I have a couple of questions, my husband is a resident of Georgia, he works for a contractor in California, where he has an apartment, he deploys overseas where he works for at least three months at a time. He worked overseas last year for a total of about eight months. His income is being taxed by Georgia and California. We looked at the income tax for 2555, but he doesn't meet the qualifications of bona fide resident or the physical presence test, is there another form that we can fill out that would give us some kind of tax break on the foreign earned income? On his check stubs it has his foreign earned income separate, but when he got his w-2 form, it had all of his income combined should the foreign earned income have been separated on the w-2?

Any help or suggestions would be greatly appreciated.

Regards.

Mrsphillips1999

If he is paying income tax in the foreign countries where the services are being performed, then he can claim the foreign tax credit to avoid double taxation. Otherwise, he is paying one level of federal tax and one level of state tax. If could be worse.

I agree with IntlTax. The only other thing to check is the potential issue with CA. I don't know the CA state tax at all but I seem to recall there's an issue with whether the Foreign tax credit is permitted. IntlTax may know the answer.

Mrs. Phillips:

The Foreign Tax Credit (Form 1116) definite applies to your federal tax return if your husband is paying taxes to the host country.

Georgia will give you a credit for the taxes paid to California, so that should resolve any potential double tax at the state level.

Your situations SCREAMS for professional tax help, which I can provide at a reasonable fee; see email address and link below.