I'm a Contractor working overseas what is the foreigh free tax bracket for 2008?

Question

How much is tax Free? and how much u get tax? Please used 100,000 as an example...

Answer 1

Contractor?

When you do your taxes, if you are paid on a 1099-Misc, you will put the $100,000 on schedule C, subtract out any expenses and carry the net earnings to schedule SE.  Approximately $14000 would be your self-employmen tax.  You will get an adjustment for 1/2 of the SE tax.

(If you are actually an employee and the $100K is paid as wages this step does not apply.)

If your contract is January to January and you are actually out of the country 330 days out 365, then you put the income on the tax return and subtract out (using form 2555) the foreign earned income exclusion (roughly $85K).  If you still have income after the standard deduction and personal exemption, you will pay tax at starting at the 25% (or higher tax bracket). (The excluded income uses up the lower tax brackets.)  If your contract is July to July and you are still gone 330 days, you can take a prorated exclusion--but only after you've met the 330 day test.

See PUB 54.