or entertainment.

The daily limit on luxury water travel (discussed earlier) doesn’t apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. See Cruise Ships , later, under Conventions.

Conventions

You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. You can’t deduct the travel expenses for your family.

If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you can’t deduct the expenses.

Your appointment or election as a delegate doesn’t, in itself, determine whether you can deduct travel expenses. You can deduct your travel expenses only if your attendance is connected to your own trade or business. .

Convention agenda

The convention agenda or program generally shows the purpose of the convention. You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. The agenda doesn’t have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes.

Conventions Held Outside the North American Area

You can’t deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless:

The meeting is directly related to the active conduct of your trade or business, and
It is as reasonable to hold the meeting outside the North American area as within the North American area. See Reasonableness test , later.

If the meeting meets these requirements, you must also satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States .

North American area

The North American area includes the following locations.

The North American area also includes U.S. islands, cays, and reefs that are territories of the United States and not part of the 50 states or the District of Columbia. See Revenue Ruling 2016-16, available at IRS , for more information.

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This teen is sunk.

A recent high school graduate ditched his tardy parents on a Caribbean island so he could make it back to their cruise ship before it departed.

Taking to Reddit this week with their written soliloquy, user ProfessionalTax7753 shared that the family decided to take a trip to sea in celebration of their teen’s 18th birthday and high school graduation.

Family drama ensued when a teen ditcher their parents to make a cruise ship on time.

Typically the family would go to all-expense-paid resorts, but the recent grad wanted a change of pace.

“I have always wanted to go on a cruise,” they wrote of the week-long trip. “I told my parents it was different and that if we went on excursions we had to follow the schedule no matter what.”

A teenager raced back to catch a cruise ship and left their family behind.

Such instructions for mom and dad were not followed.

“They would not head back to the ship when I said it was time to go. They were busy shopping and bargaining with the locals,” they added.

“I finally said that I was heading back to the ship. My mom waved me off.”

Surely enough, the Reddit user’s folks missed the ship by close to an hour and reamed out their teen for not getting the cruise to wait for them.

“I wanted to scream that they were not going to inconvenience 3,998 people because two could not understand what a schedule was.”

“They ended up having to fly to the next port from there and it was expensive. They are pissed at me for leaving them behind.”

And, now, what started as a thoughtful, nautical gesture has made waves within the family.

AITA for abandoning my parents at an island in the Caribbean so I could get back to our cruise in time? by u/ProfessionalTax7753 in AmItheAsshole

The family had to pay a great deal to get back after missing the ship.

“I don’t know what I was supposed to do. They literally told me that they knew what they were doing,” they wrote.

“I wish I had never asked for this. They are making me miserable because I left without them.”

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baltimore bridge collapse

Port of Baltimore shipping channel could fully reopen this weekend after bridge collapse

BALTIMORE -- The Port of Baltimore channel could fully reopen this weekend after nearly 11 weeks of painstaking operations to remove massive pieces of the collapsed Francis Scott Key Bridge that have been blocking much of the crucial shipping artery.

The entire 700-foot wide channel is expected to reopen between Saturday and Monday, a step made possible by the removal of the last piece of steel bridge that has been blocking the channel since its collapse in March, the Unified Command said in an update.

Clearing the final piece of bridge truss - a structure of interconnected concrete, cables and steel rebar - was completed earlier this week using concrete breakers, torches and underwater surveys, Unified Command said.

Though crews last month were able to clear a limited, 400-foot avenue for vessels to pass through, the complete reopening of the channel will usher in a return to full operations at the port - an essential international cargo destination and employer of thousands of local workers.

The 1.6-mile bridge crashed into the Patapsco River on March 26 after a 213-million pound cargo ship lost power and collided with one of the bridge's support columns - killing six construction workers. The vessel remained stuck in the waterway for nearly two months as crews worked to remove a piece of the bridge pinning down its bow, finally hauling the ship away on May 20.

