330 exemptions

[RatBrother]

Hey Yall ,
I have been doin' this Exemption stuff, and Filing the form 2555,
Overseas Tax Exemption for a while.
I do not have all the answers , and Neither does the IRS.
But here is the number if you need help from them .
800-829-1040

They got me squared away with the issue that I had with them .
Hopefully they can help answer your questions also , and get all the forms you need.

[Incognito]

Thanks Rat brother,
I got a few questions to ask them myself !

[mattsindian]

If he's still on here, that CPA fm Fla is an expert with Expat Tax forms. I have had good success with his company now 3 yrs.
Indian of Oklahoma
Koutoulas & Relis of Plantation Fla:2cents:cheers

[HeadRat]

I've heard good reviews from our in house tax guy as well. From the posts I've read he seems to be on the ball too.

[studman]

I do believe it's called a 330 because it's 330 days out in a 365 day period. Unless you want to f___ with the ir_ follow this rule. it can not be any simpler. or you could do that residence thing.

[Electrical Al]

if you do the 330 you need to stay out for 365 too get full 100 per cent of 85,500.00. If 330 only you get pro rated. Divide 85500 by 100 per cent and multiply 330 and you get your qualified deduction.:rockwoot::nono:

[Gabriele]

Hear all sorts of answers on this, anything from 330 out to get full exemption to prorated for anything less then that, but take all the tax pros and their opinions, the one that counts is the IRS and from their site www.irs.gov, also of note is if you get HOLA/COLA this is taxed and not part of the base (85,000), if you receive money for schooling for your child you are taxed on that money. Example: you earn 60K wage/salary and 25K HOLA/COLA, the 25K is taxed on the basis of 85K and not 25K. This is how CACI payroll has explained this to us. Of course it is how the company lists the money to you.

Foreign Earned Income Exclusion - Physical Presence Test

You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. The 330 qualifying days do not have to be consecutive. The physical presence test applies to both U.S. citizens and resident aliens.

The physical presence test is based only on how long you stay in a foreign country or countries. This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. However, your intentions with regard to the nature and purpose of your stay abroad are relevant in determining whether you meet the tax home test explained under Tax Home in Foreign Country in Publication 54.

330 Full Days
Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during the 12-month period. You can count days you spent abroad for any reason. You do not have to be in a foreign country only for employment purposes. You can be on vacation time.

You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time.

Full Day
A full day is a period of 24 consecutive hours, beginning at midnight. You must spend each of the 330 full days in a foreign country. When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total.

Example:
You leave the United States for France by air on June 10. You arrive in France at 9:00 a.m. on June 11. Your first full day in France is June 12.

Passing Over Foreign Country
If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States.

Example:
You leave the United States by air at 9:30 a.m. on June 10 to travel to Spain. You pass over a part of France at 11:00 p.m. on June 10 and arrive in Spain at 12:30 a.m. on June 11. Your first full day in a foreign country is June 11.

Change Of Location
You can move about from one place to another in a foreign country or to another foreign country without losing full days. But if any part of your travel is not within a foreign country or countries and takes 24 hours or more, you will lose full days.

Example 1:
You leave London by air at 11:00 p.m. on July 6 and arrive in Stockholm at 5:00 a.m. on July 7. Your trip takes less than 24 hours and you lose no full days.

Example 2:
You leave Norway by ship at 10:00 p.m. on July 6 and arrive in Portugal at 6:00 a.m. on July 8. Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. If you remain in Portugal, your next full day in a foreign country is July 9.

In United States while in Transit
If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. You are treated as traveling over areas not within any foreign country.

How To Figure The 12-month Period
There are four rules you should know when figuring the 12-month period:

Your 12-month period can begin with any day of the month. It ends the day before the same calendar day, 12 months later
Your 12-month period must be made up of consecutive months. Any 12-month period can be used if the 330 days in a foreign country fall within that period
You do not have to begin your 12-month period with your first full day in a foreign country or to end it with the day you leave. You can choose the 12-month period that gives you the greatest exclusion
In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another
Example 1:
You are a construction worker who works on and off in a foreign country over a 20-month period. You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States.

