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Hi, If a married couple (US citizens) living abroad and only one is earning $150,000 (the other spouse is not working)...can they exclude on a joint tax return, maximum of $92,900 or a maximum of $185,800 (for 2011)? Thanks

Foreign Income foreign tax credit
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Tax Professional Answers

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Gary Carter, PhD, MT, CPA
The foreign earned income exclusion of $92,900 for 2011 ($95,100 for 2012) is for one earner, so in your case only $92,900 can be excluded. For any earned income in excess of the exclusion, you can claim the foreign tax credit for foreign taxes allocable to the excess income. You can use the most advantageous combination of the exemption and the credit to lower your US tax liability. Since the foreign income in excess of the exclusion is taxed at your top marginal rate, you should check the result using only the credit and skipping the exclusion.
Leave a Comment 507 weeks ago

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Chuck Heyde, CPA, CGMA
No, you can not take your spouse's exclusion. The exclusion is per person per year.

You should evaluate the benefits of the foreign tax credits as Gary suggest but I also recommend you research the other half of the Foreign Exclusion - the Foreign Housing. This too will could help reduce the double tax effect of your international trip.

Chuck Heyde
Leave a Comment 506 weeks ago


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