I spent less than 30 days in the United States in 2006, can I be reimbursed for the taxes taken from payroll?

Question

I work for AAFES; I have been deployed on Qatar since Dec'04. During 2006 I was only in the United States for approx 30 days. Is there a way to claim tax exempt for this time period?

Answer 1

As an AAFES employee you are employed by an instrumentality of the US government and are not eligible to claim the Foreign Earned Income tax exclusion UNLESS you are considered a local hire and paid in the host nation currency in Qatar. You MUST have been hired locally by AAFES in Qatar as a "US Tourist" or an individual with a Qatar work permit or visa.

Since you were deployed by AAFES, you do not get any special tax treatment as you are considered employed by the US government. You must file US Federal and State tax returns as appropriate and pay any taxes due. If you are outside the US on the filing deadline, you do get an automatic extension of time to file your return.

Answer 2

Normally, if you spend more than 330 days per year outside of the US you can deduct up to $80,000 from the income you earned overseas (use Form 2255 or 2255EZ). However, this deduction doesn't usually apply to US government employees. Carefully read the Form 2255 instructions to determine your status.