Expat Taxes for Military Contractors

Navigating Your Tax Obligations Abroad

As a military contractor working overseas, your tax situation comes with unique challenges. Unlike active-duty military personnel, your income is taxed differently, and understanding how to minimize your tax liability while staying compliant is essential. At eTaxGlobal, we make the process simple, ensuring you take advantage of every available benefit while avoiding costly mistakes.

Maximize Your Tax Benefits

Filing taxes as a military contractor doesn’t have to be complicated. From excluding foreign earned income to claiming deductions and credits, we help you navigate your tax situation with ease. Our team specializes in expat tax solutions, ensuring you don’t overpay or miss out on key benefits.

Not sure where to start?

Key Considerations for Military Contractors

Foreign Earned Income Exclusion (FEIE)

If you qualify, you may be able to exclude up to $126,500 of foreign earned income from U.S. taxes (for 2024). To be eligible, you must:

1. Establish a Tax Home Abroad

Your principal place of business must be in a foreign country.

2. Meet One of Two Tests

  1. Physical Presence Test
    You must be outside the U.S. for at least 330 full days within a 12-month period.
  2. Bona Fide Residence Test
    You must maintain a permanent residence in a foreign country for an entire calendar year and intend to stay indefinitely.

Don’t qualify for the FEIE? If you pay taxes to a foreign government, you may still be eligible for a Foreign Tax Credit, which helps reduce your U.S. tax liability.

Still unsure if you qualify?

Independent Contractor vs. Employee

Your tax classification impacts what you owe:

Independent Contractors

If you receive a Form 1099, your income is subject to self-employment tax (Social Security & Medicare). While the FEIE can reduce income tax, it does not apply to self-employment tax. However, you can deduct eligible business expenses.

Civilian Employees

If you work for a company under a military contract, you may qualify for the FEIE if you meet the necessary criteria.

Not sure which category applies to you? We’ll Help You Figure It Out.

Combat Zone Exclusion

Active-duty military members can exclude combat zone income from U.S. taxation, but unfortunately, this does not apply to military contractors. However, if you’re working in a combat zone, you may still qualify for the FEIE to reduce your taxable income.

Need help understanding your options?

Let Us Handle the Complexity

Filing your U.S. taxes as a military contractor doesn’t have to be stressful. At eTaxGlobal, we take care of the details so you can focus on your work abroad. Whether you’re looking to minimize your tax bill, claim the right deductions, or ensure full compliance, we’re here to help.

Get started today with a stress-free tax season.

Get Started with eTaxGlobal!

Ready to make tax preparation easier? Fill out the form below to get started with eTaxGlobal. Our team will reach out to you shortly to schedule your free consultation.