US citizens or residents living and working abroad finally have some direction for purposes of filing individual taxes for 2007.
The Tax Increase Prevention and Reconciliation Act of 2005 increased the maximum amount of foreign earned income that may be excluded from gross income to $82,400. The law also limited the amount of housing costs that may be excluded or deducted. These changes are effective for taxable years beginning on or after January 1, 2006.
As a result of these changes, some taxpayers might have underpaid their estimated tax liabilities for 2006. If you relied on the pre-TIPRA laws and incurred a penalty, you are eligible for a waiver. The waiver is only available to those who file a federal form 2555 or federal form 2555-EZ, with their individual income tax return.
