Taxes: I Don't Make Enough.....

Lots of people were very concerned about the tax changes affecting American expats in the last budget to come out of Washington. I don't make enough earned income for it to make much of a difference to me but there has apparently been some clarification of the issues:

Further to our advice in May 2006 on the US tax law changes, please be informed that the IRS has just released the table of locations with high housing costs and provided an adjusted limitation on housing expenses for purposes of the foreign housing exclusion. The maximum housing expenses in Hong Kong qualified for the housing exclusion in 2006 has been adjusted up to US$114,300 (highest among all the locations) as opposed to the normal limit of US$24,720.

Accordingly, the maximum housing exclusion that a qualified taxpayer in Hong Kong may offset from income for tax year 2006 would be increased to US$101,116 as opposed to US$11,536 before the geographic adjustments. The table, however, does not provide any adjustment for housing costs in China although the housing expenses in Beijing or Shanghai have increased quite significantly in recent years.

I have no idea if this is true but it seems as if cooler heads have prevailed.