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The exclusion is an election. Taxpayers may claim the exclusion only if they file IRS Form 2555 or Form 2555-EZ. The form must be attached to a timely filed U.S. Individual Income Tax Return (IRS Form 1040) for the first year of election, or an amended timely filed return. IRS regulations allow the election with late-filed returns in some cases ...
In other words, the housing amount must be deducted from the total foreign earned income to arrive at the excludable amount for foreign earned income exclusion purposes. Lastly, to choose the housing exclusion, Form 2555 is the only form allowed and must be completely filled out. Form 2555-EZ cannot be used to claim the foreign housing exclusion.
Form 2555, Foreign Earned Income, is filed by taxpayers who have earned income from sources outside the United States exempt from US income tax. US citizens or resident aliens are taxed on their worldwide income. For those who qualify, however, Form 2555 can be used to exclude foreign earned income up to (In USD): [49] $87,500 for 2007 [50]
Continue reading → The post How to Report Foreign Income Without a W-2 appeared first on SmartAsset Blog. As a U.S. citizen or legal permanent resident, the IRS is in charge of collecting a cut ...
The bona fide residence test, like the physical presence test, comprises one way that an individual can qualify for the foreign earned income exclusion from United States income tax. In order to qualify for the bona fide residence test, an individual needs to reside in a foreign country for an uninterrupted period that includes an entire tax year.
Additionally, the Act limits the related Foreign Housing Exclusion to a figure based on the excess of 16% of the value of the FEIE, with a cap of 30% of the value of the exclusion. (Previously, the figure was the excess of 16% of the salary of a federal worker grade G-14 Step 1, with no cap.)
The exclusion reported on Form 8873 was created by the Foreign Sales Corporation (FSC) Repeal and Extraterritorial Income Exclusion Act of 2000. The new exclusion applies to certain transactions entered into after September 30, 2000, but is subject to transition rules for foreign corporations with a valid FSC election in effect on September 30 ...
Certain exceptions apply, including the exclusion from Subpart F income of CFC income subject to an effective foreign tax rate of 90% or more of the top U.S. tax rate. [ 213 ] The United Kingdom provides that a UK company is taxed currently on the income of its controlled subsidiary companies managed and controlled outside the UK which are ...
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