Accepted Answer

Hello Mavrik,

If you will be in the foreign country for at least 330 days out of a consecutive 12 month period, then you will qualify to claim the foreign earned income exclusion. The allowed exclusion amount is $91,400. What this means is that as long as you meet the 330 days physical presence test, your first $91,400 in earnings will not be subject to any taxes here in the US. Any income which you have that exceeds that amount would still be taxable. It will be taxable at the federal level as well as at the state level, as long as you maintain your permanent residence in SC.

If the company you are working for is not a US employer or an affiliate of a US employer, then your earnings will not be subject to SS or Medicare taxes, as the US has no totalization agreement with Saudi Arabia. At the same time those earnings will not be used in figuring your future SS benefits when you retire.

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Thank you Mavrik

Expert:	Merlo
Pos. Feedback:	99.8 %
Accepts:
Answered:	10/22/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad