Thursday, 28 April 2011

Almost there... (and concerning taxes)

Today I talked to my mom's tax attorney and had all of my tax questions answered. I had already read the IRS website and still was uncertain about a few details. But now I feel much more confident. Here is a list of the questions I asked in case anyone else might find it useful:

Q. If I earn less than $20,000 for the 2011 tax year, would it be more beneficial if I do not claim the exemption so I can get the working families and earned income credits?
A. It depends. The credits may be worth it, but they may not.
Q. If I do not claim the exemption for 2011, can I contribute my earnings to an IRA?
A. Yes. But if you do claim the exemption, you cannot legally contribute the untaxed income to an IRA.
Q. When does the 330-day presence test begin?
A. The count begins the day you leave US territory. It doesn't matter which country (or the number of countries) you go to, just as long as you are not located within US boundaries for 330 days out of 365.

Q. If I claim exemption based on the 330-day presence test, can I file an extension when the 2011 tax season rolls around?
A. Yes.
Q. If I file an extension for the 330-day presence test, will I still be able to claim bona fide residence for 2012?
A. Yes.
Q. Do I need to claim allowances as income?
A. Furniture allowance, monthly rent allowance, and most employer allowances will likely need to be claimed as income.
Q. Will health insurance need to be claimed as income?
A. It might. The tax laws often depend on the country in question and on treaties between the country and the US.
Q. As for state income tax, will I claim exemption or non-resident status?
A. In the state of Missouri (and Oregon), non-resident status can be claimed, and no taxes will need to be filed for the state.
Q. Should my spouse and I file jointly or separately?
A. It’s hard to say at this point. You would want to look at the numbers to see which status is best. Try both options in a tax preparation service/software to see which has the best results (or have a tax attorney do your taxes for you).
 I found it very helpful to visit a tax professional because no matter how much I read on, I still have questions relating to my personal situation (and the IRS website actually inspired more questions). But because I read the websites first, I was prepared with specific questions for the tax professional, and now I feel ready to take on the next tax season, at least until it actually comes time to file!
Other than having my tax questions answered, I also acquired an international driving permit from AAA. It cost $15 and took less than 10 minutes to process the application. To be more precise, though, I had already filled out the permit form and printed out a couple of passport photos before heading to the AAA travel office. So, perhaps it took me a total of 30 minutes. :)
Now, I basically want/need to find a few long skirts for the first month or two in Abu Dhabi and purchase sentence strips at a local teacher resource store. As far as authentication goes, I called ProEx, and they said my documents will be complete by this coming Monday, at which time they'll send me back my authenticated documents. I sent the documents to ProEx on Thursday last week and anticipate having them back in less than 2 weeks from the postmark date!! 

I'm almost there, Abu Dhabi!


  1. Tammy, this is a fantastic review of the tax situation for US citizens. I mean, clear, simple, to the point. Well done!

  2. Thanks, Mimi! I should add the questions to the faq document on FB.

  3. Though it might not be a good idea to post the questions on FB. Under a heading of FAQs, these answers might appear as the official word on tax laws.

  4. Do you mind if I link this blog entry, though? You're right, we don't want to make this a replacement for Official IRS Rules, but it will certainly help people who don't have MAJOR tax concerns.

  5. Thanks for this blog, it looks as if I can't go home for Christmas. In will miss my dog.

  6. Overall, are you happy with your decision to go to the UAE to teach? If you could change it, would you?