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hi I have question about foreign earned income ? because

hi I have question about...
hi I have question about foreign earned income ?
because I have salary i am getting now form outside USA and I wonder how to fill it ?
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Answered in 9 minutes by:
10/17/2013
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified

Greetings,

 

Even though there may or may not be any W-2 or other tax form received by you and field by a foreign company this is still either wages and salary or self employment income that has to be reported by a citizen or resident of the United States.

 

If you qualify it may be possible to exclude foreign earned income (though it is still reported and then excluded) from taxation by the US.

See http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Requirements

"To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:

  • A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
  • A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
  • A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months."

Even if you can not qualify for foreign earned income exclusion (FEIE) if you pay tax on the same income to both the foreign government and the US then you get to claim a credit for the taxes paid to the foreign government on Form 1116.

Links and details are at http://www.irs.gov/taxtopics/tc856.html

 

 

For more complete details see http://www.irs.gov/publications/p54/index.html

 

If you are an employee the earned income is included on line 7 of Form 1040 and if you are self employed it will be reported on Schedule C.

 

You will also claim an exclusion on Form 2555 or a credit for foreign taxes on Form 1116. See links above for more information.

 

Please ask if you need more discussion or clarification.

Thank you.

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Customer reply replied 4 years ago

thank you for your answer if I think my income is taxable up to these information because I am living here in USA all the year , I have 3 kids is that make tax less ?


 

Hello again,

 

If you live in the US and work in the US you should get a W-2 from the employer or you will use Schedule C for the income and expenses as an independent contractor.

 

Yes, children will have deductions if they live with you for more than one half the year and you can claim them as dependents.

 

Hope this clarifies for you.

Thank you for the opportunity to be of service.

 

 

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Customer reply replied 4 years ago

just one thing I want to clarify please and thank you again


I am just now I added these income on my turbo tax soft ware as foreign income and I got credit how !!!?

Hello again,

 

It is possible if you have children and your income is under certain levels that you may have qualified for Earned Income Credit.

That particular credit will increase as income is added (up to a point).

 

This will be reflected in your payment section of Form 1040 and gets to add to your refund or reduce the amount due from you.

 

Of course, this is just one possibility.

Best regards.

 

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Customer reply replied 4 years ago

last thing just to be sure I understand you that if I have less income this year and I add this amount of money ( foreign earned income ) I am still can get credit instead of own money , is that correct ?


and if I filled it I need statement from my foreign employer there right ? that is what is showing up to me now !!


 

Hello again,

 

last thing just to be sure I understand you that if I have less income this year and I add this amount of money ( foreign earned income ) I am still can get credit instead of own money , is that correct ?

 

Yes, that is correct.

 

and if I filled it I need statement from my foreign employer there right ? that is what is showing up to me now !!

 

Yes, that may be needed as you see there is money being paid for you (and maybe to you) so there may be documents needed.

 

Hope that clarifies for you.

Thank you.

 

 

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Customer reply replied 4 years ago

you are perfect and I was happy to deal with you can I request you specially in the future ?

Hello again,

 

Thank you for the compliments.

Yes, I can help in the future (but am not always online).

 

The best thing to do is to put my username jgordosea as part of the question so other experts will know you want me to answer.
(And if you are in a hurry and I am not here soon enough just edit out my name).

 

Since you have a subscription it may be possible to mark me as a preferred expert but for that please contact customer service at http://ww2.justanswer.com/help

The box on the right has several contact options.

 

Thank you for the opportunity to be of service.

jgordosea
jgordosea, Enrolled Agent
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Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
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