Foreign Housing Exclusion

My husband and I were reading up on Foreign Housing Exclusion yesterday. We had no idea about this until we saw it on TurboTax. Sounds great (though have no idea why we can do this... seems to nice for govt?).

Few questions though:
1) Employer provided amounts can just be salary right? You don't need a housing allowance to deduct your rent right? (That's how it reads to me so I want to be sure)
2) Can you really deduct your phone and tv service costs?
3) This exclusion and the income exclusion sort of take up the same space right? Meaning I have 89K of exclusion to play with and if I have 70K of income to exclude then It will consider the first 19K of my rent, utilities, etc and ignore the rest. Is that right?

We were thinking of including:

* rent
* council tax
* gas
* electricity
* water
* vonage bill
* virgin media (tv/broadband) bill

Is there anything on this list that I shouldn't include and have I left anything off that I should include?

Julia - It sounds as if you are rushing as your profile indicates you moved around August 2007 so you couldn't file claiming the exclusion until around July 2008 at the earliest?

Yeah, I know but you have to pay any taxes owed on April 15th right even if you're filing an extension? So that means you need to prepare your taxes by then anyway so you know what you have to pay (we never get a refund and always have to pay). I'm supposed to attach a check to my extension and send that off (at least that's what E&Y said the proper procedure was in our 5 min chat we got last fall). Then in July I can file the actual tax return. (I've always been confused at how people who need an extension can know how much they have to pay but at least in my instance I'm just waiting on a date, otherwise I know everything I need to know to file my return.)

So, that's why I'm inquiring about this topic.

Just to clarify - you are right.

You can indeed pay Federal & State taxes by April 15th to avoid interest.  (If you come from a domicile based State such as Virginia or Georgia you may even owe State taxes on your entire year's income!)

 

Just to clarify - you are right.

You can indeed pay Federal & State taxes by April 15th to avoid interest.  (If you come from a domicile based State such as Virginia or Georgia you may even owe State taxes on your entire year's income!)

 

Yay :/ I obviously come from GA so I guess we'll have the "privilege" of paying taxes on our entire year's income. Oh well... I guess I'll have to see how much we'll have to pay to state. At least we usually get a refund on state taxes (though we never do federally) so perhaps we won't owe too much.

We were thinking of including:

* rent
* council tax
* gas
* electricity
* water
* vonage bill
* virgin media (tv/broadband) bill

Is there anything on this list that I shouldn't include and have I left anything off that I should include?

Page 20 of Publication 54 allows:

"Utilities - other than telephone charges"

and excludes:

"Pay television subscriptions"

So Vonage bill and Virgin TV are out, broadband is questionable but in spirit I think is excluded.  I take utilities to mean utilities necessary for survival (water, gas, electric) as non-essentials are excluded (TV and telephone)