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Discussion:Foreign Earned Income Credit

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Discussion Forum Index --> Advanced Tax Questions --> Foreign Earned Income Credit

Discussion Forum Index --> Tax Questions --> Foreign Earned Income Credit

Willeytaxes (talk|edits) said:

15 March 2009
I have a client who worked part of the year in Australia. Have tried to understand Pub 54 but afraid I'm not seeing the forest for the trees.

Facts are: Entire years 2007 & 2008 he worked for same employer. Moved from US to Australia on 7/25/07 and lived/worked there thru 3/15/08. Moved back to US on 3/25/08 and resumed working for same employer in States. Assignment was originally supposed to be 9 months; move was never intended to be permanent. While in AU he set up housekeeping, rented an apartment, purchased furnishings & a car, etc.

Does he meet either of the tests for exclusion of the foreign earned income and/or housing?

Also, while in AU, he was paid two non-taxable (for AU purposes) stipends; a food allowance and a "Living Away From Home Allowance". Are either of these afforded any secial treatment for US tax purposes?

Riley2 (talk|edits) said:

17 March 2009
He doesn't meet the 330-day physical presence test.

Lizzit (talk|edits) said:

17 March 2009
He can take foreign tax credits instead. He is a dual-resident and did not cease US residency, he is considered treaty-non-resident on his Ozzie return. He needs a competent Ozzie tax preparer who can handle a treaty-based filing. He will probably get a refund of excess Ozzie tax paid, so you should WAIT and file on extension so that you have the accurate Ozzie tax computed. Ozzie tax return for the period 1 Jul 07 - 30 Jun 08 (yes! they file on a June fiscal year!) won't be done until some time in Sep/Oct, so make sure he pays on ext!!!!! You will take a portion of the refund to offset the 2007 Ozzie tax witheld and a portion of the refund offsets the Ozzie 2008 tax withheld. This may force an amended 2007 if he filed based on withholding.

Guya (talk|edits) said:

17 March 2009
It sounds as if he'll have away from home expenses to deduct in the US plus foreign tax credits so you'll hve to run some estimates now to determine the payment due on 4/15.

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