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Temporary Job Assignments
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Re: Overseas Temp Job Assisgnment

There are actually a few different tax breaks to discuss here.

For starters, if you intend to return to the city you were living in prior to this temporary job assignment, then you should be able to treat this year-long job as one long business trip. You'll be able to write off all of your travel back and forth and your lodging expenses while abroad. You will also be able to base your meals and incidentals on the Foreign Per-Diem Rates available at www.gsa.gov. The foreign rates can be found at: http://aoprals.state.gov/web920/per_diem.asp.

You will most likely write off these costs as a Miscellaneous Itemized Deduction.

There is another tax break to be aware of, however, called the Foreign Earned Income Exclusion. Anyone who is physically present outside the USA for 330 days out of a 365 period qualifies to exclude from US taxes the first $87,600 earned during the 12 month period. That is equivalent to the first $7,300 of foreign source compensation earned each month. Please note that the 365 day period can straddle two calendar years.

The IRS has been known to review a person's passport to make sure they meet this 330 day threshold. So plan your trips back to the US accordingly.

To claim this exclusion, you'll need to complete and attach a Form 2555 to yoru federal tax return. You can read through the instructions for this form at: http://www.irs.gov/instructions/i2555/index.html.

Please keep in mind that the IRS does not let you file a return with a Form 2555 until you meet the 330 day requirement. So you will definitely need to put your return on extension next April, and wait until after 6/30 to file.

I hope this gives you some basics about these two tax breaks. Feel free to post follow-up questions.

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