Please be aware that - the exclusion above will not affect self-employment taxes - only income taxes. Only earned income is excludable - income from wages and self-employment. For instance - dividends, investment income, rental income, pensions, etc - are not excludable.
Please also be aware that this exclusion is not granted automatically - you need to file a tax return and claim the exclusion on form 2555.
Another issue - if the same income is subject to income tax in the US and abroad - you may claim a credit for foreign taxes. Thus effectively will avoid double taxation of the same income.
If the same income is taxable abroad and in the US - you may claim a credit for taxes paid abroad - so the same income would not be taxed twice.Use the form 1116 -
please find instructions here -
The credit is limited by the US tax liability on the same income - the form 1116 is used to calculate the amount of credit. Means - if tax liability abroad is higher - there will not be US taxes on that income, but if tax liability abroad is lower - in the US you will pay the difference after the credit will be applied.
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