Estimating 2006 U.S. taxes

Hi Expats,

I Need a little help, or should I say sanity check.  I was this weekend estimating my 2006 taxes for the U.S. using HR Blocks 2006 TaxCut program and had a little bit of confusion creep in.  Basically, after TaxCut calculated all the basics below - it says I get a $1,000.00 REFUND!!!  My tax situation is not that complicated but here are the details:

I've converted to dollars using 1.9 as the yearly average.

Salary $104,500.00 (filing jointly)
I'm the only wage earner
Wife is house mum
1.5 year old son

Claimed life long learning credit for $2,400 or a final deduction of $458 in savings.
Claimed foreign earned income exclusion of $82,400
Claimed foreign earned housing exclusion of around $15,671

Finally, used standard deductions of $10,300.

From taxcut these are the final figures after all the exclusions:

Total (gross) income $6,429
Adjusted gross income $3,929
taxable income $0
total federal tax $0
total payments $1,000
penalties $0
refund amount $1,000
amount you owe $0

So the question is this - is it possible even though I am not paying any U.S. taxes I am entitled to a $1,000.00 refund?

Has any one else had a similar experience?

Thanks,
Shawn

1. The figures you quote say $1,000 in estimated taxes or a refund applied from a previous year.  Is this an input error?

2. You have not mentioned claiming the telephone tax refund, but the standard claim for 2006 married filing joint plus 1 is $50 so I'd expect a refund of $50.

3. You have not mentioned your employer pension contributions, but these do not qualify for the foreign earned income exclusion, although they would need to be reported.

4. Alternatively you could claim a deduction for employer pension contributions under the double tax treaty, but again if you choose to do so your maths would change.

5. The software my have the wrong rates for those electing to claim the foreign earned income or foreign housing exclusion in 2006 because of the stacking rule backdated to 1 January 2006, which states that income above these exclusions must be charged at the tax rate that would exist if you did not claim the exclusions. 

6. You may well be in the world of refundable child credits.  These are fine and kosher if you are overseas; however it is more likely that the software is throwing out the earned income credit which is big no-no for those overseas, except for those in the military.

Thank you Guya,

I did avoid putting in any type of pre-paid tax figures into the software.  My thought was it was the child tax credit that it was saying I would get refunded as $1000.

I did notice that it didn't seem to be calculating my entire yearly earnings and only taking into consideration my income after the exclusions.  I was under the impression that this was changed this year.  In fact, I went back into the TaxCut software and if you look at the 'help' topics they have put this change in the wording - but perhaps they did not make the 'code' change in the software.

The final release of the software is out on the 4th of January with all the updated forms etc., so maybe I will recalculate then and see what happens.

At the end I will probably need to have a tax advisor look over my documents though.

Thanks for the tips on the telephone credit!

Best regards,
Shawn