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Old 08-06-2007, 10:39 PM
  #7  
fdx727pilot
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Joined APC: Jul 2006
Position: 767 Cap
Posts: 1,306
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At least one problem with your numbers. First (and I will paste directly from the IRS website for accuracy,) your Foreign tax credit (or deduction) is $14008 off, as (from IRS topic 865 - Foreign Tax Credit)

"You may not take either a credit or a deduction for taxes paid or accrued on income you exclude under the foreign earned income exclusion or the foreign housing exclusion. There is no double taxation in this situation because the income is not subject to United States tax."

Using your 17% HK tax rate on the $82400 exclusion (as of 2007 tax year)means you can't deduct or get a credit for $14008 that you have included in your figures.

Also, from IRS Publication 54, Section 4, "Figuring tax on income not excluded. If you claim the foreign earned income exclusion, the housing exclusion (discussed later), or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. " Therefore, a rate of 25% or so would probably apply, and then 28% after $128500 (prior to the exclusion.) Captains will most likely be in the 33% bracket.

A newhire or fairly new FO in HKG will lose money. I don't know if a Captain will.
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