Tax question......

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And I also work overseas....

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You may be in a loophole. Some years back several of the major overseas defense contractors (KBR, DynCorp) exploited a tax loophole and didn't withhold or pay taxes on overseas workers.

In response, Congress passed the HEART Act which was supposed to close this loophole. But as Congress does, it closes one loophole and opens another.

The new loophole allows overseas companies that are not more than 50% owned by an American firm to continue the past practice. So what have some of this firms been doing? You guessed it -- they created shell companies in the Caymans, etc. and moved all their overseas employees under them.

You think you work for Company X, when in fact you may be working for a Cayman-based subsidiary of said company.

Then you are probably dealing with computer error (i.e., someone can't type at their computer).

Sorry about that. You may get clobbered on a future paycheck as they correct the error, but better that than dealing with the IRS later.

Hopefully they'll get it fixed soon so you won't have to root from Cell Block 6.

yeah same here.... although I could just stay overseas for a while

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Either way I cant believe youve been getting paid for 8 months and havent noticed any taxes coming out. You better start checking that thing closer...

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Well the crazy thing is that they've been taking out SS and Medicare, but no Federal or State... I just never paid attention to it. And yes, I do believe that I qualify for the $91,500 exemption.
I spoke with my CPA yesterday and told me that I will be fine, and that I may still get money back next year

Who Qualifies for the Exclusions and the Deduction?
If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $91,400 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts. See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later.

You may also be entitled to exclude from income the value of meals and lodging provided to you by your employer. See Exclusion of Meals and Lodging, later.


1. A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
You fail this test!

2. A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
You fail this test!

3. A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

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Your employer's payroll software may be taking into account the foreign earned income exclusion. If you qualify, up to $91,500 of foreign earned income may be excluded from United States income tax.

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This is most likely the case. Probably not a input error. If you will not be at this assignment for >1 year you should contact your HR to begin having some taxes withheld if you want somebody to babysit your money. Personally I'd just take 10% of my income and stick it in some sort of interest bearing account, and pay your tax liability with that if need be.