FYI,


www.bloomberg.com/news...-says.html

To add to this I was unknowingly audited for every year to date that I was contracting ( 5 yrs) believe it or not I got a check in the mail and a notice that I actually over paid. The other side of this is I know of 3 people that have been audited through the years and had bank accounts frozen and houses liened against for failure of reporting or incorrectly reporting income.

I think the IRS and our tax system are one of the most oppressive in the world, they contradict everything the USA stands for and should be abolished. It should be replaced with a fair or consumer tax systems where its not just 39% of the population that pays taxes. My question is how many Congressman or Senators have been audited lately, has Timothy Geitner ever paid his tax bill?, I guess why should he have to if he is in charge of the IRS right?

OPsBoss wrote:

I think the IRS and our tax system are one of the most oppressive in the world, they contradict everything the USA stands for and should be abolished. It should be replaced with a fair or consumer tax systems where its not just 39% of the population that pays taxes. My question is how many Congressman or Senators have been audited lately, has Timothy Geitner ever paid his tax bill?, I guess why should he have to if he is in charge of the IRS right?

If I remember correctly he was flagged but that got buried real fast. Did anything ever come of that?

Of course not...

I have been researching this lately, as my husband recently deployed with BW. Apparently, according to an IRS memo on the subject and recent cases, as was posted, civilian contractors cannot take the Foreign Earned Income Exclusion of IRC Section 911 or the Combat Zone Exclusion of IRC Section 112.

From the reading of the memo, it appears that the only method of doing this without tax evasion, is to completely give up residency in the US. No dirver's license, voter's registration, home, car, etc. Even if everything is in the wife's name, and you come back to visit for blocks of time, you can still be nailed.

Be careful out there, and write your representative.

so you are saying the 330 rule or bonafied residence is void due to this ruling? It will get so it is not worth the pay to do the work if that is the case.

Alleycat: There are two tests, right, the 330 test and the bona fide residence test.

BEFORE you can get to those tests you have to establish that you have a tax home in the foreign country. In order to have a tax home in a foreign country, you cannot have an abode in the US. In order to not have an abode here, according to the memo, it means -- no DL, bank account, real estate, mortgage, voter registration etc. NO large blocks of time in the US to visit friends and relatives.

So to sum it up: FIRST, do you have an abode here? IF no, then you can have a tax home in a foreign country and then you can establish "physical presence" under the 330 rule.

Does that help?

Sorry, I should have posted these right away.

One is the case that was already referenced, the other is the IRS Memorandum I keep talking about.
http://www.irs.gov/pub/irs-utl/am2009003.pdf