Example 2:
You work in New Zealand for a 20-month period from January 1, 2007, through August 31, 2008, except that you spend 28 days in February 2007 and 28 days in February 2008 on vacation in the United States. You are present in New Zealand 330 full days during each of the following two 12-month periods: January 1, 2007 - December 31, 2007, and September 1, 2007 - August 31, 2008. By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Refer to Chapter 4, Figure 4-B in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

References/Related Topics
Foreign Earned Income Exclusion

[studman]

Ah, there you go with that copy & past thing again Gabriele. Your post should clear up a lot of confusion on this subject.

[Gabriele]

OH, I don't know, as I said there are many interpetations, all I know is my taxman won't be paying the fines if he's wrong, :fauches: I'm supposed to go to Boston in a week for a school and my boss reminded me that that counts against my 330 :nono:

[Electrical Al]

Good post on irs, but just remember when you figure your calender year you must still remember that just because you stay in foreign country for 330 days does'nt mean you get full 100 per cent of 85500. Many of the guys who work overseas do not understand this. But then there many who know this.
Just for those who who does't want to loose 8200 on there exemtion and this my fellow rats is a fact.::nono::cheers

[Wheelsup]

Electrical Al You are right. If you only have 330 days overseas you will get about a 90% deduction. Dividing 330 by 366 equals .901. Times the new maximum of 87,600 will give you a deduction of about 79,000. Look up form 2555 EZ at irs.gov. Hope this makes sense.

[Megga Watt]

Electrical Al You are right. If you only have 330 days overseas you will get about a 90% deduction. Dividing 330 by 366 equals .901. Times the new maximum of 87,600 will give you a deduction of about 79,000. Look up form 2555 EZ at irs.gov. Hope this makes sense.

OK Who handed out the STUPID PILLS?? :doh:banghead

Check with a Tax man before you do anything stupid, The IRS will not correct you if you do something stupid like that!!!:blahslap

[Justus]

OK Who handed out the STUPID PILLS?? :doh:banghead

Check with a Tax man before you do anything stupid, The IRS will not correct you if you do something stupid like that!!!:blahslap

If they have checked with their Tax man, I hope they post the Tax man's name here so no one else will go to him--he obviously doesn't know what he's talking about. If you are in a foreign country (or countries) for 330 days in a 365-day period (or do the Residency option), you qualify for the FULL exempt amount of $87,600.

[Electrical Al]

To figure your exemption : Divide 85500 by 365 = daily times 330== amount for that many days out. Then you add daily for any aditional days you stay out . So if you stay another 35 days you get full 85500. Sorry I left out.

[Ramblin Rat]

Read the form.

Read the instructions that come with the form.

Get a current tax preparation guide for abot 15 bucks at the grocery store or Walmart. Read the sections that apply to foreign income.

Whether you choose to use a tax preparer or not you should do the above so you understand your own taxes. It is there in black and white and it is not that complicated. Do not listen to rumors spread by people who may or may not be knowledgeable on this subject.

Some people get away with filing incorrectly for a while, and pass this information along but the IRS can come back 3 years later and tell you you owe more money do to an error on your return. Go to a legitimate source for all your information.

[Wheelsup]

:wtf Who is stupid? Not me. Look at the form and fill it out. Its not that hard.

[Wheelsup]

:wtf Who is stupid? Not me. Look at the form and fill it out. Its not that hard.

[Ramblin Rat]

Like I said...read the form...read the instructions.

The information Wheelsup provided is correct. It is there in black and white and it is not complicated.

If you do not agree you have not read the form.

You have not read the instructions.

You have not prepared your own taxes. You paid someone to do it and you do not understand what the facts are.

You are passing on inaccurate information. This is outside your realm of expertise.

This is important enough that everyone should actively participate in their own taxes. You can still hire someone to do it for you but you should read the form and the instructions so you understand it. Your tax man will not take the time to teach you the details what he did or you may not come back next year when you find out how easy it is.

