How does tax work for an overseas contractor on a split year contract?
I am currently working as U.S. DoD contractor in Afghanistan. I arrive in Afghanistan late October 2010. I will be over here until at least October 2011. I know that when working overseas for 330 days or more, the first about 90 thousand dollars are tax-free.
What I don't know is how to fill my tax for the 2010 year. At the end of the year, I wouldn't have been over here for more than 330 days. So I wont get the tax break. At least that is how I understand it. Is this correct? If so, will I receive my take break for the 2011 year if I am not overseas for more than 330 days of 2011? Even if I have served overseas 330 days of the last 365 days?
(1)1 Comments
Sorted by latest first Latest Oldest Best
My husband had this come up when he went to Kuwait from August2006 - August 2007. Its all based on the percentage of the time. So say the first 90k is taxfree. If you were there 3 months of that tax year then 25% of 90,000 is your "tax-free" income and the rest of the money earned in those 3 months is taxed at the appropriate tax bracket rate. Then the following year you take the other 75% (67,500) free and tax the rest. You will have to pay your estimated taxes and file an extension for the first year so that you can prove the 330/365 days to the IRS. Get a really good accountant or you will still be paying taxes and penalties years later like we are.
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2025 All Rights reserved.