Table of Contents State Tax Considerations for Expatriates .................................................................................. 5-8 Determining domicile ............................................................................................................ 5-8 Determining residence ........................................................................................................... 5-9 State taxes and expatriate compensation planning .......................................................... 5-10 CHAPTER 6 - FOREIGN EARNED INCOME AND HOUSING COST EXCLUSIONS Qualifying for the §911 Exclusions ............................................................................................ 6-1 Foreign tax home .................................................................................................................... 6-2 Bona fide residence test.......................................................................................................... 6-3 Physical presence test ............................................................................................................ 6-7 Waiver of time requirements for some countries ................................................................. 6-9 U.S. travel restrictions............................................................................................................ 6-9 Foreign Earned Income Exclusion ........................................................................................... 6-10 Foreign earned income ......................................................................................................... 6-10 Limit on excludable amount ............................................................................................... 6-12 Attributing income to the year earned ............................................................................... 6-12 Year-end payroll exception .................................................................................................. 6-13 Moving expense reimbursements ........................................................................................ 6-13 Foreign Housing Cost Exclusion ............................................................................................... 6-14 Reasonable housing expenses .............................................................................................. 6-15 Base housing amount ........................................................................................................... 6-16 Housing cost exclusion limitation ...................................................................................... 6-18 Applying the exclusion limits.............................................................................................. 6-18 Tax rates on income not excluded....................................................................................... 6-18 Qualified second foreign household .................................................................................... 6-18 Two-earner families.............................................................................................................. 6-19 Disallowance of double benefits .......................................................................................... 6-19 Earned income tax credit restriction .................................................................................. 6-19 Electing or Revoking the §911 Exclusions .............................................................................. 6-19 Special Exclusion for Employer-Provided Meals and Lodging ............................................. 6-20 Expatriates living in "foreign camps"................................................................................. 6-20 CHAPTER 7 - SOCIAL SECURITY, MEDICARE, AND FEDERAL UNEMPLOYMENT TAXES FOR EXPATRIATES Social Security and Medicare Taxes .......................................................................................... 7-1 Totalization Agreements .............................................................................................................. 7-1 Transferred worker rules ....................................................................................................... 7-2 Countries under totalization agreements ............................................................................. 7-2 Establishing U.S. social security coverage ........................................................................... 7-3 Online employer resources ..................................................................................................... 7-4 Establishing foreign social security coverage ...................................................................... 7-4 Extension of transfer period ................................................................................................. 7-5 Combining work credits from both countries ...................................................................... 7-5 Foreign Affiliate Coverage Election ............................................................................................ 7-5 Federal Unemployment Tax ......................................................................................................... 7-7 3