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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 - http://www.irs.gov/businesses/small/international/article/0,,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.
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!