Have a Tax Question? Ask a Tax Expert
Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.
As a US Citizen/resident, you must declare your worldwide income on an income tax return, even if it is not earned in the US. Just because there are persons who live/work out of the US and don't report their income, it is not necessarily the correct or legal thing to do.
There are several different concerns for you. One, is whether or not you are entitled to the foreign income exclusion. This is a tax provision for individuals who live and work abroad, and if you meet certain requirements, you are able to exclude up to $91,500 of income from tax in 2010, and up to $92,900 in 2011. However, to use this exclusion, you must still file a tax return: http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html
If your income exceeds this amount, or if you are not eligible for this provision, there are other possibilities of paying less US tax on your income if you pay income tax to the foreign country, through the foreign income tax credit or deduction, or US-foreign country tax treaties.
Please let me know if you need additional information.
Hello, it does not matter if the company is not located in the US or owned by a US company. A foreign tax credit or deduction won't help you if you don't pay foreign taxes, but you still may be eligible for the foreign tax exclusion.
$91500 is the amount that you are able to exclude if you meet certain requirements that are listed in the links I gave you. There is no specific amount that you have to make to be able to exclude the $91500---it is up to $91500.
You must meet either one of two tests, the bona fide residence test or the physical presence test.
Here is a short questionnaire to determine if you can take the exclusion:
Here is more info about the physical presence test and the bona fide resident test: