I'vw worked as a DOD contractor overseas for a few years and just changed employer/job/location and my new employer wants to report more stuff as taxable income than my last employer (both are overseas DOD contractors). Just looking for guidance/opinions that what they're reporting is okay, seems a bit odd that it's up to the employer to decide what constitutes reportable income.

What they want to report (that my last employer didn't) are:

Relocation reimbursement - what they spent moving me here

TDY reimbursement - hotel, car, per diem for up to the first 30 days in country while I find housing - this wasn't applicable at my last job

School tuition reimbursement - they pay for the DOD schools for my kids or a private school up to the DODS rate. There were no DOD schools at my last jobs, just a private one, which was paid for by my employer

Thanks.

Starting with the last first, the educational reimbursement is considered employment income to you.

The other two questions involve moving. I suggest you consult this:
Publication 521 (2008), Moving Expenses
Since the topic is lengthy.

Generally fringe benefits and reimbursements under a qualified plan are not considered income.
If your employer does consider them income then you are perfectly entitled to deduct those expenses from income.

If you are an independent contractor and entitled to take the Foreign Earned Income Exclusion be sure to consult:
http://www.irs.gov/pub/irs-pdf/p54.pdf
Particularly chapters 4 and 5.

I agree that some of the education may be taxable, however the DODs school rates are excessive and should not be considered income. For instance, at a public school in Arizona, estimates between $7K and 10K per year to educate a child. The DODs charges $24K and there is no way to get around the charges or challenge them as unfair. If living overseas, contractors cannot put our kids in local schools because this affects our work permits. We can find private schools, and the rates in Euro are similar to the states 7-10K euro per year, but the euro rate kills us right now.

I disagree that the education fees for your kids in a DODs school is entirely taxable income. It is not taxable for military parents or for DOD civilian employees. The education expenses for those workers are paid via their government channels and not through the employee's paycheck.

I have to play around with the 2555 form because there is an educational benefit section on there that gets added to your foreign earned income, and is then subtracted from your total income via the deduction (as is COLA and a portion of Housing). It is interesting to me that I can declare the housing, take the deduction, or not declare and not take deductions and the numbers end up the same way.

Someone needs to get on this and get some real clarity. I have two kids, and this adds $50K to my income when it should only add about $14 if considered benefits. I have friends that have 4 kids. Is this fair to tax them on 100K of truly unearned income? I know some of us are tax free, and that seems unfair, but in all adding extra taxes on benefits that are freely given to others without the tax consequences seems a bit unlawful.

That seems an incredibly high tuition cost.

Here in Portugal the most elite private school costs around Euro 5,500/student. The conversion rate so far this year is .7311; that's $7,523. That is way less than $24,000.

I suggest you consider an alternative to the DOD school.

Quote:

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Originally Posted by Five Rings

Starting with the last first, the educational reimbursement is considered employment income to you.

The other two questions involve moving. I suggest you consult this:
Publication 521 (2008), Moving Expenses
since the topic is lengthy.

Generally fringe benefits and reimbursements under a qualified plan are not considered income.
If your employer does consider them income then you are perfectly entitled to deduct those expenses from income.

If you are an independent contractor and entitled to take the Foreign Earned Income Exclusion be sure to consult:
http://www.irs.gov/pub/irs-pdf/p54.pdf
particularly chapters 4 and 5.

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Yep, I get to the exclusion, which helps, but when they add-on $80K+ of taxable income, hat makes me liable for taxes on a lot of income that I never see, and at a higher rate to boot.

So theoretically I should be able to claim as a moving expense everything that they're reporting as taxable income in relation to my relocation; i.e. they paid $20k for the airline tickets, they report it as $20k in taxable income, I should then get to claim $20k in moving expenses for those tickets, correct?

Correct to a degree.

See Pub. 54 and the chapter on moving expenses therein. You have to do some arithmetic.
http://www.irs.gov/pub/irs-pdf/p54.pdf

Tax-time - new follow up questions, ignoring the fact that they're reporting an accountable relo as taxable income for a moment, so far, the only $$$ that they reported for me for 2009 was an advance that they gave me. I received my final reimbursement in 2010 for the other out-of-pocket expenses; the two biggest expenses are so far unreported. So what do I do? Do I get ahold of the receipts for the move, claim them, and then hope that the excess (actual minus the bonus that they reported for 2009) carries over to 2010 for when they presumably finally report it? Or do I demand an amended w2 from them so I can have it all sorted for 2009 ty? I'm really preferring not to have to claim/reconcile 2009 moving expenses on my 2010 return; seems like that would raise some audit flags.

Second question - I came from a similar situation to here - foreign exclusion bonafide resident - and for my current employer I'd be foreign exclusion residency test - can I do two form 2555s? I'm assuming that I'm still only entitled to the $91.4k exclusion, which each of my two W2s is less than but combined, they exceed it; so I should be able to claim the full $91k exclusion for the year, correct?

Still hating the dod school reimbursement... :[

Thanks!

My recommendation to you is to get a professional to do your taxes. Do not attempt this at home; it is false economy.

That's kind of what I was thinking. I don't think my situation is complex, but my circumstances are a little unique.