Overseas Tax Issue.?
I have been overseas for 5 years. I came back to the states in August of this year where I took a job with the same company but in the states. Since I did not complete a full tax year overseas do I have to pay taxes on the full amount earned last year? Or just the time I came back in 2007? Or is there a way to get around this? I have been told that since I did serve a consecutive 365 days overseas I would be tax exempt, but part of the 365 days was from 2006. Can anyone help me with this?
Public Comments
- Let's say you came back August 1st. If you look at August 1st 2006 to July 31st 2007, do you have the 330 days? (If you never came back, you could even look at Sept 1st/06 to August 31st/07.) yes, you get to do the form 2555. (The fact that you used the same 2006 days on the 2006 tax return is a non-issue.) On the form 2555, you have the 365 day window and 212 days land in 2007. You would get 212/365 of the exclusion and would get to exclude about $50,000 of the foreign income. You would be taxed on any income above that--and would be taxed as if the excluded income was still there. The excluded income was taxed at the 10% and up bracket. Your remaining income starts from there. If you lived and worked in say, Canada, where you also paid taxes to Canada, try the return both with the 2555 and the form 1116. The 1116 works with tax bracket averages and sometimes come out with a lower tax bill than a 2555. Who told you the 365 days had to match up to 1/1 and 12/31? Certainly not the publication 54.
