Earn Income
Five facts about the exclusion of foreign earned income
Taxpayers not required to claim a foreign exchange income federal tax
If you are a U.S. citizen or resident alien in the world in general income subject to income taxes in the United States. However, taxpayers who live and work abroad may be able to exclude your foreign income on your federal taxes. The rules governing the exclusion can be complicated and confusing, but there are important bases for further time to consider income from foreign sources.
- To qualify for exemption income you must be a U.S. citizen or resident alien, have a bona fide residence or physical presence in a foreign country as a whole fiscal year and receive income work abroad. This income is called income earned by foreigners. The IRS believes it has a residence eligible if you live in a foreign country or have been in this country at least 330 full days during a period of twelve months. You must also demonstrate that you are keeping your U.S. citizenship abroad.
- The amount may be excluded from your reported income is limited, which changes every year. For fiscal year 2010, the maximum amount you can exclude is $ 91,500. With over $ 100 compared with 2009.
- To claim the exclusion, you must file IRS Form 2555, Foreign Earned Income, and attach to your federal tax return. There is a shorter form (2555-EZ) that can be used by these taxpayers do not claim the exclusion, without a Form 1040.
- Once you choose to take the exclusion for foreign earned income, you can not claim a deduction for foreign taxes on that income.
- You can always be able to take other credits on your tax return, even if you take the exclusion. Making Work Pay credit the credit of the Government Pensioners and IRA deductions may be available. You may also qualify for the exclusion of foreign housing, if you are an employee, deduction of foreign policy or housing, if you are self-employed.
In addition to the above rules, taxpayers must be aware that residents of Puerto Rico and U.S. Virgin Islands are not eligible for the exclusion of income or housing homelessness. But if you are a resident of the work of the U.S. Together in Puerto Rico and enter the same number of the previous rule can exclude from your income unless you are paid as an employee of the United States.
The rules on foreign requests the Earned Income Exclusion can be confusing. An online site preparation Tax can help all kinds of relevant questions about your income and residence. IRS Publication 54, Tax Guide for U.S. Citizens and residents abroad, can also help you determine if you qualify for exclusion.
About the Author
Karin Velez is a freelance writer and author whose expertise covers a wide range of subjects including DIY, gardening and finance. She and her husband live on their family farm in Peculiar, Missouri. For more, visit www.karinvelez.info.
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