Foreign Exclusion: Self Employment Tax

Video Transcript

"I’m Tom Choisnet, enrolled agent; the foreign tax exclusion for 2007 is eighty-five thousand and seven hundred dollars, that is a pretty good tax free income, you would probably have to make a hundred and twenty or so to take that kind of money home here. In order to qualify for that you have to be in the qualified foreign country for a full year or more to meet the bona-fide residence test, but most people who work in foreign countries make the exclusion on the three hundred and thirty days of any 12 month period and that 12 month period does not have to be consecutive. The most important thing is keeping a good written record to back up your passport, it should just be part of your routine paperwork so that you can be assured of the foreign tax exclusion. An interest, interesting note here has to do with the world situation being the way that it is, is that if you have to leave the foreign country for war or insurrection, that time out of there does not go toward the test for being out of the country. I hope that I have enlightened you a little bit about foreign tax exclusion if you are getting ready to consider such a job or if you are just back or just kind of want to know something. Thank you, take a look at some of my other clips. "