Your client works for a defense contractor and was assigned to work on a military base in Australia....

Question

Your client works for a defense contractor and was assigned to work on a military base in Australia. As a condition of his employment, he was required to live in housing that was provided to military personnel. The housing provided was a condominium located in a civilian neighborhood that was 20 miles from the military base where he performed his services. The employer paid over $6,000 of rent while the employee was living there. Your client would like to know whether the value of the housing can be excluded from his gross income. He read an article that indicated that employees who are required to live in a "camp" in a foreign country can exclude the cost of the housing from gross income. What's the result of your research? Prepare tax file memoranda to explain you research results.

Robert · Accepted Answer

To: Defense employee 
From: CPA 
Re: Exclusion of value of home from gross income 
Date: 18 May 2013 
FACTS:  As per the publication, there are certain requirements which need to be fulfilled so as to 
avail Foreign Earned Income and Housing Exclusion and they are: 
- The tax home needs to be in a foreign country 
- The individual needs to have a foreign earned income 
- An individual must fall in one of the following: 
(a) A U.S.

Your client works for a defense contractor and was assigned to work on a military base in Australia. As a condition of his employment, he was required to live in housing that was provided to military...

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