Nikko wrote:

- quote -

If you meet the specific requirements for foreign earned
income, UP TO $80,000 of earned income may be excluded each
year. In the first year, unless you go overseas on January
1, the exclusion will be prorated based on the number of
days you are outside the U.S.

Although the rules may appear simple, when you read them,
actually applying them to real-life situations can be
difficult. If you do take a position outside the U.S., you
should consult a professional who is familiar with the
exclusion rules.

Lanny Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Nikko" <nothanks[at]yourmomma.com> wrote:

- quote -

Yes and no. You have to reside outside the country for 330
of any 365 day period for earned income from overseas to
qualify. It only applies to income tax.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

Links and references, below, may be accessed at http://www.irs.gov

If you are a United States citizen or a resident alien of
the United States who lives and works abroad, you may
qualify to exclude all or part of your foreign salary or
wages, or amounts received as compensation for personal
services rendered from your income. If you are a United
States citizen with a tax home in a foreign country and you
meet the bona fide residence test or physical presence test,
you may exclude up to $80,000 in the year 2003 and
thereafter. Resident aliens of the United States with a tax
home in a foreign country may be eligible for the exclusion
if they meet the physical presence test, or if they are
citizens or nationals of a country with which the United
States has an income tax treaty with an applicable
nondiscrimination clause, and they meet the bona fide
residence test. Specific guidelines for these two tests are
covered in Topic 854. The maximum annual exclusion is
prorated on a daily basis if there is any part of the year
that you do not qualify under either test.

If you qualify under either test, you may also claim an
additional exclusion based upon what you spend for foreign
housing. The foreign earned income exclusion and the foreign
housing cost amount exclusion are figured on Form 2555
(PDF), which must be attached to Form 1040 (PDF). However,
if you claim only the foreign earned income exclusion, you
may be able to use Form 2555-EZ (PDF) instead.

If you would like more information on who qualifies for the
exclusion, refer to Topic 854. For more information on what
type of income qualifies for the exclusion, refer to Topic
855.

You may also refer to Publication 54, Tax Guide for U.S.
Citizens and Resident Aliens Abroad.

If the information you need relating to this topic is not
addressed in Publication 54, you may call the IRS
International Tax Law hotline. The number is area code (215)
516â€"2000. This is not a tollâ€"free number.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I've been reading a lot of working overseas, especially about contract work
in Iraq, and something that comes up is that income overseas (or at least
some of it) is not taxable. The figure I've most often come across is that
the first $80,000 is not taxable, everything after is. First of all, is
that an accurate figure? And is the first $80K not taxable for every tax
year or just the first year? Finally, when that is referred to as not
taxable income, do they mean I would get to keep my entire paycheck or do
they still take things like social security out? Thanks for any help you
can provide in answering these questions.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->