Posted: 2/22/2007 12:46:07 PM EDT
I worked overseas for a year, June 05 to June 06. This qualifies me for the overseas tax exemption. Because my 330 days were split over two years the exemption was pro-rated. I just came back from acct. The tax return he had figured for me was about half of what I was expecting. When I asked him about this he pulled out this years return and last years return and I looked at the numbers he had figured. The pro-rated exemption amounts he had figured for the two years only added up to a little over 60K. The exemption was 80k in 05 and 82.4 in 06. So, I asked why the two pro-rated amounts didn't add up to atleast 80K. He said because it was split over two years I didn't get the full 80K deduction. You only get that if your 330 days occur in one calendar year. He said it didn't make sense to him either but that's the way the numbers added up. Am I wrong or is this guy way off? 
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It's my understanding that you have to be out of the country for 330 days out of 365 consecutive days. If it's split over two years it gets pro-rated as such. I.E. if 50% of those days fall in one year and 50% in the next and the exemption is 80K then you would get a 40k exemption the first year and 40K the second for a grand total of 80K. |
haha
FWIW, I have never heard anything about splitting it up like that. Thats not to say it cant or doesnt work like that, just that I've never seen it. Hopefully another deployed member will see this and comment. And you've IM. |
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When I got here 3 years ago, they gave me a form from the government that we filled out that started our foreign earned exemption "clock". I don't know the number of the form off-hand, but your accountant should look into it. I would also look into using an accountant that specializes in ex-pat issues. I am in the process of selecting a new one, now. Good luck, especially with Congress changing the 2006 tax law retroactively in 2007. 
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