Tax Law (Questions About Taxes)/overseas work

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Question
Good Afternoon,

I've worked in Afghanistan for seven years. I came home in September and had not been home for a year previously.
My employment originated in September of 2006 and I have never been in the states enough time that I didn't qualify for the exemption.
Do I have to pay taxes on the first 98,000 or am I still exempt? If I do need to pay, is it pro-rated for the nine months I was out of the country?

Thank you,

Greg

Answer
Hi Greg, you would likely qualify for the foreign earned income exclusion under the physical presence test. Since your likely qualification period (assuming less than 35 days in the US during the 365 days qualification period) will include only part of 2013, your maximum exclusion amount will be prorated for the period of time that your qualification period falls within 2013.

As a contractor in Afghanistan (my assumption), you would not qualify under the "bona fide resident" test. Please feel free to read my military contractors article for americans working overseas in Afghanistan, etc for more info.

The key for your exclusion will be selecting a qualification period that will maximize your exclusion amount.


Best regards,
Randall

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Randall Brody, EA, MBA, CCP

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Tax Samaritan is a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the unique tax issues that apply to taxpayers that are gamblers, teachers, nurses and military.

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