How are Expats taxed after the 87k?

[Sunking]

Just wondering how the IRS taxes u after the 87k. At 88k do they tax u as if you made 88k and tax at the 88k bracket or tax u as if you made 1k.

 

[typhoonpilot]

88k

Tp

 

[X man]

87k

I believe they tax you on the amount over that, as if you made 127K, you would be taxed on the 40K above and beyond the 87K. It would be as if you made 40K, and what ever tax bracket you fell into, that would be the tax rate. This info is based on older info, so probably ten phone call s would get the right info.
Cheers

 

[tyuwerty]

Anything after the exclusion is taxed as it is the first dollar in that bracket. You don't start again at zero anymore.

So as TP said:

88k

 

[Sgt. Hartman]

http://www.irs.gov/publications/p54/ch04.html#d0e3841


This link should have all the answers. The example shows that you are taxed on the income in excess of the $85,700 allowable exclusion for 2007.

Foreign Earned Income Exclusion





If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Foreign earned income was defined earlier in this chapter.

Sgt.

 

[Sunking]

Thanks for the info guys.

 

[PadFull'oTrim]

Did I read that link correctly regarding residency requirements:

You need to live overseas 330 days in a year for the tax exemption to apply.

That mean if you have a 1 month on/off rotation, you do NOT meet the residency requirement and all income generated is subject to US taxes? Is that correct?

Is there anyone who is doing a 1 month on/off rotation that could provide clarification to that?

Thanks.

 

[Gillegan]

Did I read that link correctly regarding residency requirements:

You need to live overseas 330 days in a year for the tax exemption to apply.

That mean if you have a 1 month on/off rotation, you do NOT meet the residency requirement and all income generated is subject to US taxes? Is that correct?

Is there anyone who is doing a 1 month on/off rotation that could provide clarification to that?

Thanks.

There is also another test of residency that is called the bona fide residency test. It is more of a common sense test for overseas residency. When I moved overseas, I used the 330 day test to establish my residency and then remain qualified under the bona fide test. That said, I don't believe that a month on/month off job where you spend your month off in the states would qualify for overseas residency so any income not taxed by your country of employment would be subject to U.S. income tax (provided that country has a tax treaty with the U.S.).

You might consider this: there are only two countries in the world that tax the income of its citizens who reside overseas - the U.S. is one of them.

 

[d328pilot]

You might consider this: there are only two countries in the world that tax the income of its citizens who reside overseas - the U.S. is one of them.

How far we have come as a country since the "no taxation without representation"

It's painful to pay so much each year (even with the exemption) when the only service you use is your passport. Then when I have to go get something notarized at the Embassy and they charge me $30 to boot.

 

[typhoonpilot]

How far we have come as a country since the "no taxation without representation"

It's painful to pay so much each year (even with the exemption) when the only service you use is your passport. Then when I have to go get something notarized at the Embassy and they charge me $30 to boot.

Think of it as an insurance policy. You are paying for that helicopter and the aircraft carrier that it is stationed on to come rescue you when the country you are in devolves into anarchy.


TP