The IRS and flying foreign
 

If you've been working overseas in a permanent position and the company goes out of business, what is your status with regard to receiving a lump sum settlement and what would be your exposure to the dreaded taxman (USA)? Thanks in advance for any good advice :confused:

Obviously a question for a expat tax expert. Just remember that US citizens and resident aliens must file tax forms. There is an exclusion available for Foreign EARNED income. It is about $75,000. You need to be either:

A) a bona fide resident. (drivers lisc, phone and utility bills, etc) OR
B) physically present in that country for something like 300 of 365 days.

If you qualify, you must file or loose the credit. By the way the Social Security department still wants their 15% but have no real way to collect or even know what you earned.

These tax rules are very tricky and change yearly. You really need a good professional. Or you could wing it and just not admit making any money as there will probably not be a W2.

Good luck

Thanks Mike. I will be seeking professional advice (dont want to **** off the IRS). Thought maybe somebody who had retired from overseas and gotten their Provident Fund and gratuity in a lump sum, which you would need to live off of, and not have it lumped into one tax year. Once thats gone theres no more money coming in.

I've heard from other soldiers that have been in Iraq (I haven't been deployed yet...) but they said for their 2 weeks of leave, not to come back to the states.
The pay that they earn is tax free ( maybe I'm confusing this with civilian contractors there), but if the return to the states before 300 day rule, their pay is taxed.
Just thought that I'd share how the troops (or maybe civilians) in Iraq are getting taxed.

This guy seems to have a handle on the issue:

Don D. Nelson, Attorney, Certified Public Accountant
Nelson's US Expatriate Income Tax Services
US Phone (949) 481-4094 US Fax: (949) 606-9627
US Toll Free (866) 712-0320
Email: [email protected] or use our email inquiry form
34145 Pacific Coast Highway #401
Dana Point, California 92629 USA

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TP

Thanks TP. Been working in a high tax area so never had to worry but expect my next gig will probably be in a tax free or low tax area.
NG