The removal of the ship allowed for the temporary 400-foot channel to be opened. A pair of cruise ships set sail on May 27 from the Port of Baltimore for the first time since the bridge collapse.

Multiple agencies have launched investigations to determine who might be responsible for the catastrophic collapse, including the FBI, the US Coast Guard and the National Transportation Safety Board.

Meantime, Baltimore officials have been working with the federal government to restore economic activity at the port and plan the rebuilding of the Francis Scott Key Bridge, which served as a critical thoroughfare for about 30,000 daily commuters, according to Maryland Gov. Wes Moore.

The port also supports 15,330 direct jobs and 139,180 jobs in Maryland, according to the state's website.

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Inside Carnival’s cheapest $90-a-day, windowless cabin on its Firenze ship

A n Italian-themed Carnival Cruise ship offers the line’s discount-rated cheapest rooms — but you’ll have to sacrifice having a view.

The four-year-old Firenze, anchored in Long Beach, California has 44, tiny “interior” cabins with no windows nor balcony that can cost about $90 per night, according to reports.

A deal with Costco advertises trips on the four-year-old 4,000-plus capacity ship can go for even cheaper at $564, taxes included. Business Insider reported that it can cost $360 apiece, or about $90 a day.

Other than having some cost-efficiency, a vacation onboard the Firenze doesn’t exactly feel like you’ve seas-ed the day, according to one review.

“It might’ve been the ugliest cabin I’ve ever stayed in,” Business Insider’s Brittany Chang bluntly wrote of her cramped quarters over four nights to Ensenada, Mexico with a stop at Catalina Island in California.

It was about 150 feet in total space.

The ship doesn’t have any alternative solo cabins beyond the accessible, according to ThePointsGuy .

Aside from the cheap cost, the room was torn for looking “quadruple” its young age from dates furniture. The bathroom was also compared to a gas station’s.

“Did it feel more like a hospital room than a floating hotel room? Yes,” Business Insider reported.

However, some redeeming qualities were reported as well.

“It’s chaotic and a lot to take in, but somehow it works,” according to a review Ashley Kosciolek wrote for ThePointsGuy.

“Passengers can have their photos taken with a Vespa-style scooter and grab Italian-themed burgers and meatball sandwiches at new iterations of some of Carnival’s most popular eateries.”

Trivia, movies, and games were noted for creating a lively atmosphere — as were the spa, waterslides, ropes course, and gym.

Still, it was panned for feeling too crowded on a trip well below full capacity.

An American adaptation of Italian culture — the ship is named for Florence after all — is also present just about anywhere you go. Photos evoke a similar sensation to walking around The Venetian in Las Vegas.

“The Italian vibe carries through everything you do on board,” she added. “It will either make you smile or roll your eyes. Regardless, it’s a lot of fun.”

