I would like to know from US citizens who file their foreign income with US IRS. How does it work? how much is exempt? how much is deducted and how much is being taxed? and at what taxation rate?
Part-year exclusion. If you qualify under either the bona fide residence test or the physical presence test for only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. The number of qualifying days is the number of days in the year within the period on which you both:
1. Have your tax home in a foreign country, and
2. Meet either the bona fide residence test or the physical presence test.
For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year.
Answer is clear and concise. Left a particular case where the subject has been living abroad for less than a certain number of days a year. Let's say a subject moved out to a foreign country in June for example. He had 6 months of US income and by the end of the year will have the last 6 months of foreign income. I am not sure but the rules above might not apply.
The answers above are good enough (at least for myself) and the particular case is of less importance but better for completeness for people seeking information
Thanks again Stephanie. Maybe someone has filed US taxes with a mixed US&foreign income in same year
For 2007, your foreign income up to $85,700 is excluded from taxation(this is called the income exclusion). It will be increased by a number for inflation for 2008, but I don't know that number yet. There is also a housing exclusion. Even if your employer pays for your housing, it will be considered part of your total income just like it would in the US. The exclusions are literally entered on your tax form as a negative income.
Your income bracket prior to the exclusions determines the tax percentage that you would have to pay. You will probably be in the 28% bracket, as this covers a pre-exclusion income of roughly $80,000 - $165,000.
I'd check out Publication 54 on the IRS website to answer any other general questions, but you may want to talk it over with your accountant if you trying to determine if a move to Qatar would be advantageous or not.
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Part-year exclusion. If you qualify under either the bona fide residence test or the physical presence test for only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. The number of qualifying days is the number of days in the year within the period on which you both:
1. Have your tax home in a foreign country, and
2. Meet either the bona fide residence test or the physical presence test.
For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year.
Answer is clear and concise. Left a particular case where the subject has been living abroad for less than a certain number of days a year. Let's say a subject moved out to a foreign country in June for example. He had 6 months of US income and by the end of the year will have the last 6 months of foreign income. I am not sure but the rules above might not apply.
The answers above are good enough (at least for myself) and the particular case is of less importance but better for completeness for people seeking information
Thanks again Stephanie. Maybe someone has filed US taxes with a mixed US&foreign income in same year
For 2007, your foreign income up to $85,700 is excluded from taxation(this is called the income exclusion). It will be increased by a number for inflation for 2008, but I don't know that number yet. There is also a housing exclusion. Even if your employer pays for your housing, it will be considered part of your total income just like it would in the US. The exclusions are literally entered on your tax form as a negative income.
Your income bracket prior to the exclusions determines the tax percentage that you would have to pay. You will probably be in the 28% bracket, as this covers a pre-exclusion income of roughly $80,000 - $165,000.
I'd check out Publication 54 on the IRS website to answer any other general questions, but you may want to talk it over with your accountant if you trying to determine if a move to Qatar would be advantageous or not.