[Justus]

You guys are confusing a full-year exemption and a partial-year exemption. If you already had your 330 for 2007 but broke it this year on say 31-March, you can still claim 01-Jan to 31-Mar as tax-free.

You take the number of days in foreign countries and divide by total days in the year (91 / 366) and you get 24.9% of your days were outside the US.

This means you qualify for 24.9% of the max exemption of $87,600, or up to $21,812. To qualify for the 100% exemption, you just need the 330, not 366. The IRS sets this as the point at which we "earn" the full exemption, otherwise it wouldn't be called "330", it would be "365" or "366".

[guitartexan]

I dont have the time, nor do I possess expertise in the ever changing tax regulations to file my own taxes.
I DID , however, find time to locate a top notch CPA that specializes in expat income tax filing. I made sure that he is legally responsible for his miscalculations and have not had a problem. Save all of your reciepts for EVERYTHING, file the long form if you want to, and SAVE $ just in case, specifically for taxes. After 3 years you can buy a new boat with the $ if you dont have to use it for taxes.

Dont be like so many of our employers--be willing to pay for qualified help.:cheers

[Electrical Al]

The reason they call it 330 is because that is the qualifying event. Irs knows that e-pats sometimes have to go home for certain personal reasons legal,funerals and family. So they allow this time without loosing qualifying event

I sorry rat bro. but if you try to qualify full exemption you need 365 Sure you can qualify for the out of country tax exemption with 330 day but you still need 365 for full amount of 85500 or now it has increased to 87500. This amount has increased each year. I used 2 different professional tax firms and each has a form from irs that shows this above. These guys do more ex-pat returns than your average tax firm. Even if you do the software from companies like turbo they have this form. This will not be on your basic turbo.
This is confusing topic so do your homework and you will understand this
So if have been deducting full amount on 330 you may still owe taxes. Last post on this subject.:banghead

[Ramblin Rat]

OK.... I have form 2555 in front of me. this is for 2007

line 37 indicates the maximim exclusion is 85,700.00

line 38 askes you to enter the number of days in your qualififying period you were out of the country. I was gone 340 days out of 365.

line 39 says if you were gone 365 days out of 365 days enter the multiplier of 1.00 if not divide the number of days you were gone by 365

340/365=.932

line 40 says multiply line 37 (85,700.00) times line 39 (.932) = 79,872.00

This is your exemption which is entered on line 42

Easy as pie any 6th grader could do this.

You do not get a full exemption unless you are gone 365 days

you qualify for an exemption after 330 days (just not the full amount)

If you want to argue this you have not read the form. You have not done your own taxes. You hired someone to do it and signed it without reading it.
Please do not repeat what you have " heard" from another craftsman or "heard" in a bar somewhere.

It takes some time to keep up to date on these laws. Most people are better off paying someone else to do it. But if you do it that way don't go around telling others how to do their taxes

[RatBrother]

I am with Justus on this one !!!!
It is called 330 for a reason !!!!
Most of all , your first 330 ! I have never heard of a pro-rated 330.
If you bust out of , wherever, for a Funeral , your Dog has fleas, and you aint gone 330 out of 360, there aint no exemption !
If you get your first 330 , and going out on your 2nd , or 7th. year of Tax Exempt, yes , you are allowed extended visits.
I knew this thread was going to stir up , all YOU EXPERTS !!!:banghead
What kind of Dumb ass , would only go 340 and try to push the IRS' Buttons.?????
Rover , must be busy these days, Jump on in here !!!

[Ramblin Rat]

Before anybody else goes shooting off...pull out your tax returns for the past 3 years and read it. See for yourself what was done.

[tavi]

well worth it. the I.R.S. was sending me nice letters about my 06/07 stint with H.B.Z. in beijing my C.P.A. and the bag of reciepts for my after contract traveling saved me some serious green.

[Ramblin Rat]

Lets keep it real simple.

On either your 2006 or 2007 return look at form 2555 line 42.

You do have a copy of these returns don't you.

line 42 shows the amount of the exemption your tax man calculated for you.

Read it and weep.

