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Question for the Money Doctors

Question submitted on Mar 28, 2014.

Question

I worked over seas 6 months of last year in Afghanistan and Kuwait. Will I recieve a tax exclusion for that time that I worked? I can use Form 2555? because I don't meet the requirements can I use Form 1116?

Answer

You are making reference to the Foreign Earned Income Exclusion. Please go to www.irs.gov and look at Publication 54 - Tax Guide for US Citizens and Residents working abroad. Please carefully read the instructions to Form 2555. In order to qualify for this exclusion, you need to qualify under the Physical Presence test or Bona Fide Residence test. Based upon your short comments, you may not qualify if you are back in the US. If you worked overseas for only six months, you might not have been considered a resident in those countries or meet the physical presence test.

If you paid taxes overseas, you do get a credit via Form 1116 - the Foreign Tax Credit. Please carefully read the instructions to that form. Please check to see if you paid any income taxes to the countries you were working in. There is a possibility you did not pay any taxes on the countries you mentioned. Please check your paystubs. For additional assistance visit www.findacpapfs.org to find a CPA/PFS near you.


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