In this article, US International Tax Advisors answers the frequently asked questions about foreign earned income exclusion.
Should I have a tax home in a foreign country to qualify for the foreign earned income exclusion?
Yes. A tax home is the city or general vicinity where your primary place of work or business is located. Qualifying for foreign earned income exclusion involves having a tax home in a foreign country and being a resident alien, or US citizen.
Additionally, you must pass the physical presence test, or the bona fide residence test. If you would like to learn more, US International Tax Advisors, the premier tax experts and FATCA consultants serving clients in Chevy Chase, MD and the greater Metro DC area, can explain the qualifications for foreign earned income exclusion in detail.
Are Forms 2555 and 2555-EZ Different?
The Form 2555-EZ is a simplified version of Form 2555. It can be used by most individuals if they do not claim housing exclusion or deduction, did not have any business or moving expenses, did not have self-employment income for the year, and their total foreign earned income did not go over the maximum foreign earned income exclusion threshold for the corresponding tax year.
Should I still file a U.S. individual income tax return if my foreign earned income is below the exclusion threshold amount?
Yes, because foreign earned income exclusion is voluntary. You need to file a tax return to claim the foreign earned income exclusion, regardless if your foreign earnings are less than the foreign earned income exclusion threshold. There are definite requirements you must satisfy to claim foreign earned income exclusion. For more details, consult us and we can discuss everything, from tax compliance to FBAR amnesty for tax payers in Bethesda, MD and the Metro DC area.
Contact US International Tax Advisors to learn more about foreign earned income exclusion, foreign account compliance, foreign bank reporting, or international taxation. We will give you the assistance and counsel you need. Our years of experience and strong relationships with the IRS and other financial authorities allow us to manage and navigate tough taxation issues. Give us a call and our highly qualified team will be glad to address all your concerns and questions.