Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2006 Page 18
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44includible reimbursement by a fraction. The frac-
More information. Publication 516 has more
accept the lodging to properly carry out the du-
tion is the number of days of foreign residence
information for U.S. Government employees
ties of your job. You must accept lodging to
during the year (90) divided by the number of
abroad.
properly carry out your duties if, for example,
days in the year (365). The remaining part of the
you must be available for duty at all times.
includible reimbursement is for services per-
Foreign camps. If the lodging is in a camp
Exclusion of
formed in the foreign country in 2005. You report
located in a foreign country, the camp is consid-
Meals and Lodging
the amount of the includible reimbursement on
ered part of your employer’s business premises.
your Form 1040 for 2006, the year you received
A camp is lodging that is:
You do not include in your income the value of
it.
•
meals and lodging provided to you and your
Provided for your employer’s convenience
In this example, if you qualified under
family by your employer at no charge if the
because the place where you work is in a
TIP
the physical presence test for a period
following conditions are met.
remote area where satisfactory housing is
that included at least 120 days in 2006,
not available to you on the open market
the moving expense reimbursement would be
1. The meals are furnished:
within a reasonable commuting distance,
considered earned entirely in the year of the
•
a. On the business premises of your em-
move.
Located as close as reasonably possible
ployer, and
in the area where you work, and
Storage expense reimbursements. If you
•
b. For the convenience of your employer.
Provided in a common area or enclave
are reimbursed for storage expenses, the reim-
that is not available to the general public
bursement is for services you perform during the
2. The lodging is furnished:
for lodging or accommodations and that
period of time for which the storage expenses
normally houses at least ten employees.
are incurred.
a. On the business premises of your em-
ployer,
b. For the convenience of your employer,
U.S. Government Employees
and
Foreign Earned
For purposes of the foreign earned income ex-
c. As a condition of your employment.
clusion, the foreign housing exclusion, and the
Income Exclusion
foreign housing deduction, foreign earned in-
Amounts you do not include in income be-
come does not include any amounts paid by the
cause of these rules are not foreign earned
If your tax home is in a foreign country and you
United States or any of its agencies to its em-
income.
meet the bona fide residence test or the physical
ployees. Payments to employees of nonap-
presence test, you can choose to exclude from
propriated fund activities are not foreign earned
Family. Your family, for this purpose, includes
your income a limited amount of your foreign
income. Nonappropriated fund activities include
only your spouse and your dependents.
earned income. Foreign earned income was de-
the following employers.
Lodging. The value of lodging includes the
fined earlier in this chapter.
•
Armed forces post exchanges.
cost of heat, electricity, gas, water, sewer serv-
You can also choose to exclude from your
ice, and similar items needed to make the lodg-
income a foreign housing amount. This is ex-
•
Officers’ and enlisted personnel clubs.
ing fit to live in.
plained later under Foreign Housing Exclusion.
•
Post and station theaters.
If you choose to exclude a foreign housing
Business premises of employer. Generally,
•
amount, you must figure the foreign housing
Embassy commissaries.
the business premises of your employer is wher-
exclusion before you figure the foreign earned
ever you work. For example, if you work as a
income exclusion. Your foreign earned income
Amounts paid by the United States or its
housekeeper, meals and lodging provided in
exclusion is limited to your foreign earned in-
agencies to persons who are not their employ-
your employer’s home are provided on the busi-
come minus your foreign housing exclusion.
ees may qualify for exclusion or deduction.
ness premises of your employer. Similarly,
If you choose to exclude foreign earned in-
If you are a U.S. Government employee paid
meals provided to cowhands while herding cat-
come, you cannot deduct, exclude, or claim a
by a U.S. agency that assigned you to a foreign
tle on land leased or owned by their employer
credit for any item that can be allocated to or
government to perform specific services for
are considered provided on the premises of their
charged against the excluded amounts. This
which the agency is reimbursed by the foreign
employer.
includes any expenses, losses, and other nor-
government, your pay is from the U.S. Govern-
mally deductible items allocable to the excluded
Convenience of employer. Whether meals
ment and does not qualify for exclusion or de-
income. For more information about deductions
or lodging are provided for your employer’s con-
duction.
and credits, see chapter 5.
venience must be determined from all the facts.
If you have questions about whether you are
They are considered provided for your em-
an employee or an independent contractor, get
Limit on Excludable Amount
ployer’s convenience if there is a good business
Publication 15-A, Employer’s Supplemental Tax
reason for providing them, other than to give you
Guide.
more pay.
You may be able to exclude up to $82,400 of
American Institute in Taiwan. Amounts paid
If the conditions listed earlier are met (includ-
your foreign earned income in 2006.
by the American Institute in Taiwan are not for-
ing the convenience of employer condition), do
You cannot exclude more than the smaller
eign earned income for purposes of the foreign
not include the value of the meals or lodging in
of:
earned income exclusion, the foreign housing
your income, even in the following situations.
•
$82,400, or
exclusion, or the foreign housing deduction. If
•
Your employer intends them as part of
•
you are an employee of the American Institute in
Your foreign earned income (discussed
your pay.
Taiwan, allowances you receive are exempt
earlier) for the tax year minus your foreign
•
from U.S. tax up to the amount that equals
A law or your employment contract says
housing exclusion (discussed later).
tax-exempt allowances received by civilian em-
that they are provided as compensation.
ployees of the U.S. Government.
If both you and your spouse work abroad and
On the other hand, if your employer provides
you and your spouse meet either the bona fide
Allowances. Cost-of-living and foreign-area
meals or lodging to you or your family as a
residence test or the physical presence test, you
allowances paid under certain Acts of Congress
means of giving you more pay, and there is no
can each choose the foreign earned income
to U.S. civilian officers and employees stationed
other business reason for providing them, their
exclusion. You do not both need to meet the
in Alaska and Hawaii or elsewhere outside the
value is extra income to you because they are
same test. Together, you and your spouse can
48 contiguous states and the District of Colum-
not furnished for the convenience of your em-
exclude as much as $164,800.
bia can be excluded from gross income. Post
ployer.
differentials are wages that must be included in
Paid in year following work. Generally, you
gross income, regardless of the Act of Congress
Condition of employment. Lodging is pro-
are considered to have earned income in the
under which they are paid.
vided as a condition of employment if you must
year in which you do the work for which you
Page 18
Chapter 4 Foreign Earned Income and Housing: Exclusion – Deduction
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