[Justus]

The "Qualifying Period" is not just the days you are in foreign countries, it's the total time-frame you are qualifying. If you have 340 qualifying DAYS, you are qualifying 340 days out of a 365 day PERIOD. That's what should have been entered in Line 38--your Qualifying Period was the full 365 days of the year, not just the 340 qualifying days.

Someone mentioned Turbo Tax; I've used their Premium version for years and this is the exact way they figure it. But I don't just take Turbo Tax's word on everything--I DO read the instructions and publications every year and I think Turbo Tax is figuring this the correct way.

We each have the right to believe whatever we want to and I guess there are different ways this can be interuptreted. I choose to believe Turbo Tax Premium backed up by the way I read the codes.

[Ramblin Rat]

You're right Justus, and Rat Bro. I reviewed the instructions and the form.
I did it wrong and paid $155.00 that I did not owe.:banghead

[Megga Watt]

The "Qualifying Period" is not just the days you are in foreign countries, it's the total time-frame you are qualifying. If you have 340 qualifying DAYS, you are qualifying 340 days out of a 365 day PERIOD. That's what should have been entered in Line 38--your Qualifying Period was the full 365 days of the year, not just the 340 qualifying days.

Someone mentioned Turbo Tax; I've used their Premium version for years and this is the exact way they figure it. But I don't just take Turbo Tax's word on everything--I DO read the instructions and publications every year and I think Turbo Tax is figuring this the correct way.

We each have the right to believe whatever we want to and I guess there are different ways this can be interuptreted. I choose to believe Turbo Tax Premium backed up by the way I read the codes.

Hey Justus, let them over pay their taxes all they want, someone has to pay for what Obama is about to do to everyone, Bend over and SMILE.:moon:fauches::lol:

[RatBrother]

Justus ,
Have I got a sweet deal for you !!!

You do my Taxes this year, and I will hand deliver , a very special package to you in about 3 weeks.

Game on ???

[RatBrother]

Where the hell is Rover on this Topic ?????

Someone check every bar on the east coast, and Eastern Europe .

[RatBrother]

OH, I don't know, as I said there are many interpetations, all I know is my taxman won't be paying the fines if he's wrong, :fauches: I'm supposed to go to Boston in a week for a school and my boss reminded me that that counts against my 330 :nono:

Gab. ,
No , No ,
here is the OTHER kicker. Sure to stir the pot even more.
You can claim, " Bonafied Residence ".
Check out the requirements for THAT !!!
If you are in ABC . country , drawing your pay , and need to do Co. Work in the States , then return , Even to another country, It does NOT count against you !!! I have read it in black and white.

[Justus]

You're on RatBro. I hope some Stellas are included in this deal.

[Boomer]

The "Qualifying Period" is not just the days you are in foreign countries, it's the total time-frame you are qualifying. If you have 340 qualifying DAYS, you are qualifying 340 days out of a 365 day PERIOD. That's what should have been entered in Line 38--your Qualifying Period was the full 365 days of the year, not just the 340 qualifying days.

Someone mentioned Turbo Tax; I've used their Premium version for years and this is the exact way they figure it. But I don't just take Turbo Tax's word on everything--I DO read the instructions and publications every year and I think Turbo Tax is figuring this the correct way.

We each have the right to believe whatever we want to and I guess there are different ways this can be interuptreted. I choose to believe Turbo Tax Premium backed up by the way I read the codes.



Justus

You are Correct But your wasting your Breath.

You Know Sparkies are not BRIGHT

[Electrical Al]

Gab. ,
No , No ,
here is the OTHER kicker. Sure to stir the pot even more.
You can claim, " Bonafied Residence ".
Check out the requirements for THAT !!!
If you are in ABC . country , drawing your pay , and need to do Co. Work in the States , then return , Even to another country, It does NOT count against you !!! I have read it in black and white.

If you look on form 2555 you will read Part 2 line 13 a
if you submit statement to the authorities of the foreign country that you are not a resident yes or no
Are you required to pay income tax to the country where you claim bona fide residence yes or no

If you are answer yes to first question and no to second question
you do not qualify for bona fide resident