Yes, he qualifies for EIC (assuming he or his wife had
income earned in the US.for 2005 and meet the other
requirements) since he does not meet the requirements for
filing Form 2555 or 2555-EZ (for foreign earned income) as
he was not in the foreign country for all of 2005 or for at
least 330 days in 2005

I believe the time starts when he is physically present in
the foreign country.

He should file as married filing jointly with his wife,
claim the 2 children as dependents and as qualifying
children for the EIC.

For subsequent years, he won't qualify for EIC as he will
likely have to file Form 2555 or 2555-EZ which will make him
ineligible for EIC.

However, since he will be living apart from his wife for at
least the last 6 months of 2006 and 2007, then she may be
able to file as head of household and possibly qualify for
EIC (assuming she meets all of the EIC requirements) and he
can file as married filing separate.

See Pub 54, Tax Guide for U.S. Citizens and Resident Aliens
Abroad, and Pub 596, Earned Income Credit (EIC).

Rudy
www.LizcanoTaxServicesLLC.com

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"securityinfo[at]hushmail.com" <securityinfo[at]hushmail.com> wrote:

- quote -

As you describe your friend's situation, he has no special
tax treatment at this time. There is no reason why he
shouldl not qualify for EIC, if the requirements are met.

In calculating the Foreign Earned Income Exclusion, he
counts each day he is not in the US for any part of the day.
Thus, he can never count the day he leaves nor the day he
returns. If he was somewhere over the Atlantic Ocean at
midnight, he could count the day he arrived in Europe as his
first day; if he took a daylight flight, however, and
arrived in Europe before midnight, he could not count that
day.

He has two choices for 2005. He can file as usual and pay
the tax on his Iraq income. Then, when he has been there
long enough, he would file an amended return to claim the
exclusion and get a refund. Or, he can ask IRS for an
extension based on his expectation of meeting the 330 day
rule. They will give him until 30 days after he meets the
requirement to file his return. Then, he couldl claim the
exclusion and not have to pay the tax.

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

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

My friend took a position as a private contractor the first
week of October, 2005. He is on an army base in northern
Iraq. His income for 2005 was approximately $25,000 gross,
most of it from the three months in Iraq. He has a wife and
two children. The children are under 10 years of age. He
expects to stay through 2006 and into 2007 ( a two year
commitment).

Will he qualify for EIC for tax year 2005?

It is understood that the taxable income exclusion amounts
are predicated on his remaining out of county for x number
of days in a 365 day period. Is this calculated from the
day he was "wheels up" to Iraq?

Opinion. What is the best way for him to file for 2005,
with the above conditions in mind? And how will this filing
effect subsequent tax years?

Thanks for your help!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >