How does one file for taxes when you work overseas for one year?

I answered this once but my computer froze. It is a complicated tax question but I will try to answer it so you will understand.

First you figure which year will give the better deduction.

You count forward to get the 330 days to meet the physical presence test.

You meet the physical presence test of 330 days on April 26,2010

You go back 12 months to figure your deduction for 2009 April 26 2009 to April 25 2010. count the days that fall in this 12 month period and divide by 365.

250/365=.6849x$62808 max deduction for 2009

Go back 330 days to figure your 2010.

From June 1,2010 to April 26 2009 this is the date you meet the physical presence of 330 days going backward

Figure the amount of days that you were in the foreign country for the 12 month period beginning April 26, 2009 to april 25 2010. then you count the days from Jan 1 2010 to April 25 2010 that you were physically present in the foreign country.

114/365=.3123x$28638 maximum deduction for 2010. So you are better using the deduction for 2009.

You will complete the 2555ez or 2555

I hope this helps you. It is very hard to explain in an email.

Christine EA Master Tax Advisor

This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.

http://www.hrblock.com/tax_professionals...

1. You assume you do won't meet the 330 day test. If you do in fact make it, then you get a huge tax break.

2. You read IRS pub 54.

3. The 330 days are allowed to cross from 2009 to 2010. The tax break, however will be prorated. (You can't claim the tax break, however, until you meet the 330 days.) So you only get to exlude 7 months in 2009 and 5 months in 2010. If you have other taxable income, it's taxed at a much higher tax rate. (Typically it starts at 25%.)

4. Get form 2350. You can file it after 1/1/2010 if you expect to meet the 330 days and it will get you an extension to June 30th....or file 4868 and get an extension to 10/15.

5. There is nothing special to file when you leave. While there is a form to turn off withholding due to the expected use of form 2555, don't use it.

Have your wife take your W2 to the CPA in February! Have them take care of it! ha ha

I think that if you file a 2 month extension next year, then you can do a pro-rate for the 6 months that you are there since you would have met the physical presence test.

However, you will have to do the same in 2011 for the remainder of the time you were there. Thats how i'm seeing it. the question still remains wether or not you can get an extension if you owe.