On Wed, 9 Apr 2008 22:15:42 EDT, mavigozler <mavigozler[at]turkiye.govwrote:


- quote -


Your tax home for the first half of 2007 was the foreign country. You
changed to a new tax home when you returned to the US for the last
half of the year. If you were in the foreign country exactly 1/2 of
the year, you may exclude up to $42,750 on Form 2555. If you earned
more than this in the foreign country, you will have to pay US tax on
the excess but you may claim a credit for any foreign income tax paid
on the excess.

If, as it would seem, you qualified as a bona fide resident for 2006,
you also qualify as a bona fide resident for 2007. You do not need to
meet the physical presence rules; the residency status continues until
you abandon it.

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

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I posted a question on tax determination software earlier precisely
because I wanted it to hold my hand on questions like these.

For 2007, I lived exactly the first 6 months of the year in a foreign
country. My home was there. My family was there. I had a job as
proteomics supervisor there for the past 3 years (yes, from mid-2004 to
mid-2007). My salary was paid by the foreign university, and I paid taxes
(income and others) to the foreign country.


So in mid-2007 I am back in the U.S., getting a job here and working for
the last half-year here. Although my wife and daughter remain back in my
wife's native country, I am here for good.

So here's what I think: my tax home was there for the first half of 2007
but back in the U.S. for the last half of 2007.

I should not have to pay U.S. income tax on income earned and taxed by a
foreign employer and foreign country. It should be excluded from my
income tax computation. But I should pay tax on U.S. income I earned in
my new tax home in the U.S.

But Form 2555 is NOT AT ALL clear in its instructions OR its examples. I
called the IRS and its expert said I met the physical presence test, but I
am still not clear about the tax home!

Anyone else want to offer an opinion? The tax software seems to offer no
opinion. And 1-800-829-1040 answered questions in a way that only
generated more questions.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >