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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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I have earn $40,000 in China last year, and live there for

Customer Question

i have earn $40,000 in China last year, and live there for 330 days,how can i report my tax return,even no foreign tax earning credit, it isn't? please gave me answer,thanks.
Submitted: 7 months ago.
Category: Tax
Expert:  Lev replied 7 months ago.
There are two options - foreign earned income exclusion or foreign tax credit..As an US person living abroad - you may claim a foreign earned income exclusion.The person may qualify for the foreign earned income exclusion - he/she should:-- Work and reside outside the United States for at least 330 days during the year, or-- Meet either the Bona Fide or Physical Presence tests.If the person qualifies, he/she may exclude up to $100,800 (2015 in foreign wages).To receive that exclusion - the taxpayer should file either form 2555 or 2555EZ.Here are forms you likely need:Form 2555https://www.irs.gov/pub/irs-pdf/f2555.pdfInstruction 2555https://www.irs.gov/pub/irs-pdf/i2555.pdfPlease 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, etc - are not excludable.Please also be aware that this credit is not granted automatically - you need to file a tax return and claim the credit..
Expert:  Lev replied 7 months ago.
Another options is to claim a foreign tax credit when the same income is taxed in the US and abroad.If the same income is taxable in the US and in a foreign country - the person may claim a credit for taxes paid in a foreign country on your US tax return.To determine the amount of credit - the person should use the form 1116 and attach it to the tax return -http://www.irs.gov/pub/irs-pdf/f1116.pdfHere are instructions -http://www.irs.gov/pub/irs-pdf/i1116.pdf..Let me know if you need any help with reporting. .I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.