Foreign earned income exclusion Proration
I have always filed my tax periods as 01 Jan. - 31 Dec. This year my contract is going to end in the first week of November. If I were to return to the U.S. will I lose all of my foreign income tax exclusion? I have been inside the U.S. for about 10 days total this year. Last year I paid about 35,000 dollars in taxes and I am wondering how much higher I should expect it to be this year. This year I expect to make about 195,000 which is about the same as I made last year.
As it relates to your situation, If I understand correctly you have been out of the US for more than 2 years, and you simply are returning in November this year. In this case, you can still qualify for the Foreign earned income exclusion, which for 2010 is $91,500. It will be prorated, so assuming your qualifying period is 11/30/09 to 10/31/10, you can exclude up to $83,875. Anything in excess of that will be taxable – 111,125 in your case.
I unfortunately cannot tell you how much you will pay, because there are many other factors to take into consideration. If you wanted, however a rough estimate, you could add 1/12 to what you paid last year.