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I am currently working as U.S. DoD contractor in Afghanistan. I arrive in Afghanistan late October 2010. I will be over here until at least October 2011. I know that when working overseas for 330 days or more, the first about 90 thousand dollars are tax-free.

What I don't know is how to fill my tax for the 2010 year. At the end of the year, I wouldn't have been over here for more than 330 days. So I wont get the tax break. At least that is how I understand it. Is this correct? If so, will I receive my take break for the 2011 year if I am not overseas for more than 330 days of 2011? Even if I have served overseas 330 days of the last 365 days?

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2 Answers

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My husband had this come up when he went to Kuwait from August2006 - August 2007. Its all based on the percentage of the time. So say the first 90k is taxfree. If you were there 3 months of that tax year then 25% of 90,000 is your "tax-free" income and the rest of the money earned in those 3 months is taxed at the appropriate tax bracket rate. Then the following year you take the other 75% (67,500) free and tax the rest. You will have to pay your estimated taxes and file an extension for the first year so that you can prove the 330/365 days to the IRS. Get a really good accountant or you will still be paying taxes and penalties years later like we are.

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Thank you so much... I heard stories what I need to do, but never got any answer with proof. Thank you so much. – SgtOJ Dec 15 '10 at 20:14
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I guess you've read the article Summary of Afghanistan Income Tax Law: Focus on Individuals ?

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I hadn't check it out before you posted. However, I did check it out afterwards. I read it. Not really what I am looking for. Also, I am pretty sure it is out of date. I believe that document was dated April 2005. Though I really do appreciate your assistants. Thank you. – SgtOJ Nov 24 '10 at 8:52
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While this link may answer the question, it is better to include the essential parts of the answer here and provide the link for reference. Link-only answers can become invalid if the linked page changes. – C. Ross♦ Aug 30 '12 at 0:41

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