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Tag Archive for Foreign Earned Income Exclusion

Claiming the Foreign Earned Income Exclusion when Filing a Late Return – What US Expats Need to Know

Hugo Lesser, Tax Advisor

The Foreign Earned Income Exclusion lets US expats exclude the first around $100,000 (the exact figure rises a little each year) of their earned income from US taxes.

It’s a great choice for many expats who earn less than this threshold, and sometimes a good option for expats who earn above the threshold too.

To claim the Foreign Earned Income Exclusion, expats have to file form 2555 with their annual US tax return. Form 2555 requires expats to prove that they live abroad.

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Exactly What Income Can U.S. Expats Exclude? FEIE

American expats are, unfortunately, still required to file U.S. taxes from abroad. Thankfully though, there are several exclusions that reduce or in most cases eliminate their U.S. tax liability. The foremost among these is the Foreign Earned Income Exclusion. Not owing U.S. taxes doesn’t exempt expats from having to file a U.S. tax return though, as the exclusions that reduce or eliminate U.S. tax liability for expats must be claimed each year when expats file their federal return. Read more

A Quick Refresher On The Foreign Tax Credit

Ephraim Moss, foreign tax credits, expat, tax professional

One of the fundamentally important tax concepts for U.S. expats to know is that the U.S. tax system has built-in mechanisms for preventing the “double taxation” of your income (i.e., tax in both your new host country and in the United States). These mechanisms provide a measure of relief for U.S. expats who remain subject to U.S. taxation, despite living and working abroad.

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Late Filing The Foreign Earned Income Exclusion

Ephraim Moss

We’ve blogged a number of times in the past about the foreign earned income exclusion (“FEIE”), because it is one of the main tax relief measures available to expats filing U.S. tax returns. Expats qualifying for the FEIE may be able to exclude all or part of their foreign salary or wages from their income when filing their return – so its importance can’t be overstated.

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Digital Nomads And The Foreign Earned Income Exclusion

Ephraim Moss

In today’s age of “digital nomads,” working remotely overseas has become increasingly popular. More companies are adding remote working options in order to benefit from a broader talent pool and give employees more lifestyle choices.

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U.S. Expats and IRS Tax Refunds

Ephraim Moss

A number of clients have asked us whether a U.S. expat can receive a tax refund from the IRS despite living overseas. While the answer to this question can be nuanced depending on the circumstances, the general rule is that living overseas does not preclude an expat from entitlement to a refund that is otherwise due to the individual.

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Expat Tax Tips For The Foreign Earned Income Exclusion

Ephraim Moss

One of the most common tax relief measures available to U.S. expats is the Foreign Earned Income Exclusion (FEIE). If you qualify, you may be able to exclude all or part of your foreign salary/wages from your income when filing your U.S. federal tax return. Here are five key tips to keep in mind regarding the exclusion:

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Foreign Earned Income Exclusion – Timing is Everything!

Not many U.S. expatriates realize that the foreign earned income exclusion is an election and is not automatic. In a recent tax court Nancy McDonald learnt this in a painful way when her exclusion was denied. Nancy McDonald V. Commissioner TC Memo 2015-169.

IRC Section 911(a) provides that a qualified individual may elect to exclude from gross income the foreign earned income of such individual. To qualify for the foreign earned income exclusion (FEIE), the taxpayer must satisfy a three-part test:

1. Taxpayer must be a U.S. citizen who is a bona fide resident of a foreign country for an entire taxable year or physically present in a foreign country during at least 330 days out of a 12-month period, sec. 911(d)(1); Read more

IRS Reminds Those With Foreign Assets of U.S. Tax Obligations

WASHINGTON — The Internal Revenue Service reminded U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2014, that they may have a U.S. tax liability and a filing requirement in 2015.

Most People Abroad Need to File

A filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the foreign earned income exclusion or the foreign tax credit , that substantially reduce or eliminate their U.S. tax liability. These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return.

The filing deadline is Monday, June 15, 2015, for U.S. citizens and resident aliens whose Read more

Don’t Mistake Gin For “GIIN,” Or You May Suffer From More Than Just a Hangover!

In a recent blog entitled, “FATCA GIIN January 2015 FFI Registration Analysis … by the numbers,” Professor William Byrnes provides a brilliant commentary on the IRS’s publication of its first FATCA GIIN list of the new year (published on New Years Day!). The FATCA GIIN list is a list of “approved FFIs (Foreign Financial Institutions)” that have registered on the IRS FATCA portal by December 23, 2014.

For those who have never heard of a “GIIN” and who may have initially confused it with a certain type of drink that mixes exceptionally well with tonic, GIIN stands for “Global Intermediary Identification Number.” A Foreign Financial Institution (FFI) that registers on the “FATCA Registration Website,” upon approval, receives a Global Intermediary Identification Number (GIIN) from the IRS (unless the FFI is treated as a Limited FFI). The GIIN is a Read more

Application of Foreign Earned Income Exclusion to Civilian Contractors Working In Combat Zones – Part II

This is Part II of a two-part blog series. After establishing that they have a tax home in a foreign country, taxpayers must still establish that they satisfy the 330 day physical presence test or the bona fide residence test. See IRC section 911(d)(1).

I. 330 Day Physical Presence Test

The 330 day physical presence test is the epitome of a “hard and fast rule.” To satisfy the test, the taxpayer must establish the following (there are “no ifs, ands, or buts about it”):

(1) That he is a U.S. citizen or resident of the United States, and

(2) That he was physically present in a foreign country or countries for at least 330 full days Read more

Application of Foreign Earned Income Exclusion to Civilian Contractors Working In Combat Zones – Part I

This blog addresses the foreign earned income exclusion rules as they apply to civilian contractors, and other civilian employees, who work in foreign country combat zones. By “civilian,” I am specifically referring to individuals who are not employees of the United States or any agency of the United States.

I. IRC Section 911 Foreign Earned Income Exclusion

Let’s start with some basics. IRC section 911(a)(1) allows a “qualified individual” to exclude his foreign earned income and housing costs from gross income. In the same way that the foreign tax credit limitation limits the foreign tax credit to the amount of U.S. tax attributable to foreign-source income, IRC section 911(b)(2)(D) limits the amount of foreign earned income that may be excluded to an amount adjusted annually for inflation. Read more

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