Inside Carnival’s cheapest $90-a-day, windowless cabin on its Firenze ship

COMMENTS

Navigating Income Taxes on a Cruise Ship: A Guide for Crew Members
Flag of the Ship: The nation under which the ship is registered, also referred to as the ship's flag, determines the tax laws that apply to revenue made on a cruise ship. U.S. Citizens: No matter where the ship is registered, income made on a cruise ship for U.S. citizens is subject to federal income tax in the United States.
Do Cruise Ship Crew Pay Taxes?
Crew members are kind of like the contractor fixing your roof. They do a job, the cruise line pays them for it, then the cruise ship workers pay the taxes on it. As members of society in general we assume that if people don't pay their taxes then their respective governments will handle it. This is pretty much how it is for cruise line employees.
Cruise Ship Salary, Wages, Banking & Savings
Cruise Ship Employee Contract and Agreements. ... Taxes on Cruise Ship Employment Income. Crew members are responsible for any taxes due to their country of origin. Only United States citizens or employees that reside in the USA will have US federal taxes deducted from their pay. Depending on your employment contract and the country where you ...
Cruise Ship Employment FAQ
While specific position requirements depend on the job you are interested in, there are some essential requirements that all crew must meet to work onboard: Be 21 years of age or older. Be able to pass a criminal background check. Hold a valid passport. Have a US C1/D visa (if you are not a Canadian or US citizen/resident) Have a Princess ...
Do Cruise Ship Employees Pay Tax
If you work on board a cruise ship, are employed by the vessel, and are a resident of the UK, you may not need to pay tax on your earnings. The three basic rules to qualify for SED are that you must have spent more than 183 days outside of the UK during a 365-day period, your qualifying period has at least one voyage that begins and ends at a ...
Fact Check: Do Cruise Lines Pay US Taxes?
How much do cruise lines pay in taxes? In 2019, Carnival Corp. paid $71 million in taxes on $3.06 billion in income. In the same year, Royal Caribbean Cruises, Ltd. paid $25.5 million in taxes on ...
Crew Compensation: What to Know for Your U.S. Taxes
Crew Compensation: What to Know for Your U.S. Taxes. This tax advice is not intended, and cannot be used, to avoid any penalties as a result of taking any position from this column. Thomas Andrews is a CPA and a principal of AvMar Accounting Services. +1 954 764 0404; www.avmaraccounting.com.
Cruise Ship Employee Pay, Travel Discounts, Tips
In positions like these, cruise ship employees can make as much as $4,500 a month. Keep in mind though, that these positions are very competitive. One of the top-earning positions onboard is that of a cruise director, a position that can command as much as $80,000 per year! Although, the average cruise ship director salary is $50,000 annually.
How much do cruise ship workers make?
According to BestHospitalityDegrees, the top five jobs on a cruise for salary are: Executive Chef. Cruise Director. Chief Purser. Hotel Director. Human Resources Manager. ZipRecruiter also notes that Cruise Ship Physician Assistant and Cruise Manager also rank well in terms of salary.
How Much Do Cruise Ship Workers Make? (23 Jobs and Salaries)
National average salary: $49,874 per year Primary duties: Recreation coordinators plan, direct and oversee the ship's recreational activities, such as exercise classes, dance instruction and children's activity programs. They may also plan special events, such as theme parties. Find recreation coordinator jobs. 19.
Is income from working on a cruise ship tax free?
Read more about UK Income Tax for employees on-board cruise ships. United States of America. All U.S. citizens working for a U.S. based cruise line such as Norwegian Cruise Lines or Carnival Cruise Lines, will automatically have income tax deducted from their paychecks as per federal and state laws. Depending on individual circumstances ...
Do cruise ship employees pay US taxes?
Yes, cruise ship employees do pay US taxes. However, the taxation process for cruise ship employees can be quite complex and can vary depending on a range of factors, including the individual's citizenship, the cruise line they work for, and the duration of their employment. In general, if you are a US citizen or a permanent resident, you are ...
Answered: How Much Money Do Crew Members on a Cruise Earn?
In 2022, the company stated that its median employee earned $15,264. Given total compensation to the CEO of $10.7 million, the pay ratio comes in at 705:1. Finally, Norwegian Cruise Line Holdings, which includes NCL, Oceania and Regent Seven Seas filed that its total compensation for 2022 was $24,484.
Airline And Cruise Ship Employees: How Income Earned In ...
