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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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My husband will be working in Afghanistan as a civilian contractor.

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My husband will be working in Afghanistan as a civilian contractor.   Can you explain to us how the bona-fide resident tax exempt rule works? He plans on coming back to the states approx. every 3 months. ie ~ 60/90 days on 30 days off. This will be for an indefinate period... over 12 months.   Obviously the tax exclusion on the 1st $88,000 is one of the reasons he is accepting work there. The company he will be working for is not American. Please help!

The person may qualify for the foreign earned income exclusion - he/she should:
-- Work and reside outside the United States for at least 330 days during the year, or
-- Meet either the Bona Fide or Physical Presence tests.
To receive that exclusion - the taxpayer should file either form 2555 or 2555EZ.

Here are forms you likely need:

Please be aware that - the exclusion above will not affect self-employment taxes - only income taxes. Only earned income is excludable. For instance dividends, investment income, etc - are not excludable.

If the person qualifies, he/she may exclude up to $91,400 (2009 in foreign wages -

plus housing allowances (limited to 30% of the earned income exclusion).


You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. To see if you meet the test of bona fide residence in a foreign country, you must find out if you have established such a residence in a foreign country. - See more details here -,,id=96960,00.html


I do not think that your husband is going to established a residence in Afghanistan (and it is likely that the IRS agent will not think so either)

So - to use the foreign earned income exclusion - your husband should be outside the US at least 330 days - he doesn't have to be in the same country of be outside the US for work - instead of coming back to the US - he may spend time - for instance - on vacation in Canada.

Let me know if you need help with reporting.


Customer: replied 7 years ago.

OK... just trying to get a grasp on reality here. Generally what you have told me I'd already pulled from IRS pubs & other internet sites.


We've known several civilian contractors that claim they pay no taxes on the 1st $80 ~ however, come back into the states 2 or 3 times a year... so that would exclude the 330 days! We do know of 1 that previously came & went via Canada ~ Apparently this has stopped now due to the border Passport reqs?


Any additional loopholes here that we could look at?


Any additional info would be appreciated ~ Thanks!

Fortunately or unfortunately - we should relay on the IRS information.
You should not expect any information that contradict the information you obtained from IRS publications - if someone tells you otherwise - that would be at least suspicious...

If the person was outside the US less than 330 during the calendar year and the person did not established a permanent residence in the foreign country - such person do no qualify for the foreign earned income exclusion.
There is no limit on the number of visits to the US - but there is still a requirements to be in the foreign country not less than 330 days.

If you know someone who claimed the credit that he/she doesn't qualify - that doesn't necessary mean the person is doing so legally.
The IRS doesn't require to present any supporting documents unless the person gets audited. However if audited - supporting documents that proof qualification would be required.
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