How long do you have to be working in Iraq as a gov’t contractor to be tax exempt?
g_rachel04 asked:
My Husband is leaving in 6 months for a 6 month stint in Iraq and we heard that the money he makes could be tax exempt. We then heard that he had to be there for 1 year before this would be true…IRS website doesn’t say anything about it. Any help?
Thanks everyone!
Rocco Surrency
My Husband is leaving in 6 months for a 6 month stint in Iraq and we heard that the money he makes could be tax exempt. We then heard that he had to be there for 1 year before this would be true…IRS website doesn’t say anything about it. Any help?
Thanks everyone!
Rocco Surrency
Tags: Money, Tax Exempt
It’s a tax “exclusion” not an exemption.
It requires 330 full days in a foreign country within a 12 month period. A 6-month job won’t be enough. And if his paycheck is from the US government, he’s not eligible anyway.
IRS publication 54.
i looked up working in Iraq for the U.S. govt. It states you have to been there for about a year (I think it said 346 days or something). I’m guessing the time frame is similar for contractors.
As a government contractor he is not exempt. Go to IRS.GOV and download the 2555 instructions for exact details if you so desire.
exclusion on foreign required 330 days and up to $96000 is excluded
NOT exempt.
If he’s US military, working in combat zone, it’s not taxable income. BUT, if he’s a contractor working in Iraq, it may well be taxable, particularly if it’s a 6 month assignment. Be sure there is withholding. Find out if this is treated as employment (w-2) or contractor (1099), because if it is the latter (most likely), there is NO withholding for SS, Medicare, FIT, SIT, and he should be paying quarterly estimated taxes to IRS. Will have to file Schedule C and SE with tax return.
If more than 330 days, income may be excludable, not exempt.