Job Discussion Forums

boundforsaudi · Joined: 29 Jan 2003 Posts: 243

I left the USA Oct 1, 2005. Using the period Oct 1, 2005 to Oct 1, 2006 for the physical presence test, I was OK for not paying federal income tax, as I only spent the month of August in the USA. Here's my problem: For my next physical presence test, do I have to begin Oct 1, 2006 and run to Oct 1, 2007, or can have an overlap and begin Sept 1, 2006 and run to Sept 1, 2007?

mdk · Joined: 09 Jun 2007 Posts: 425

I'm not sure enough to give advice. As I recall it is less than 4 weeks out of a given year back in the states.

You can check on www.irs.gov and look at the relevant tax doc.

But why take a chance? spend your vacation in Dubrovnik. If you can't have a good time in Dubrovnik, you can't have a good time anywhere.

Then you can go back to the states.

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

If you've been away for 12 months in a row. Or were a bona fiada resident for 330 days of 2003, you should file the 2555. It makes sure you don't have to pay Uncle Sam, if you've already paid taxes in the country where you are living.

Can you just say that for the next year you were a bona fiada resident? I've been one since Mar 19 2003. That way I don't have to worry about the physical presence stuff.

denise · Joined: 23 Apr 2003 Posts: 3419 Location: finally home-ish

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

denise · Joined: 23 Apr 2003 Posts: 3419 Location: finally home-ish

Apparently the rules have just changed, but when I filed in April for 2006 the situation was this:

--if you're a foreign resident or only in the country for less than 35 days, you aren't taxed on anything (you still file, but you aren't taxed on your income). **The OP had a question about how to qualify for this exemption.

--if you overstay, you have to report your total earnings and measure them against a benchmark the IRS gives you. I don't have my files with me now, but I think the amount was something like $10,000. If your earnings are below that, you don't pay. My income in Peru was less than $10,000, so I paid nothing. If your income is above that amount, then you do pay--I don't know what percent, though. I do remember that even if you did overstay in the US, the amount you're taxed is less than what you would pay on your income in the US. (This is the part that apparently has changed, as of May--now you're taxed equally, at the same rate as income earned in the US.)

Important note: I am in no way an expert on this! I gladly welcome changes, corrections, etc.

d

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

Also, I've heard that you can opt out. Meaning that you don't have to file ever again, but you have no rights to social security. For those of you who aren't thinking of ever going back it might be an option for you.

mdk · Joined: 09 Jun 2007 Posts: 425

I think the IRS gets real tetchy if you don't file at all. It's much easier all around if you go online and use one of the commercial tax filing services. I spent $35 to use one of them and it was deductible.

Does everybody know about the foreign income exclusion? You can exclude up to some obscene amount of foreign earnings as long as you stay out of the country for a long enough period.

I would give a long hard think before blowing off my social security contributions. I keep thinking about the babushkas selling two carrots and a head of garlic outside the metro station. What was that line of Peter Lorre's in the original Round the World in 80 Days...Passpartout has been shanghaid to Yokohama and Peter Lorre tells him..