US Citizen Airline Pilots And Cruise Ship Employees Living Outside The USA - What percent of the work takes place in "international waters"? It's obvious that some work time is spent in "international waters" and some is spent in "non-US AKA foreign countries".
Do Cruise Ship Residents Need to Pay Taxes?
Employee Benefits Offered by Cruise Ship Companies. Cruise ship companies often provide employee benefits such as accommodation, meals, healthcare, and transportation. These benefits can greatly enhance the quality of life for cruise ship employees and may be provided tax-free or with certain tax advantages. Tax Implications of Employee Benefits
Will the Cruise Industry Navigate Around the Minimum Tax?—Part 1
Foreign-incorporated cruise lines based in US ports have often been exempted from US income tax due to Section 883. Whether the post-2022 US corporate alternative minimum tax or the proposed OECD Pillar Two minimum tax (discussed in Part 2 of this article) will impose a minimum tax regime on such cruise lines is uncertain, says Gunster, Yoakley & Stewart, P.A.'s Alan S. Lederman.
Federal Income Tax
July 25, 2006. more or less in TX. #2. Posted June 15, 2009. Cruise ship employees are paid while the ship is at sea and pay no US taxes. Of course they get no Social Security or Medicare when that time comes. Crew, officers, cooks, dancers and even the doc gets paid at sea.
Cruise-ship workers reveal how much money they make
Shutterstock. There's a big gap between the highest-paid and lowest-paid cruise-ship workers. Business Insider spoke with 35 current and former cruise-ship employees, who reported monthly earnings ...
Cruise Ship Salaries: How Much Do Workers Really Make?
Salaries of cruise ship staff vary greatly depending on their position and level of experience, with the average salary of a cruise ship captain being $98,000 and the average cruise director salary being $58,887. Cruise ship waiters can make anywhere from $1,200 to $5,000 per month, while cruise ship doctors can earn between $7,500 and $12,000 ...
FAQs
Assignments vary depending on the position and brand. For most of our fleet, it can be anywhere between 4 months thru 9 months depending on the position. On the Pride of America only, entry level positions work up to five months with a scheduled, unpaid vacation. Management level positions work four months onboard followed by a scheduled, paid ...
Cruising to a write off
Rule #3. If the ports are outside the U.S., the best option is to consider the 'per diem rule' that allows you to deduct up to 2x the maximum federal per diem rate, per day, on the Cruise. This may not seem like much, but for example, in 2021, the maximum federal per diem rate was $367. Thus, if you were on a cruise for 7 days.
The truth about working on a cruise ship
01/25/2023. From 14-hour shifts to meager pay, working conditions on cruise ships are tough. No wonder it's becoming increasingly difficult to find staff. While passengers enjoy their cruise ...
Cruise ship employee, received W-2, no fica withheld
Cruise ship employee, received W-2, no fica withheld. 02-25-2023 03:37 PM. Client, a US citizen, working for a foreign cruise line, received a W-2 with only federal taxes withheld. Is client responsible for paying all, half or none of the social security taxes? If responsible, hoe do I enter the info into Lacerte. Thanks to all for any assistance.
Teen ditches 'pissed' parents on island to make cruise on time
01:18. This teen is sunk. A recent high school graduate ditched his tardy parents on a Caribbean island so he could make it back to their cruise ship before it departed. Taking to Reddit this week ...
Another Celebrity Ship Itinerary Change
The original plan was to visit Bimini, Labadee, and Grand Cayman. "Due to a change in our itinerary planning for our winter 2024-2025 sailings, we are removing our visit to Labadee, Haiti, on ...
Best Cruise Insurance Plans Of June 2024
The average cost of cruise insurance is $457 per trip, based on Forbes Advisor's analysis of rates for 37 cruise travel insurance plans. Cruise insurance costs will generally depend on your age ...
Cruise Ship Employees Arrested at PortMiami on Child Pornography
Two cruise ship workers were arrested at PortMiami on child pornography charges, setting their bonds at $10,000 and $12,500.
Port of Baltimore shipping channel could fully reopen this weekend
The removal of the ship allowed for the temporary 400-foot channel to be opened. A pair of cruise ships set sail on May 27 from the Port of Baltimore for the first time since the bridge collapse.
Inside Carnival's cheapest $90-a-day, windowless cabin on its Firenze ship
A deal with Costco advertises trips on the four-year-old 4,000-plus capacity ship can go for even cheaper at $564, taxes included. Business Insider reported that it can cost $360 apiece, or about ...