Job Discussion Forums

[Never Ceased To Be Amazed]

Who's "Our resident Oklahoman"?

NCTBA

[scot47]

In "Fort Zinderneuf",where I perform my didactic duties , there is a gentleman from the Territory of Oklahoma. He is a wise man, full of erudition, wit and repartee. How he came to this fate, I know not. As with our comrades in the Legion it is here considered a breach of etiquette to discuss the past or what has brought our companions to this place.

I can report that from time to time he looks wistful and says,"A woman did this to me." Then he changes the subject.

[veiledsentiments]

[mccainjohn96]

[johnslat]

Dear mccainjohn96,

No way? Well, not according to this:

Under the physical presence test, you can choose any consecutive 12-month period to qualify for the foreign earned income exclusion. You would then prorate your maximum exclusion by the amount of days you were physically present during the tax year. The exclusion is calculated by the ratio of the number of days physically present in the foreign county (numerator) to the number of days in the year (denominator).
Your pro-rated exclusion amount may not exceed the maximum allowable exclusion.

You may also qualify for a prorated exclusion if you intended to meet all the time requirements but you left the country due to civil unrest. According to IRS Instructions for Form 2555:

"Waiver of Time Requirements
If your tax home was in a foreign country and you were a bona fide resident of, or physically present in, a foreign country and had to leave because of war, civil unrest, or similar adverse conditions, the minimum time requirements specified under the bona fide residence and physical presence tests may be waived. You must be able to show that you reasonably could have expected to meet the minimum time requirements if you had not been required to leave. Each year the IRS will publish in the Internal Revenue Bulletin a list of countries and the dates they qualify for the waiver. If you left one of the countries during the period indicated, you can claim the tax benefits on Form 2555, but only for the number of days you were a bona fide resident of, or physically present in, the foreign country.
If you can claim either of the exclusions or the housing deduction because of the waiver of time requirements, attach a statement to your return explaining that you expected to meet the applicable time requirement, but the conditions in the foreign country prevented you from the normal conduct of business. Also, enter "Claiming Waiver" in the top margin on page 1 of your 2005 Form 2555."

This from 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 a 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.
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.
Exception. You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. See Waiver of Time Requirements, later."

But this is all irrelevant, anyway, since the Sheik's (2):
"You can file extensions if you first arrive late in the year for your new overseas job. My first overseas position--I arrived in Oct. '86. I filed an extension, then got bona-fide residence 12 months later with no penalty."

is the one everybody I've known always uses (and it always works.)
Besides, how many of us make over $91,400 a year (which is when you would start being taxed?)

Regards,
John

[mccainjohn96]

Thanks for your interest John. But I'm still not clear. I was in Saudi for 5 months in 2009--from May to October, during which time I made $38,952. I was not there before May, nor after October.

Are you saying that since 5/12 of $91,400 = $38,083, then I only owe tax on $38,952 - $38,083 = $868 ???

I wonder how come the nice IRS lady never heard of such a thing? I wound up paying $3456 in FICA + $3086 SS & Medicare = $6542 taxes on $38,952 Saudi income.

[johnslat]

Dear mccainjohn96,

Ah, then you wouldn't qualify for either physical presence or permanent residency, I'm afraid. And you wouldn't be eligible for the waiver, either.
That's kind of unusual, I think - to be there for only five months. Sorry you had to pay so much,
But, as a side-note, I wouldn't always take the word of the people you talk to when you call the IRS. I'm speaking from personal experience here. We were refused the $8000 stimulus bonus for buying a new house last year. No one I talked to (about 10 different people) would tell me WHY, and all of them said it was FINAL.
Well, I kept trying, and finally got a good one. He checked out tax returns and discovered where the IRS had fouled up. We got the stimulus check within a couple of weeks.

Regards,
John

[mccainjohn96]

Thanks. As for my 5 month gig, see my thread on washing a passport.

[veiledsentiments]

I suspect that SnB has given the details in a way that isn't clear to everyone. What one does is to have achieved Bona Fide Residence as per the rules prior to the job. (which requires that you have done a full year abroad or rather 335 days I believe it is) Once you have done so, there is no rule on the number of days that you can spend in the US, but it requires that you calculate the percentage of days that you spent in the US. Take a look at the 2555 Form and you can see how this works.

But you have to ask a question very carefully to IRS and I don't even want to tell you how often they give you the completely wrong answer. Few of them know much about expat taxes. I worked in accounting for many years... the IRS phone agents are only good at the run of the mill questions.

VS
(PS John... I thought the $8000 was for first time home buyers. As I recall you already owned a home...)

[Never Ceased To Be Amazed]

[mccainjohn96]

Correction:

I wound up paying $3456 in FICA + $3086 SS & Medicare = $6542 taxes on $38,952 Saudi income. And my employer was kind enough to send my w-2 to the IRS.

[veiledsentiments]

I doubt that he had any "W-2" if he was working overseas... and if his employer did give him a "W-2" because it was an American company, it would already have provided a copy of same to the government.

Or are you suggesting that he lie and say that he had no income? tsk... tsk...

VS
(seems that we were synchronized posting... receiving a W-2 guarantees honesty. )

[Never Ceased To Be Amazed]

[scot47]

So is our resident Oklahoman correct in his assertion that this is all a "communist conspiracy" ?

And should Oklahoma Territory be granted Statehood ?

[johnslat]

Dear VS,
First-time homebuyers (as defined by the stimulus) means anyone who hasn't bought a home during the previous three years. In 2009, we'd been renting since 2004 (two different places,) so we qualified.
The difficulty arose because I'd sold some "raw land" in CO in 2006, and somehow the IRS misinterpreted that, thinking that we'd been living there (which would have meant, I suppose that we'd been living in a tent.)
So, once I managed to find out WHY they were denying the bonus (and THAT was the really hard part,) I simply faxed ALL the papers (about 60 pages) regarding the land AND two notarized affidavits from our two landladies for the period of 2004 through 2009.
Problem solved.

Regards,
John