US TAX UPDATE:

What's new for 2008 that will impact U.S. taxpayers living abroad particularly?

• Foreign Earned Income Exclusion (FEIE) has been increased:
  IRS has increased the maximum foreign earned income exclusion threshold from $85,700 to $87,600.
• Foreign Housing Exclusion (FHE ) has also been increased:
  Excludable foreign housing exclusion limitation and un-excludable foreign housing expense base amount are increased for 2008 as following: .

1) Excludable foreign housing expense limitation

2008 excludable foreign housing expense limitation for most cities is $26,280. For high living cost cities, the limitation has been increased. Beijing, Shanghai and Hong Kong are identified as high cost localities in China and the limitation for Beijing, Shanghai and Hong Kong on housing expenses has been set as following for 2008:

The un-excludable foreign housing base amount has been increased to $38.3 per day and $14,016 per year accordingly.
*Maximum Foreign Housing Exclusion Allowed = Excludable Limitation - Un-excludable Base Amount

Instructions of Form 2555
A complete table of the adjusted limitation on housing expenses for 2008 and detailed instructions for claiming foreign earned income exclusion and foreign housing exclusion can be found in IRS website: http://www.irs.gov/pub/irs-pdf/i2555.pdf, Instructions for Form 2555. Or please contact us if you have any questions.

Other Matters as quoted from IRS Publication 17:
Recovery rebate credit
You may be able to claim this credit on 2008 tax return if you did not receive the full economic stimulus payment.

Limit on exclusion of gain on sale of main home
Generally, gain from the sale of you main home is no longer excludable if it is allocable to periods of nonqualifed use of the property after 2008. For more information, please see IRS Publication 523 - Selling Your Home.

First-time homebuyer credit
You may be able to claim this credit if you are a first-time homebuyer and bought your main home after April 8, 2008.

Additional standard deduction for real estate tax
If you do not itemize your deduction, you can claim an additional standard deduction for real estate taxes you paid.

Standard mileage rates
For 2008, the standard mileage rate for the cost of operating your car for business use is 50.5 cents per mile (58.5 censt per mile after June 30, 2008).

Alternative minimum tax (AMT) exemption
The AMT exemption amount has been increased to $46,200 for single ($69,950 for married filing jointly).

Capital gain tax rate reduced
The 5% tax rate on qualified dividends and net capital gain is reduced to zero.

More 2008 US tax update, tax forms and information in Publication 17 at IRS website: www.irs.gov

The American Recovery and Reinvestment Act 2009
The new act will generally not affect major individual's 2008 U.S. tax filing, but will have impact on 2009 and 2010 tax filing.

For more information , please visit IRS website: http://www.irs.gov/newsroom/article/0,,id=204335,00.html?portlet=6

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