On Nov 1, 9:47*am, "Linda H. in Rosharon" <Rhin...[at]gmail.com> wrote:
- quote -


Whether his earnings are subject to state income tax depends on the
state of residence and all of the facts and circumstances. For
example, in California a person who is outside the state for an
uninterrupted period of at least 546 days on an employment-related
contract is considered a nonresident; an absence is uninterrupted if
the individual spends no more than 45 days of any taxable year in
California. In that case, the expatriate spouse's community 1/2 of
his foreign earnings would not be subject to California tax. However,
because California is a community property state, and current earnings
are community income in the absence of an interspousal agreement to
the contrary, the other spouse's community 1/2 of the expatriate's
foreign earnings would be subject to California tax if that spouse
remains a California resident. California does not conform to the IRC
Sec. 911 exclusion, although many other states do.

Each state defines a resident for income tax purposes by its own
statutory rule, and many states either conform to IRC Sec. 911, or
consider a person who is absent in foreign country for a certain
period of time to be a nonresident, or both. On the other hand, quite
a few states would consider the expatriate to be resident taxable on
all of his income, regardless of source. Fortunately most of those
states allow the 911 excluson.

It depends on the state and the circumstances of the individual case.

Katie in San Diego

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

You say the Saudi company pays his company which, in turn, pays him. If
his company is a US organization, the company must withhold taxes,
including FICA and Medicare taxes. However, he may request the income
tax withholding be adjusted for the exclusion available to him.

Assuming he will meet the 330-day rule, he may exclude up to $84500 on
Form 2555.

Linda H. in Rosharon wrote:
- quote -

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

<removeps-groups[at]yahoo.com> wrote in message
news:4aebe5c5-eb3e-4634-bc47-b6a355fdc1ec[at]c36g2000prc.googlegroups.com...
- quote -

The imposition of tax by the foreign governement is not a requirement for
this exclusion. It is a requirement for the foreign tax credit (on
non-excluded income).

- quote -

Depends on where the business is located. Income from a sole-proprietorship
located in the U.S. may not be excluded.

- quote -

Careful: Exemptions and exclusions are two different things. Exemptions are
things that are included (or includible) that are backed out. Exclusions
are never included in the first place.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Nov 1, 9:55 am, kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

While he may pay no federal tax because on his salary because of the
foreign earned income exclusion, he still has to pay federal taxes on
non-earned income like interest, dividends, and capital gains. In
addition, he has to pay full state taxes on all his income; I don't
know if any state allows the foreign earned income exclusion.


- quote -

If he pays no taxes in Saudi Arabia, does he still get the foreign
earned income exclusion? Form 2555 seems to allow it.

Is Schedule C income considered to be foreign earned income? Seems to
me that it ought to be. The 2555 instructions suggest this

<Quote source="http://www.irs.gov/instructions/i2555/ch02.html"
Foreign earned income for this purpose means wages, salaries,
professional fees, and other compensation received for personal
services you performed in a foreign country during the period for
which you meet the tax home test and either the bona fide residence
test or the physical presence test. It also includes noncash income
(such as a home or car) and allowances or reimbursements.

</Quote
However, is US social security tax due on the full amount (before the
exemption)?

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <fecc2552-3bbc-433e-bcbc-156311f5aa2d[at]e38g2000prn.googlegroups.com> ,
Linda H. in Rosharon <RhinoRN[at]gmail.com> wrote:
- quote -


Is his company a US company who will report his income on orm W-2?


If so, he can elect to exclude all foreign earned income up to an
indexed maximum amount -- over $90,000 by now -- see form 2555
and its instructions.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

My husband is working as a contractor in Saudi. The Saudi company
pays his company who pays him. No taxes are paid for him. If he is
out of the states for a year, does he have to pay taxes?

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >